Go ahead, and ask a financial expert this question, and chances are you’re bound to get quite a few answers.
Whether it’s the 10% gross income rule for monthly car payments and expenses or the 25% rule for purchasing a new vehicle, there is no one size fits all answer financial experts can agree on when it comes to how much “Car” you can afford.
Chances are, you might not be able to afford the car you truly desire, but you’re looking for affordability.
A car is designed to get you from point A to point B, and while it might be nice to do that in style, affordability is a better option. This leaves you with these two car affordability options, the last being a high spending maximum:
Conservative: Car value is 25% or less of annual gross income
Moderate: Car value is 35% of your annual gross income
High: Car value is 45% of your annual gross income
So where do you start when it comes to car buying?
Are you looking for a lucrative side hustle or full-time gig? Try this one out: Learn how to make money on YouTube.
Because it’s one of those online places, you go to find everything!
If you want a re-cap of a sports highlight from last night, or even ten years ago, you can find it. If you want to learn how to fix a household issue or sell items on eBay, you go to YouTube. Or, if you’re an avid fisherman and you want to learn a new technique, YouTube is your place.
YouTube is an infinite source of information. YouTube is the second largest search engine after Google.
It’s also a phenomenal vehicle of entertainment. If you have a niche interest (like ultimate Frisbee) or you want to watch a clip from your favorite childhood television show, YouTube has a seemingly limitless inventory of this type of content.
When it comes to investing, choosing where to invest is often the first and most crucial choice you make. Choose correctly, and you’ll be in a great spot to pick from a wide variety of low-cost funds and make trades for free. Choose poorly, and your investment options will be limited, and your fees will be high.
Online brokers come in all shapes and sizes, but the three things I always look for in a good broker are:
Wide variety of low-cost index funds and ETFs (for you non-stock traders out there)
Ease of use
Below we’ll break down some of the best brokers out there and score them on the three criteria above. This way, you can make a smart personal finance decision and choose the best online broker for you.
First, here’s a quick primer on what makes an online broker (you experts can skip ahead).
What is an Online Broker?
An online broker is essentially the same thing as a traditional broker, except, you guessed it, you utilize them via the internet.
Traditional stockbrokers give you a platform to execute trades and make investment decisions. That is, you pick which investment vehicles you want to invest in, and then work through a broker to make the purchase (or, eventually, the sale).
In the simplest terms possible, an online broker is a middle man. They are the bridge between you and the stock market.
The following article is a guest post written by Jessica Bishop for The Money Mix. It has been republished here with permission.
If you’re reading this post, you’ve likely found the person you want to spend the rest of your life with. Perhaps you’re considering popping the question to your partner soon, or you’re just starting to research the cost of an engagement ring so you can begin saving up.
No matter what brought you here, this post will share everything you need to know about buying an engagement ring. We cover how much you should spend on an engagement ring, how to save up to pay for the ring, creative ways to reduce the cost if budget is an issue, and determining the best style to purchase for your partner.
Have you heard that a good rule of thumb for what you should spend on an engagement ring is to pay the equivalent of two months’ salary? We’re not exactly sure where this figure came from, but feel free to ignore it.
Similar to the reported “average” wedding budgets shared by the mainstream media, they promote this to convince the public that they should spend a certain amount. Who seeks to gain from spreading these reports? The jewelers and diamond companies, of course!
So how much should you spend on an engagement ring? First, you should consider what you can afford as well as the style of ring your partner will love. The key is to strike a balance between those two areas of consideration.
Everyone’s financial situation is different, as are their stylistic tastes, and their long term goals and priorities. You’ll need to reconcile all of these to choose the best ring to purchase for your partner when you pop the question.
Take a look at your monthly budget and your current savings. How much could you put towards a ring right now? How much could you save up each month to put towards the ring? Then, factor in those monthly payments when combined with your current savings. How long will it take you to save up to pay for the ring of your partner’s dreams in cash?
If you want to make sure you buy a unique engagement ring that your partner loves while also staying within your financial means, it will take research, intel, and dedication. Below, we’ll outline the details of how to go about choosing the perfect engagement ring and making sure you get the best price.
In many ways, it was a brilliant campaign designed to increase the sales of diamonds due to a steep decline during the Great Depression. This smart marketing campaign created an emotional link between eternal love and the diamond, which has become the gold standard for engagement rings ever since.
And why are diamonds themselves so expensive? What makes a diamond so valuable?
Diamonds were historically quite hard to find, which made them appear to be rare, and therefore more valuable. De Beers had a hand in the rarity of diamonds as well by purchasing the largest diamond mining area in South Africa, which they controlled for most of the 19th century. The company restricted the number of stones released each year to keep the illusion of limited supply to make them appear rarer.
In recent decades, a broader global supply has been revealed as new mines opened around the world, as well as the increasing popularity of lab-created diamonds. Several factors contribute to the cost of diamonds today.
