Nicky Oppenheimer, Chairman of De Beers : “Diamonds are intrinsically worthless, except for the deep psychological need they fill.”

Imagine you and your significant other are reliving your first date and you have pulled out all the stops. This night has everything: wine, good music and finally comes the moment you have been waiting for. You get on one knee and say what you have been thinking about for so long: “Significant other, will you marry me? By the way, I am not giving you a ring because the purchase of a ring is a scam courtesy of the De Beers Corporation.”

Haha….. the sad part of this statement is that it is 100% true. This information is also useless my dear reader, because most of our significant others just don’t give a shi****.  Google “engagement rings are a scam” or “the diamond invention” if you’re interested in more twisted stuff on this topic.

The reality is this conversation sucks. If you spend too little, you look like a cheapskate, and so many people equate the amount of money you spend with how much you care. So, I guess we will use two months’ salary (originating from a De Beers ad, by the way) as the arbitrary number I should spend? Wait, what? My brain is starting to turn to mush.

Three Guidelines

#1: Find out what your partner values

I am not here to talk about how bad a ring is from an investment perspective (maybe another blog post for another time). We all concede, there’s a huge emotional component that goes along with the engagement ring selection process.  What you don’t want to do, is spend your money and then find out later that it was lower on the priority list then let’s say a down payment for a house, 3-6 months of emergency savings, a trip you both could enjoy, auto transportation or the wedding itself (if you said investing in a retirement account and you are female, can we exchange numbers?). If you don’t have an open dialogue you are focused more on the act of getting married then on building an honest and transparent relationship. Thank you, Dad, for that divine wisdom.

#2: The Ring is important, but what does that really mean?

So, you know the ring is important but you need specifics on what that means. This is where you do some research around what it looks like: the setting, the carats, oval vs round etc. If your partner wants something more customized and unique, you can save for something else you both value and still leave them breathless when that proposal happens.

#3: Wholesaler’s Wisdom

If the first two tidbits did not resonate and you only take away three words from this post, then listen carefully: DON’T BUY RETAIL! I spoke with a confidant whose family has made a fortune in the diamond business and they supply retailers across the country. Let’s call him Shayy the Jeweler.  Shayy let me in on the intel that people can save thousands by buying directly from a wholesaler or going through the web for the same ring or diamond! He let me know it is very typical for wholesalers to mark-up diamonds from 50-100% when selling to retail. Online diamond merchants (such as Blue Nile) are reducing markups to a rock bottom 18% from wholesale.  Common “cents” indeed!

Question for Aaron? Email him at aaron@themoneynudge.com