There are several factors to consider when deciding how much to spend on an engagement ring, so let’s first look the most recent average engagement ring cost data. According to a 2020 study conducted by The Knot, the average proposer spends approximately $5,500 on an engagement ring. While this typical price varies significantly based on where you live, it's useful to know how much most consumers spend before you start planning your own budget.

Factors That Affect Engagement Ring Cost

Before you start looking for engagement rings, it's a good idea to set a budget. This way, you won't be looking at rings that are outside (above OR below) your price range. But what exactly determines how much an engagement ring is worth? Let's look at some factors that affect engagement ring cost.

If you're looking for a diamond engagement ring (which a vast majority of people do), it's critical to understand the 4 C's—color, cut, clarity, and carat—which can all have a significant impact on a ring's price. The Gemological Institute of America (GIA) or The American Gem Society (AGS) are the largest institutions for diamond certification. The grades or certifications from the GIA or AGS play a large part in determining the quality and therefore the value of a diamond.

Color: It's not the color of a diamond that makes it more valuable, but rather the lack of color. The higher the value and grade of a diamond, the more crystal-clear and colorless it is.

Cut: The cut, or shape, of a diamond can determine its price. Round diamonds, for example, require more labor to produce and hence cost more—but they are also the most popular cut!

Clarity: The assessment of minor defects on the surface and within the stone is known as diamond clarity. Surface imperfections are referred to as blemishes, whereas inside flaws are referred to as inclusions. In most circumstances, these have little effect on the beauty of a diamond because most inclusions are invisible to the naked eye. The fewer and smaller the inclusions within a diamond, the higher the clarity grade and the greater the price. 

Carat: Diamond carat is an often-misunderstood term. It refers to the weight of a diamond rather than its size. Another myth is that a bigger carat weight is always superior to a smaller carat weight. Bigger isn't always better! Carat weight has nothing to do with brilliance. A well-crafted cut produces beautiful glitter. In fact, a diamond with a high carat weight and a poor cut may appear smaller than a diamond with a lower carat weight and a very good cut.

Bonus Buying Tip: Choose odd or “below” carat weight to save money. For example, consider buying a .90 carat weight diamond instead of a 1.00 carat diamond. The difference is almost impossible to notice, and this can save a considerable amount of money.

1. Set a Ring Budget:Getting engaged is a major life even, but it's critical to create a budget and determine how much money you can realistically set away (say bi-weekly or monthly) to purchase an engagement ring. Consider all monthly expenditures, including as rent, groceries, and bills, to determine how much money you'll have left over to lay aside comfortably. A ring saving hack is to open a separate savings account where a predetermined dollar amount is automatically deposited.

2. Utilize Financing (Carefully):Don’t have or want to utilize all of your cash reserves for your engagement ring purchase? There are a number of financing options available from credit cards to personal loans for ring buyers. It’s important to stay disciplined and understand the fees, rates, and payment terms that come with borrowing. Don’t let financing lead to spending more than what you can reasonably afford!

3. Find the Right Style:One of the greatest ways to maximize your engagement ring budget is to make sure you’re buying the right style for your partner! Surprises are great, but there’s no sense spending more on a ring if it doesn’t fit your loved one’s style. Talk to friends, family, and even your partner directly (but subtlety of course).