Eight Ways to Save on Engagement Rings

By Kelli B. Grant of SmartMoney.com

Deciding to get married is the easy part — at least, compared with the expense and effort that shopping for the engagement ring entails.

These sparkly manifestations of committed relationships will set shoppers back an average of $5,795 this year, according to market researcher The Wedding Report. And thanks to a combination of a weak dollar and high consumer demand, which has sent gold and diamond prices skyrocketing, engagement rings are only getting more expensive.

Inflated expectations (mostly on the part of the bride-to-be) about that all-important ring have also pushed prices higher, says Elena Mauer, a senior associate editor at Bridal Guide magazine. Today, most women expect at least a one-carat diamond, while just five years ago a half-carat stone would have sufficed. (Such factors aren't to be ignored: 28% of women say they would turn down a proposal if they didn't like the ring, according to the market research division of Clerical Medical Investment Group, a U.K.-based investment advisor.)

The general spending rule is to expect to pay the equivalent of two months' salary — or at least that's what the jewelry makers advise. "Affordability is different for every couple, so that's just a starting point," explains Jerry Ehrenwald, president of the International Gemological Institute, a nonprofit industry group.

The challenge of putting a price on their priceless love leads many consumers to overspend. But there are plenty of ways to cut costs without sacrificing quality. Here's how:

Reassess the rock

It's impossible to shop for a diamond without knowing the four Cs. But educating yourself (visit the Gemological Institute of America) has the added advantage of helping you figure out where to splurge, and where to save:

Clarity. Look for a stone of VS2 or better, which means none of the inclusions are visible to the naked eye. The stone is a far cry from flawless, concedes Ehrenwald, but who will ever know?

Color. Even a stone on the less-favorable end of the color scale can look stunning in a ring, says Antoinette Matlins, author of "Engagement & Wedding Rings: The Definitive Buying Guide for People in Love." You'll typically notice less color while looking at the stone from the top down anyway (appraisers grade by looking at the side), and the metal of the setting further masks the tones.

Carat. Stones jump in price at the carat mark. Look for so-called light carats — those just a little below, say, a 0.95 instead of a one carat. "Visually, you wouldn't be able to see a difference," says Ehrenwald. Pricewise, you will. At Union Diamond, a loose 0.95-carat stone (ideal cut, F, VVS2) is $8,075. The one-carat equivalent costs $11,294.

Cut. The way a stone is cut largely determines its final appearance, and so has the least wiggle room of any of the four Cs. Get the best cut you can, advises David Levi, owner of David Levi Diamonds in La Jolla, Calif. Trading up yields the most improvement in a diamond's value.

Consider other shapes

Round, brilliant-cut diamonds are the most popular shape for engagement rings — and perhaps not coincidentally, the most expensive per carat, says Matlins. Opt for a significantly less expensive oval, marquis or pear cut, which carry more of the carat weight at the top, thereby appearing larger. At Diamonds.com, you'd pay $8,209 for a round diamond (1.01 carats, F, VS1, very good cut) set in white gold. In comparison, you'd pay $5,717 for the same ring set with a pear-shaped stone of the same attributes; $6,174 for a marquis, or $5,803 for an oval.

Not all shapes offer such a great deal, though. Steer clear of radiant and princess stones if you don't want to stretch your budget. "These shapes, though popular, tend to have a lot of carat weight at the bottom, which can make them look smaller," she says.

Go generic

Tiffany & Co. boasts of its "Lucida" stones, Kay Jewelers showcases the "Leo Diamond" from Leo Schachter Diamonds, and Hearts on Fire's eponymous diamonds are sold by independent jewelers nationwide. Such branded diamonds employ trademarked precision cuts to maximize brilliance. As a result, these stones cost 15% to 20% more than a generic (i.e. unbranded) diamond of the same attributes, says Martin D. Fuller, an independent jewelry appraiser based in McLean, Va. You're paying for the name, not necessarily a better stone. And should that brand lose favor with fickle consumers, there's no added value down the line.

Cut loose

Buying a loose diamond from a wholesaler can save you hundreds of dollars. The savings will more than make up for what you'd pay to have the stone put in a setting. A half-carat stone (G, VS2, very good cut), for example, has an average retail price of $2,238, but could cost as little as $1,272 when purchased through a wholesaler, according to Diamond Review, an independent diamond education and pricing web site. Shenoa & Co. in New York City's famed diamond district has several that fit the bill, ranging in price from $1,140 to $1,458.

Skimp on the setting

No one will be ogling your fiancé's ring for the band, says Mauer. "Focus your spending on the center stone, rather than the setting," she says. At Diamonds.com, a platinum setting with a half-carat in accent diamonds is $2,205, while a simple cathedral setting in platinum is $875. If you have your heart set on a fancy setting, consider swapping pricey platinum for white gold or palladium (a member of the platinum family), which offer a similar look for less than half the price. In 18K white gold, those same Diamonds.com bands would be $1,107 and $490, respectively.

Hone your haggling skills

The markup on engagement rings can easily be 300% over wholesale costs, so there's plenty of wiggle room when it comes to negotiating a lower price, says Matlins. "Mall chain stores have the highest markup, ironically because they're so competitive," she says. "To afford the occasional 50%-off sale, the regular retail price has to be much steeper." Independent jewelers tend to have slimmer profit markups, as well as more leeway to offer discounts. In such a competitive market, many jewelers will give you a deal for buying the whole ring (instead of having them set a loose stone you bought elsewhere), or for agreeing to come back later to purchase wedding bands. Because credit-card merchant fees are high, some stores will even give a 3% discount if you pay by cash instead.

Mine online retailers

Prices can be up to 40% cheaper when you buy online. But you'll have to be more vigilant about which sites you buy from, says Levi. Price compare at several stores, and steer clear of sites where prices are significantly less than others you've seen. That's a good indication you're looking at low-value, lab-enhanced stones or outright fakes, complete with a fraudulent appraisal report.

Buck tradition

Diamonds are still a girl's best friend, serving as the centerpiece stone in 90% of engagement rings, according to The Wedding Report. But there's something to be said for going the nontraditional route. Rings set with colored gemstones are very trendy right now — and very affordable, too, says Mauer. "Colored gems are less expensive [than diamonds], which means you can get a larger, better-quality stone for your budget," she says. At Blue Nile, a three-stone white gold ring set with an oval-cut sapphire (just shy of one carat, good color, no visible flaws) and flanked by two 0.15-carat diamonds goes for $1,575. If you opted for a white diamond of comparable quality instead, that price would get you a 0.30-carat center stone, max. (For a diamond the same size as the sapphire, you'd pay $4,313.) One caveat: Knowing the four Cs of diamonds won't help you here. Our shopping guides for colored pearls can help you figure out what to look for.

Useful article for "later", BTW, what about artificial diamonds?