The sweaty palms, butterflies fluttering in your stomach, and deer-in-headlights look you get when you think about budgeting for your engagement ring, is completely normal. After all, you’ll want to make a decision that is both economically feasible and will have your loved one beaming from ear to ear. Whether you’re mathematically inclined or cringe around numbers, determining an appropriate budget for such a life-changing purchase is incredibly important.
Rather than binge-watching the latest season of Stranger Things on Netflix, spend your evening evaluating your income and expenses. You’ll save yourself the imminent headache that will ensue if you commit to a ring that you simply cannot afford. You wouldn’t want to begin your new journey as a married couple with a slew of complicated financial issues due to a lack of planning. Here is a step-by-step guide to help you budget for that once-in-a-lifetime moment.
Gather Income-Related Documents
From your statements detailing your take-home pay and any additional sources of cash flow, to interest you collect from investments, collect all documents related to your income. Use a digital spreadsheet or good old-fashioned pen and paper to record each of your assets – each on its’ own individual line.
Gather Expense-Related Documents
Expenses are unique from person to person, but here are some of the typical items to look for: rent or mortgage bills, credit card statements, phone/cell phone bills, car-related payments, student loan bills, and any type of amenity statements, like internet, cable, utility services, or trash collection fees. These are your fixed payments that you are obligated to make month over month.
Next, make an educated estimate of expenses that are variable. For example, what you spend on average for dining out, groceries, entertainment, gas, gifts, home or car repairs, etc. A good rule of thumb here is it’s better to overestimate than underestimate when dealing with your variable expenses. Add up all your expenses, included fixed ones, for the calendar year and divide the total amount by 12. Keep a record of all these expense-related numbers.
Run a Comparison
Compare your income and expenses side-by-side. If you find your expenses exceed your income, start assessing where you can begin making cutbacks so you can put those savings aside for the engagement ring. Should your income prove to be greater, then you’re starting off on the right foot and you can start allocating a certain percentage (or all if you prefer) towards your engagement ring fund.
You can easily use this method to guide you for future budgeting needs as well, such as a down-payment for a new home. For now, you’ll want to decide on next steps and how much you want to put into your savings account each month. Many individuals purchase their engagement ring using a credit card or combination of a credit card and their savings. It’s important to gauge how much credit you’re eligible for and of course, the amount of money you’re comfortable charging to the card. Those who elect to use a credit card for payment should consider sitting down with their fiancée to discuss their level of comfort first. Because realistically, those payments will most likely continue into your marriage. Additionally, you should check with your jeweler to see if they offer a credit program as they could provide added benefits such as no interest for a specified period of time.
At the end of the day, despite your expert calculations, you need to feel completely secure with the amount you choose to spend on your engagement ring. Budgeting is immensely important, but don’t forget to inject some romance into the process as well. By now, you probably have a good picture of your fiancée’s expectations, which will also help guide you to selecting the perfect engagement ring for your loved one!