Jim N. writes with a question that most frugal young gentlemen eventually face.

How much should I pay for an engagement ring?  I realize that the ideal answer is, “Don’t spend a lot on the ring because she shouldn’t need material objects to realize you love her.”  I agree, but that’s not very realistic.  I want to buy her something very nice that she’ll be proud of, but I don’t know if I should try to pay cash, get a loan from the bank, etc.

This question falls precisely at that point where money decisions meet psychology and emotion.

It’s often said that a man should spend twice his monthly salary on a ring, but I have a strong suspicion that this is a marketing ploy from the diamond industry. (Which brings up another point: there’s no rule that you must give a diamond engagement ring.)

How should you pay for the ring? It’s best to pay cash, of course, but that can be difficult for a young man making his start in the world. And remember: you can often negotiate the price of an engagement ring. (Some people claim that buying an engagement ring is just like buying a car.)

I don’t recall how Kris and I set our budget when we went to buy her ring, but I know that I only spent $350. We were still in college, so this probably did represent twice my monthly salary, but that’s not why we chose it. We chose it because it was the ring that Kris liked best. I promptly charged it to my credit card. (If I were buying an engagement ring today, I would save for it.)