How much should I spend?

This is the fifth C - Cost. And what you spend is a matter as personal as boxers or briefs. You will probably hear that three months' salary is the "rule". But that isn't possible for many people and, frankly, isn't necessary to get a gorgeous engagement ring that will make her heart turn cartwheels of joy. Remember: the engagement ring is a symbol of your love for her. And, whether that is a simple ring that costs $100 or a five carat diamond set in platinum that sets you back $60,000, the meaning is the same, you love her and want to be the ball on her chain forever. Spend the amount that YOU are comfortable with on a ring that will withstand daily wear for 30, 40, or 50+ years.

Here's some simple logic to help you out: Unlike clothing, a plasma TV, or even a car, the engagement ring will be worn 365 days a year until death-do-you-part. That is a long time! You may have heard about dollar-cost averaging when investing in your retirement plan. Well, you could also approach the ring purchase the same way.

Engagement Ring Cost: $4200

Number of Years Ring is Worn on Left Hand: 50 years

Annualized Ring Cost: $84

Daily Cost: 23 cents

Now, think about this: your car payment is $350 per month (or $4200 per year). You might keep that car four, five, maybe six years, and then trade it in or sell it. 50 years from now you probably won't remember much, if anything about that car you spent over $20,000 on back when you were young.

Bottom line, the amount you should spend on the engagement ring is up to you. And you also want your soon to be fiancé to love it, show it off to her friends and colleagues, make the girlfriends and wives of your friends jealous, and possibly even pass it down as an heirloom for future generations - and those future generations aren't so far off in the coming now.

It is imperative to consider spending the greatest percentage of your budget on the part of the ring that will give you the most satisfaction. A smaller diamond that is flawless will cost the same as a larger diamond with inclusions, so you'll need to decide if you'd be happiest with a larger carat weight even if you may see a few tiny flaws (inclusions), or a smaller diamond that is close to perfect.