How Much Money Should You Spend on Groceries?
How Much Money Should You Spend on Groceries?
“How much should I be spending on groceries?”
Whenever I work with a new coaching client and we begin looking at their budget, that question usually comes up. In fact, it is one of the most common questions I get, so I’m willing to bet you’ve asked it before.
Maybe you feel like you spend too much but can’t quite seem to cut back. Or perhaps you’ve never really paid attention to how much you dish out on groceries each month. Maybe you’re trying to put an end to the paycheck-to-paycheck cycle, and you’re evaluating where all your money is going for the first time. Whatever the reason, you’re wondering what is an “acceptable” amount to spend.
It can be hard to gauge what you “should” be spending on groceries. After all, many factors affect what anyone or any family spends — not just on groceries, but on anything for that matter.
Harder than coming up with the ideal amount to spend on groceries is trying to stick to it. I don’t think people intentionally overspend on groceries. They just buy what they buy, and figure it is what it is. I mean we are talking food; we all have to eat, right?
Well, yes, we do. BUT if you take an “it-is-what-it-is” approach, then you aren’t intentionally spending. And if you aren’t being intentional with your money then undoubtedly, you’re not going to be pleased with where that leads you.
And I want to help you prevent that.
In this post, we’ll take a look at how much you spend on groceries, see how it measures up against some guidelines, and we’ll explore some tips to help you save and be more proactive in your grocery-spending.
How much do you currently spend on groceries?
The first step to changing anything is to assess where you are right now.
So…how much do you currently spend on groceries? If you have absolutely no clue, don’t worry; that is not out of the ordinary. More than half of my coaching clients can’t tell me what they spend when we begin working together. And when I first started cleaning up my financial mess, I didn’t know either.
So if you haven’t the faintest idea of how much you spend on groceries, then this is the perfect time to figure it out!
Pull your bank or credit card statements for the last month and add up all your grocery purchases. If you use cash as well, then remember to add those purchases, or estimate them if necessary. If you really want a good idea of your average grocery spending, then go back and look at three months of spending. (But just to get a quick view, one month will work.)
Oh, and pay attention to what month you are using to figure out your spending. If it’s November or December or some other month when you’re buying more groceries than on average, then you might want to look at a different month.
How much money you “should” be spending on groceries
I don’t necessarily like the term “should,” but for lack of a better word, that’s what I’m using. So, how much “should” your family be spending on groceries? There are a few guidelines and standards out there. And taking a look at them can be helpful.
Percentage of your income
One standard you could use is to spend a certain percentage of your income on food. When new budgeters don’t know where to start in terms of establishing limits on their spending, I like to use percentages as a reference.
The recommended percentage for food according to The Total Money Makeover is 5% to 15% of your monthly net income (take-home pay).
Let’s see what that looks like using an average income as an example. According to the U.S. Census Bureau, the median annual U.S. household is $60,336 or $5,028 per month before taxes. Let’s estimate that after taxes, that amount boils down to a monthly net income of $3,771. Using 5% to 15% as a range, then the grocery budget would be between $189 to $566 a month.
To calculate your recommended amount to spend on groceries, first add up all your sources of income to determine your net amount. Next, multiply that total by 5% (or .05) to get the low end of the range and by 15% (or .15) to get the high end.
Now, again, those numbers are just a starting point. If your income is extremely high, then your recommended percentage may be a lot higher than you need to spend. Other factors such as family size and your location need to be considered as well. So figure out the range and tweak up or down depending on your situation.
The United States Department of Agriculture (USDA) issues guidelines on the cost of food. The charts are published monthly and are based on the estimated cost of eating healthy meals and snacks as recommended by “MyPlate” and additional dietary guides.
The result? The recommended amounts are surprisingly generous! The estimated cost of groceries for a family of four (two adults and two children ages of 6 to 11) is $1,068 per month based on the chart’s “moderate” plan.
In calculating the recommending spending for my family — 3 adults, 2 children — the guidelines suggested a cost of $1243. That’s more than double my target spending of $500 a month!
To figure out your estimated spending, refer to the most recent Cost of Food Report. You’ll be able to calculate your recommended amount based on the age and sex of your family members, and you can choose between a thrifty, low-cost, moderate, or liberal plan.
Keep in mind that these charts are based on eating three meals and two snacks a day. Your particular diet and quantity of meals per day may warrant higher or lower totals.
Even though I believe the amounts are on the generous side, I think the chart is worth looking at.
