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If you’re ready to pop the question and want to spend more than $1,000 on an engagement ring, finding the right account can help you earn interest and get you to your goal faster. Consider how much you can afford, and the kind of ring your partner expects, when determining how much you need to save.
How to save for an engagement ring
Have a conversation with your partner about expectations for an engagement ring before you get started. Diamond rings can cost an average of $5,680, according to The Knot’s 2018 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. Follow these four steps to start saving for whatever you choose:
1. Set a budget
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.
2. Pick a ring
Research the kind of rings you can afford. You don’t need to visit a jeweler, as there are plenty of online sites that can give you an idea of what you can get.
3. Open an account
Depending on how much you want to spend, you’ll likely want to find a short-term savings account that will give you a high return on your contributions. Compare fees, APY and access to your money when you’re ready to spend.
4. Make regular contributions
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.
How much should I save for an engagement ring?
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 average. If you can avoid financing a ring, you’ll end up paying less in the long run.
Best accounts to help you save for an engagement ring
Types of accounts to save for an engagement ring
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:
Traditional savings 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.
Money market accounts
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.
How to compare accounts for an engagement ring
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:
- Fees. Some accounts come with monthly fees, but usually if you meet certain requirements you can avoid them.
- Access. If you have too much access to your savings account, you may struggle to save the total amount you planned.
- Bonuses. You might get lucky with an account that offers a sign-up bonus or rewards program that gives you cash right off the bat.
- Eligibility. Be sure to look out for eligibility requirements, fee waiver conditions and other details.
APY. Interest rates will make a difference in the total amount you can save. Find an account that has the highest APY at a balance threshold you can afford.
Tips to save for an engagement ring
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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