Luckily, we also have more choices when it comes to sourcing stones, so you don’t have to worry as much about falling prey to marketing tactics or scarcity sales messages.
The Four C’s of Diamonds that Factor the Cost
If you’re wondering what you should look for when you purchase a diamond engagement ring, you can start by considering the Four C’s of diamonds. The GIA has defined these characteristics to standardize the valuation of diamonds.
The goal is to keep things ethical and fair. The following four facets contribute to the cost of a particular stone:
Carat refers to the apparent size of a diamond and is just one of the contributing factors of a diamond’s cost. A carat is 200 milligrams. Each carat gets broken down into 100 points. The reported average diamond in an engagement ring is around one full carat, for around $6,000 in cost.
Clarity refers to the gemstone’s overall quality. A flawless diamond is free from visible inclusions, surface defects, or blemishes. Most diamonds, however, do have small inclusions or imperfections that are microscopic, meaning they are entirely incapable of being seen with the naked eye. Saving experts say clarity is the least important factor when choosing a diamond because of this fact.
Diamond color refers to the actual visual tone of the stone and is graded on a scale of D (colorless) through Z (light color.) While fancy colored diamonds such as pinks, yellows, and blues are considered rare and desirable, clear diamonds are most popular for engagement rings. The more clear in color a diamond is, the more valuable it will be. Diamonds with a slightly yellowed hue are considered less desirable and therefore tend to be cheaper.
The cut of a diamond refers to the shape and technique used to shape the diamond into its’ final state. There are many different popular cuts for a diamond, such as round, brilliant, princess, oval, cushion, emerald, Asscher, marquis, pear, and more. Round is the most popular shape for a center diamond, by far, followed by a princess.
5. Creation (The Fifth C)
Is the diamond mined from the earth, or was it created in a lab?
Lab-grown diamonds have skyrocketed in popularity in recent years. Not only are they genetically the same material as traditionally earth-mined diamonds, but they are also conflict-free and more affordable as well. Choosing a lab-grown diamond over a mined stone can save you 30%, so it’s a bit of a no-brainer.
You could decide to save 30% on a stone of the same quality as a traditionally mined rock, or you can make your money go farther. You could choose a larger or higher quality stone for the same spend as you’d pay for an earth-mined stone.
Other Cost Factors in an Engagement Ring
The other major factor in the cost of an engagement ring is the setting. Once you’ve chosen your diamond (or another gemstone), you’ll need to decide how you would like that stone presented.
There are more designs than ever to choose from these days, from simple solitaires set in white gold to micropavé halo bands with tiny diamonds covering the entire ring. The setting for your engagement ring could ultimately cost more than your center diamond, depending on what you choose.
Tips to Save Money on an Engagement Ring
If you’re on a tight budget, you may be looking for ideas on how to reduce the costs of an engagement ring. Below are some tips that will help you find a beautiful piece for your partner while keeping your spending in check.
Select a Low Clarity Stone
Opt for a stone that is lower in clarity. As mentioned above, internal inclusions and imperfections are usually untraceable with the naked eye and could only be seen under a microscope.
Choosing an internally flawless diamond will cost you more, or perhaps push you to select a smaller stone to afford that level of clarity. By selecting a stone with a lower clarity rating, you will likely be able to afford a larger stone.
Choose a Diamond Alternative
If diamonds are too spendy for you, perhaps you’d instead consider a diamond alternative such as Moissanite, which is made from silicon carbide crystal.
You could also go wholly non-traditional and opt for a colored gemstone if your partner would love something a bit more unique.
Consider a Lab-Grown Diamond
As mentioned above, Lab-grown diamonds will save you 30% or more when compared with naturally mined diamonds with similar specifications. For that reason, lab-created diamonds are a very budget-savvy choice. Many consider them to be a more eco-friendly option for a wedding or engagement ring, as they are less harmful to the earth when created in a lab.
Select a Simple Setting
Keep the cost of your engagement ring down by selecting a simple setting for your diamond. Consider a single solitaire on a white gold band for the most cost-effective and traditional solution.
Go for Gold over Platinum
Platinum gained popularity in recent years for being the top choice for an engagement ring or wedding band, but truthfully the metal is not as durable as gold, and it is also more expensive. You’ll save significantly by choosing to set your rings in 14k white gold.
Shop Online for Better Selection
Choose a reputable online retailer to find the best quality diamonds and engagement rings at the best prices. They have lower overhead and pass along the cost savings to their customers.
Just make sure to shop with a retailer that will provide you with a certificate of authenticity for your diamonds.
Whether you’re close to popping the question or just starting to save up for your sparkler, we hope this post has given you some great insights and ideas into buying an engagement ring. Best of luck and happy proposing!
This article originally appeared on The Money Mix and has been republished with permission.