At first De Beers suggested suitors spend a single month’s salary on a ring. However, by the 1980s in the U.S., the recommended amount had increased to two months pay, in part a result of a newer advertisement featuring the slogan, “Isn’t two months’ salary a small price to pay for something that lasts forever?”
Since then, that somewhat arbitrary rule of thumb has jumped to three months’ salary, says Alison McGill, editor of Weddingbells magazine. Nevertheless, she agrees the “rule” about how much to spend is a generalization and couples have to be realistic about their financial situation. “It’s typically something you have to plan for and save for,” she says.
There can be a lot of emotion attached to buying an engagement ring, but like any major purchase it’s a good idea to take into account your own financial circumstances when deciding how much to spend.
So once you’ve decided how much you’re prepared to spend, how should you pay for your purchase?
If you have enough savings to buy the ring outright you’re in great shape. If you’ve got money in a Tax-free Savings Account (TFSA), you can withdraw it without having to pay tax, and then the contribution room becomes available again the following year.