Pricey engagement rings a no-go for younger Americans
The old theory on engagement ring spending is that the cost should be equal to three months’ gross salary – but younger Americans may be planning to rewrite that rule.
While nearly one-quarter of Generation Z and millennials say they don’t ever plan on getting married, the ones that do are not expecting to spend too much on an engagement ring, according to a new study from TD Ameritrade.
While the average engagement ring costs around $5,000, the majority of younger Americans expect to spend less than $3,000.
Among Generation Z, 11 percent of respondents said a ring should cost less than $100, while 43 percent said it should cost under $1,000. Only 5 percent said an engagement ring should cost between $5,000 and $10,000.
For millennials, the highest number of respondents placed the ideal price between $100 and $999 (31 percent), while the next highest range was between $1,000 and $2,499 (30 percent). That compares with their parents – 36 percent of whom cited costs between $1,000 and $2,499, while 27 percent opted for $2,500 and $10,000.
TD Ameritrade surveyed more than 3,000 people ages 15 and older between February and March.
A recent New York Times article cited similar trends in the jewelry market: Most people spend about two weeks’ worth of pretax income on an engagement ring. While spending did increase along with higher incomes, it stayed at the same rate as an overall percentage of income.
So what does that mean for retailers? It appears that some are attempting to accommodate consumers across all budgets.
A spokesperson for Blue Nile, the world's leading diamond jeweler online for engagement and wedding rings, told FOX Business that it works with “every customer regardless of budget to maximize value and create the ring of their dreams.”
Blue Nile even offers potential buyers budgeting tips, adding on its website that people should “forget that old-school tip about spending three months of your salary.”
A spokesperson for Signet Jewelers said it is the company’s practice to “provide a wide range of prices in bridal jewelry for customers of all ages.” Signet is the parent company of Kay Jewelers, Zales and Jared The Galleria, among others.
Kay Jewelers’ website has one offering under $250, though it is on sale. However, it has a relatively large selection priced between $501 and $1,000. Meanwhile, Zales has a larger selection of offerings for under $100.
A spokesperson for Tiffany & Co. did not return FOX Business’ request for comment. The jeweler unveiled its first new engagement line in nearly a decade last year, with prices that start around $7,000, but can climb much higher. The company named the line as an important source of innovation in its fourth quarter earnings call, as sales of engagement rings decelerated. That was due in part, Tiffany said, to Chinese consumers spending less on these items while traveling.
The company also began offering for-sale engagement rings online last year.
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However, in addition to what could be perceived as a penchant among young people to balk at traditional engagement ring spending – retailers must also contend with the fact that the overall marriage rate is declining.
According to the Pew Research Center, half of Americans ages 18 and older were married in 2017 – down 8 percentage points since 1990.