TORONTO - Popping the big question with an engagement ring on Valentine's Day may sound spontaneous and romantic but financial experts advise doing some legwork before getting down on one knee.
"Remember, Cupid can shoot an arrow through your heart but also through your wallet," says Sun Life financial adviser Brian Burlacoff.
Burlacoff said the purchase of an engagement ring should be made with the bigger picture — the wedding — in mind.
According to a recent analysis by rate comparison website RateSupermarket.ca, the average price of an engagement ring is $4,000, while a wedding in Canada, including a venue, dress and a honeymoon can cost as much as $32,000.
"If you go crazy on the ring, you might be paying for it for 15 years and giving up other parts of your wedding, for example, or even a down payment on a home," said Burlacoff.
"It's important to know where you want to prioritize spending your money."
Burlacoff suggests coming up with a wedding budget and examining your financial priorities for the next three to five years after the wedding. Do you want save for a down payment on a house? Do you want to put money into RRSPs? Do you plan on having children and have you considered how you will pay for daycare?
For some, the top priority may be a bigger, more expensive rock. Others may opt for a less expensive ring with a gemstone or a Cubic Zirconia instead of a diamond. Couples can also decide to buy a smaller diamond first and upgrade it later when there is more financial stability.
While it's prudent not to buy a ring you can't afford, temptation may win out. In that case, it's best to consider taking out a line of credit with a bank rather than signing up for a high-interest financing plan. In some cases, this can mean the difference between paying four per cent in interest with the bank versus paying 19 to 29 per cent with a credit card or with a merchant.
"The number one reason why couples break up is still for financial reasons," said Burlacoff. "While that engagement ring is very symbolic of a marriage, that can be the tip of the iceberg if it's not done properly. It can set a positive pattern or a negative pattern for the rest of the marriage."
Newly engaged Chris Stasiuk said he popped the question to his girlfriend Melissa in January after months of saving.
He recommends going to a jeweller understanding what is known in the diamond industry as the four Cs — colour, clarity, cut and carat weight — for an idea of how quality is determined and how much you want to pay.
Stasiuk, who owns a video production company, had a budget in mind but admits he went over what he wanted to pay when he started looking at the rings.
"I wanted to give her something that she was proud of," he said. "I got caught up in the whole thing. She's going to wear the ring forever and that obviously played in my mind as well. What's an extra few grand over the course of a few years?"
An old adage has long been that engagement rings are expected to cost about three months of salary, a benchmark that was created by the De Beers diamond cartel.
But jeweller Chris Shortt says there are rings out there in all price ranges. At James McTamney & Company, one of the oldest jewelry store in Toronto, engagement rings start at $200 and can go up to $25,000.
It's a big financial purchase and the best way to approach it is to be sure you're prepared for the lifelong and financial commitment before you splurge on the ring.
"Many times people come back a second or third time to make their final choice," said Shortt.