Should you pay less for an engagement ring for a long marriage?

With the average wedding in Australia these days costing between $36,700 and $48,296, I recently came across an interesting study. Unfortunately, the findings might horrify some brides!

In September 2015, two associate professors of Economics, Andrew Francis-Tan and Hugo Mialon published their findings* in a study on whether spending more money on weddings and engagement rings correlated negatively to the duration of the marriages. In other words, do people who spend more on engagements rings and their weddings tend to have shorter marriages? As part of the study, they surveyed 3,370 individuals. Although it was a pretty small survey size, their findings were nevertheless interesting.

The key finding was that those who were ‘sensible’ in their spending were likely to have a marriage that lasted longer than those who splurged on expensive diamonds and ‘the big day’. In other words, the duration of a marriage is inversely associated with how much is spent on the engagement ring and wedding ceremony over a particular amount.

In my view, the survey shouldn’t be taken too seriously and considered just a bit of fun. Having been with Suzy for 21 years, I don’t believe the success of a long relationship is irrefutably linked to the size of the engagement ring or wedding costs. However, the survey does proffer a more serious issue:

When planning a new life with someone, it is important you both live within your means. Some purchases may inhibit your ability to build wealth over the long term.  

As you navigate these life choices, it is important to weigh up the large decisions, understand the trade-offs, and how this might affect your ability to build wealth for the future.

When it comes to building wealth, you really have only a few levers you can pull:

• Income you can allocate to an investment

• Return you can generate on the capital that is invested

• The investment horizon

• Size of asset invested.

If you mess around with any one of these variables, there are trade-offs that might influence the final outcome.

Before embarking on any investment decisions or regular investment programs, I recommend you always seek professional guidance from a licensed financial planner. Of course, I recommend AJ Financial Planning!

*Francis-Tan, A. and Mialon, H. M. (2015), “A Diamond Is Forever” And Other Fairy Tales: The Relationship Between Wedding Expenses And Marriage Duration. Economic Inquiry, 53: 1919–1930. doi: 10.1111/ecin.12206