The old adage is 2-3 months salary. This was, of course, originated by the diamond industry itself, thanks to a campaign run by DeBeers (see the bonus chapter for more information).
Is that actually happening? We did some math to find out.
First off, does DeBeers mean pre or post tax? They don’t seem too specific. Regardless, I’m going to use a blanket tax rate of 25% to keep it simple (obviously varies based off income, state, and other exemptions)
| Salary | Tax Rate | Monthly Take Home | Ring Cost (2 Months) | Ring Cost (3 Months |
|
$25,000 |
25% |
$1,563 |
$3,125 |
$4,688 |
|
$40,000 |
25% |
$ 2,400 |
$5,000 |
$7,500 |
|
$55,000 |
25% |
$3,438 |
$6,875 |
$10,312 |
|
$70,000 |
25% |
$4,375 |
$8,750 |
$13,125 |
The average salary of a college graduate in their mid to late twenties brings home $38,000 per year…yet the average cost of an engagement ring is about equivalent to two months salary to someone making almost half that.
So no, people aren’t following the 2-3 months salary rule.
To show you why you’re reading this book instead of studying the web… here’s a table from the budget section of a popular wedding ring site…run of course by the industry. This is to show you how much they say you need to be saving in order to buy a ring:
|
ANNUAL INCOME |
SPENDING ESTIMATE |
|
$30,000 |
$5,000 |
|
$40,000 |
$6,667 |
|
$50,000 |
$8,333 |
|
$60,000 |
$10,000 |
|
$70,000 |
$11,667 |
|
$80,000 |
$13,333 |
Remember, YOU DO NOT NEED TO EXPECT TO SPEND 2 MONTHS OF PRE TAX INCOME ON A RING. Most people don’t.
