Lynda Moore cautions that a simple decision to buy an engagement ring could set off a whole chain of events and missed conversations about money.  It's a conversation you should have to avoid getting embroiled in an argument about money

Diamonds are a girl’s best friend, sang Marilyn Monroe, and Madonna.  What made them that? and more to the point what has that got to do with personal finance?

Well, quite a bit. This week’s article may seem a bit frivolous to some, but as I work with couples whose relationship haven’t survived the test of time, it makes me think that this is a topic worth exploring a bit further.  If there were more money conversations happening in the early stages, there might well be less couples blaming money at the end of the relationship.  

Getting married may not be as popular as it used to be, but there are still a lot of couples who do want to go down that path.  One of the first big purchases is the engagement ring.  Now, it sounds really easy doesn’t it.  The guy (or girl) buys the diamond and makes a grand gesture and presents it to their partner and they are now engaged.

After reading some of the stories on social media and articles that have popped up in my feed recently, it isn’t that simple. How much should you spend?  Who owns it? Who pays for it? Do you really need one at all?

Let’s backtrack a bit and have a quick history lesson on the ‘diamond are a girl’s best friend’ story.

Not surprisingly the rise of a diamond being the standard for an engagement ring was a marketing campaign.  It was back in the late 1930’s that the jeweller De Beers, decided they weren’t selling enough diamonds, so they did a marketing blitz and promoted ‘diamonds are forever’. They had socialites and movie stars wearing diamonds and flashing them at events. 

There was an education campaign to learn about the 4C’s of a diamond, which also enhanced desirability for a bigger and brighter one.  The next generation was also part of the diamond story. In American high schools’ lectures were given to convince young women that a diamond was what they should be given. The men (of course) were advised to spend at least one month’s salary on the ring.

The campaign was a roaring success, the diamond ring went from a 10% popularity before the campaign to 80% of the engagement ring market by 1990.

Of course, while all of this marketing was happening back in the 1940’s and 50’s The typical couple role models were more traditional.  The man (as the breadwinner) paid for the ring, and it was a gift to his wife to be (who would be staying at home to look after him).  It was hers to keep should the engagement break off.  I can’t believe I’m saying this, but it was thought to be compensation as a broken engagement could make her look less of a marriage prospect for someone else. Thank goodness times have changed!

Fast forward to now and the traditional roles in relationships have changed and this is potentially where the whole engagement ring complications arise.

I think it’s a brave person, who wants to surprise their loved one today with an engagement ring.  What if they spend too much, or too little, or buy completely the wrong style.  Your relationship can be in strife before you even get to the wedding day.

Then there is of course engagement ring comparison if friends get engaged around the same time.

My VA told of a story she read where the newly engaged financée was distressed as her engagement ring cost $5.00 on Amazon.  My mind immediately went to ‘cheapskate’.  Where did yours go?  But maybe $5.00 was all he could afford right now due to their financial circumstances.  Would he have been better to have bought nothing now and saved up a bit longer?  This poor guy is in a no-win situation, his partners expectations and what he could deliver were quite different, and this is probably a story she will tell for years to come. Hopefully it will over time become a funny family anecdote and not a snarly statement in the divorce proceedings.

The story that prompted to me to put pen to paper about this topic was about the now wife, who had just found out that her $8,000 engagement ring was being paid for from their newly combined finances. This one really piqued my interest into the dynamics of this couple’s money story. 

The article mentioned they were saving for a house. It was also a short time between engagement and wedding, and when they got married, they immediately combined their finances.  This is just to give you a bit of context.

There’s a few conversations, that if they had happened, could have saved this newly wed sharing her story with the world and asking for advice.  And she got a lot of it.

I wonder if there had been any real conversation about how much to spend on a ring? It was clear from the tone that she expected him to pay for it out of his own money. Reading between the lines, it also seems that initially her expectations were met about the ring she received, she just didn’t expect to pay for half of it!

Her husband’s explanation is that he didn’t have time to pay for it himself, so it seems she didn’t know he had put it on a payment plan in the first place.  Even if it was for the ‘right reason’ this if financial infidelity.  The start of what can be a slippery slope to keeping money secrets.

They immediately combined their finances once they got married.  This meant he didn’t have any personal money to pay for the ring, as what was his became hers and vice versa.  At this point he could have come clean and told her about the finance on the ring, but he didn’t.  It was after two payments were made that she found out about it.

This suggests to me, that not only was there was no discussion about a budget or how the combined finances were to work as a couple.  For whatever reason, he didn’t know how to talk to her about money and tell her about the finance.  A common reason I hear for this is “I’m embarrassed’. Or ‘it will cause an argument’. Getting ‘in trouble’ at this point would have been a better option than continuing to say nothing.

If you are going to combine finances, it’s very important to retain some money for yourself.  I call it pocket money for grownups.  This is an agreed amount that is your ‘free’ money to do with what you want, it’s outside of the joint budget.  Maybe he could have used his ‘free money’ to pay for the ring. but that’s still got him potentially in a difficult position.  Why?

Well, if they are saving for a house and meet with a mortgage broker and he’s still paying off the ring, he will need to disclose that.  What if she still doesn’t know?  How is that conversation going to go?

As you can see, one simple decision to purchase an engagement ring has set off a whole chain of events and missed conversations.  Will this couple survive?  I don’t know, but right now, what should have been a very happy time for them is now embroiled in an argument about money.  This doesn’t set them up well for their financial future together.

Lynda Moore is a Money Mentalist coach and New Zealand’s only certified New Money Story® mentor. Lynda helps you understand why you do the things you do with your money, when we all know we should spend less than we earn. You can contact her here.