Our pick for a high-yield savings account: American Express® Personal Savings High Yield Savings
- 1% APY
- No monthly fee
- No minimum balance
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If you’re ready to pop the question, consider how much you can afford, and the kind of ring your partner expects. Then, follow these four steps to save for the perfect engagement ring:
The amount you spend on an engagement ring will depend on a number of factors like your income, expenses, debts and partner’s expectations. Set a realistic budget that you can afford.
Here are three tips for trimming expenses from your budget:
Research the kinds of rings you can afford. You don’t need to visit a jeweler to do this, as there are plenty of online sites that can give you an idea of what you can get.
While you’re comparing your options, decide whether you’ll get ring insurance. On average, ring insurance costs $1 to $2 for every $100 it’d cost to replace the ring, according to The Knot. So, if you bought a $3,000 engagement ring, expect to pay anywhere from $30 to $60 a year to insure it.
The sooner you start saving, the better. Whether you’re just starting out or have some money saved, set up a dedicated savings account and contribute to it whenever you can. Look for a savings account with low fees, a high interest rate and convenient ways to access your money when you’re ready to buy the ring.
If your partner wants to contribute to the cost of the engagement ring, consider opening a joint savings account. You can keep the ring a secret, but you can both contribute to reach your goal sooner.
Determine how much you need to put away monthly to reach your goal and set up automatic deposits. Consider these contributions like a bill and roll this payment into your budget so that you don’t miss a month and fall behind on your plan.
Find a roundup app or keep-the-change program to save even more to make consistent progress toward your goal with your extra money. If you receive a bonus, pay off a debt or cancel a bill, consider rerouting that money into your savings account.
Have a conversation with your partner about expectations for an engagement ring before you get started. Diamond rings can cost an average of $5,900, according to The Knot’s 2019 Real Weddings Study. But not everyone has their heart set on a diamond. Other popular rocks include amethyst, turquoise and sapphire, which can cost significantly less.
It’s likely that you’ll spend more than $1,000 on an engagement ring, no matter what you choose. But when you add a 14-karat gold band, special settings and personal touches, you can spend more than the $5,000 on average. If you can avoid financing a ring, you’ll end up paying less in the long run.
The best account for a short-term savings goal is one that offers a high APY, little fees and little access to your money. Consider these types of accounts:
These accounts usually pay between 0.01% and 2.5% APY on your balance. It’s usually easy to set up direct deposits and they can have low balance requirements and low monthly fees. Plus, they’re limited to six withdrawals per month to encourage you to keep saving.
Similar to traditional savings accounts, money market accounts pay between 0.08% to 2.35% APY. However, they often have higher balance requirements, meaning you’ll need to have a chunk saved up before opening. Some of these accounts may give you more access to your money with checks and debit cards.
With so many types of accounts that can help you save for an engagement ring, it’s important to know how to compare them. Consider these factors as you look for an account:
The amount you spend on an engagement ring depends on your financial situation and the ring you and your partner decide on. Once you choose your ring and decide how much you want to spend, compare the best savings accounts to find an option that’s right for your situation.
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