June 6, 2010

Would You Prefer a New Car or 2 Carat Diamond Ring?

Over at The Simple Dollar there was a reader mailbag question from a fellow who was looking to buy an engagement ring.  He was talking about a "3 month" salary rule for the cost of the ring which in his case amounted to $13,750. 

It seemed most of the commenter's felt that the amount spent on a ring wasn't that important and spending that kind of money on a ring was a bad thing.   In the comments 15 people said what their ring cost.  The range was $8 to $3,500 and the average of about $850.    That is significantly less then the average spent on rings in the USA. But then some of those rings were bought decades ago when they'd be cheaper and the general audience on a finance blog such as The Simple Dollar is more frugal and practical with their finances.

One of the commenter's said they'd rather have a car than a $14k ring.  In general it seems that Americans consider spending $20,000 or more on a car normal but spending $10,000 or more on an engagement ring as unusual or even extravagant.   Why is that exactly?    Why do people value automobiles more than engagement rings? 

Would you rather have a new car for $20,000 and a $1,000 engagement ring or a $1,000 car and a $20,000 engagement ring?

Based on typical spending habits it seems that most Americans are much more likely to spend $20,000 on the car than the ring.  So it seems our nation has voted with our wallets in favor of the automobile.

There are many reasons why a car or a ring are good or bad things to spend money on:

A car provides transportation.
The engagement ring is a symbol of love.
The car will steadily depreciate in value until it is scrap.
A ring could be lost.
The car is a time saving convenience.
Engagement rings can be passed along to future generations.
The car has potential ongoing costs.
The ring is a symbol of a marriage that could end in divorce.

There are a lot of ways to argue that a car or ring is the better or worse option.

Of course many people would prefer to spend the $20,000 on other things.   Paying off debts, or taking a long European vacation or paying for a childs college tuition could easily have higher priority over a car or a ring.

Some people would like that ring and value it immensely while driving a broken down car and others would find that new car much more practical and attractive purchase compared to a piece of jewelry.

Bottom line:  It all comes down to individual priorities.   It isn't about right or wrong answers. 

Blog Widget by LinkWithin