Budgeting

Are You Eating Yourself Into Debt? Why You Need a Food Budget

By February 5, 2018 One Comment
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What do you spend more on each month: your housing or your food? Unless you have a specific food budget, the answer might surprise you.

Early on in my personal finance journey, I asked Reddit how much money would be necessary to fund a move across the country. I shared my monthly take-home income and listed some of my fixed expenses, such as my rent and car payment.

While learning more about the costs of moving was helpful for planning my short-term savings, the most impactful comment came from a reader who pointed out that each month I had several hundred dollars that seemed to disappear without a trace.

Where was this money going? In my original Reddit post, I had estimated $250-300 for food each month. In reality, because I didn’t have a food budget, I had no clue.

After spending a few minutes reviewing my credit card statements, I soon discovered that not only was I spending significantly more than I estimated on food, but also that I would be unable to hit any savings goals until I was ready to be more deliberate in my spending on food.

Setting a realistic food budget

My next step was to identify a realistic food budget for myself.

In the personal finance community, there’s a fairly commonly accepted guideline for budgeting for housing expenses: aim to spend less than one-third of your monthly income on housing-related expenses.

With food, the recommendation isn’t always so clear. While food is a required expense, there can be a wide variation in monthly spending depending on one’s living situation, social activity level, financial resources, and personal values.

The USDA publishes a “Cost of Food Report” each month that attempts to consider some of these factors by presenting four different levels of food plans:

  • Thrifty
  • Low-cost
  • Moderate-cost
  • Liberal

Although the exact dollar figures change in each new report, here are some basic numbers you can start with (based loosely on the December 2017 numbers):

Monthly food budget for one person

 Thrifty planLow-cost planModerate-cost planLiberal plan
Male$185$240$300$370
Female$165$210$255$325

Monthly food budget for a couple

 Thrifty planLow-cost planModerate-cost planLiberal plan
Couple$365$470$585$710

Monthly food budget for a family of four

 Thrifty planLow-cost planModerate-cost planLiberal plan
Family of four (two adults)$640$840$1050$1280

Other factors to consider

The figures from the USDA “Cost of Food Report” provides a good starting point. You can get a better idea of how much you may want to spend on food by asking yourself the following questions:

  • What is the baseline amount I need to spend to provide sufficient and nutritious food?
  • Do I value the social aspect of eating out with coworkers, friends, or my partner?
  • Do I enjoy cooking my own food?
  • Am I provided with “free” food through my employer?
  • Am I regularly expected to provide food to share with others?
  • Do I have any specific dietary restrictions or goals that may influence my spending?

After starting with the USDA plans and reflecting on some of the factors mentioned above, I personally decided on $320-360 a month as my monthly food budget. More specifically, I set a goal to spend $40 on groceries and $40 on eating out each week.

It’s important to remember that monthly food spending is highly variable due to one’s life circumstances.

The number I came up with for my food budget may seem too restrictive for some. With $40 for eating out a week, that could easily be spent on just 3-4 days of workday lunches or a single night of drinks and dinner downtown.

Alternatively, frugal-mind individuals may be able to eat happily on under $200 a month and consider my monthly food budget to be wasteful.

Nine ways to spend less money on food

  • Nine Ways To Spend Less Money On FoodSet a specific food budget. “What gets measured gets managed.” Choose a specific number and monitor how you are doing throughout the week or month.
  • Pay for food only with cash. This was one of the first strategies I used when focusing on my food expenses. You’ll be mindful of what you’re spending, and when the money runs out, you’ll know it’s time to opt for what’s already in the cupboards. (Prepare for pockets full of loose change!)
  • Save your leftovers. Rather than feeling obligated to finish your meal when eating out, only eat until you are no longer hungry and then request a to-go box to finish your meal later.
  • Cook at home more often. Preparing your own food is almost always cheaper than eating out. Depending on your goals, eating out can consume your daily food budget in one meal.
  • Meal prep on Sunday nights. By planning your meals in advance, you can limit the temptation to make an impulsive fast food trip for lunch or on your way home from work. Whether you’re looking for easy keto meal prep recipes or healthy Instant Pot options, there are lots of recipes online that make meal prep fun and easy. 
  • Don’t grocery shop while hungry. Even the most meticulously-planned grocery shopping list can be thwarted by a hungry stomach.
  • Buy food in bulk. When purchasing canned, frozen, or dried foods, buy in bulk to pay less per serving.
  • Go grocery shopping more frequently. For more expensive grocery items, such as meats or fresh fruits and vegetables, stop by the grocery store every couple days to take advantage of sales or food approaching expiration that you plan to eat immediately.
  • Opt for versatile foods and spices. If you cook meals at home, it’s easy to spend a lot of money on random foods or spices listed in only one recipe. Instead, choose food and spice “staples” integrate into a variety of dishes and cuisines.

What works for you?

With a little planning and practice, it’s possible to stick to a budget that provides plenty of nutrition – and flavor – without interfering with your financial goals.

Have you set a specific food budget? What tips and tricks do you use to make the most of your money?

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