Bureau of Labor Statistics
According to the most recent Consumer Expenditure Survey conducted annually by the Bureau of Labor Statistics (BLS), the average American household spends $7,729 per year ($644 per month) on food — both at and away from home. Based on the average income of the respondents in the survey, $73,573, this amount represents 11% of their income.
This is an average amount and doesn’t take into account family size, region, or exact income. Again, this is just a reference.
Charts and percentages are one thing, and reality is another, so I asked readers on the Hope+Cents Facebook page what they spend on groceries. Here are some examples of what “real people” spend.
So, as you can see, there’s a big range there. A family of six in Denver spends the same as a single person in the Southwest. Many factors determine what is a reasonable amount for any individual or family to spend on groceries. We’ll touch on that in a bit!
My unofficial formula
After working with a lot of couples and individuals on their budgets and after tweaking mine over the years, I have an unofficial formula for grocery spending. I recommend a range of $25 to $50 per family member each week. Monthly, that equates to $100 to $200 per person.
So here’s what that looks like for a few family sizes.
|$100 – $200
|$200 – $400
|$400 – $800
|$600 – $1200
|$800 – $1600
Coming up with your ideal amount to spend on groceries
Grocery budgets can never be one-size-fits-all. But the goal should be to spend a reasonable amount for your family based on your situation.
When trying to establish your grocery-spending, there are a few things to keep in mind that could drive your spending up or down.
Factors to consider
- Location: Obviously, groceries in San Francisco will cost more than groceries in Boise. Take that into consideration.
- Lifestyle / Diet: Strictly organic? Dealing with a celiac allergy? Then your spending may be higher than most of the above references.
- Family size: For obvious reasons, family size, as well as the ages and sex of the family members, come into play. (Feeding three teenage boys is going to cost slightly more than feeding three toddlers.) 😉 But a large family is not a license to go crazy with your budget! Feeding five people doesn’t cost five times the amount of feeding one!
- Your definition of groceries: For some families, groceries means food and household items. For others, it’s strictly food.
Tips for saving money on groceries
There are TONS of ways to save money on groceries, but here are three quick strategies you can implement right away.
Know Your Prices
One of the most powerful ways to keep your grocery spending under control is to be familiar with the lowest prices of your “high-impact” items. High-impact items are those 10 or so things that you usually eat/consume/buy no matter what. They’re staples in your kitchen and are always on your grocery list.
For example, it could be a particular meat, a type of cereal, bread, yogurt, etc. Everyone’s high-impact items will be unique, but we all have them. And because we typically buy our high-impact items frequently and regardless of cost, learning to strategically buy them at their lowest prices can significantly reduce our spending.
The best way to learn the prices and to begin documenting them. Grocery store prices are on a cycle, and the same item is sold at multiple price points during the cycle. Your goal is to buy your impact items at the lowest prices of their cycle and to buy enough to last until the next time the price is low. That way, you’re only purchasing your staples when there’s a good deal!
Shopping this way does require a shift in your approach and habits, but it acts as almost a price guarantee. Also recognize, that the lowest price for an item may not be at your regular grocery store. For example, milk in my area is often the cheapest at the gas station. So be open to purchasing your high-impact items at an alternative store if it’s more affordable and makes sense in your routine.
Sitting down and planning out your meals for the week can do wonders to stretch your grocery budget and prevent you from overspending. It also helps you keep your food waste to a minimum. I hate how much food I waste when I don’t take the time to plan out meals!
Meal planning doesn’t have to be complicated. Set aside some time to do it. Then, starting with what food you have on hand and next looking at what’s on sale at the market, come up with the meals you plan to make for the coming week.
You can simply write your meal plan down. If you like the idea of meal planning but don’t want to spend time on it, consider $5 Meal Plan, a meal-planning subscription service. For $5 a month, you will receive a weekly plan for affordable meals and snacks. Each meal is designed to cost $2.00 or less per person to make. $5 MealPlan offers a free two-week trial, so you can test it out first.
Shop with Cash
I know using cash almost seems a way of the past, but consider buying your groceries with cash. It will change the way you shop.
If you walk into a store with $150 in cash and a goal to keep your spending under that amount, you will shop differently than if you went in with the same goal but had your debit and credit cards. With your cards in hand, you might walk out with $175 of groceries, but with cash, you won’t have that option. Suddenly, you’ll be a little more judicious with what makes its way into your cart. Try it!
(Looking for another way to reduce what you spend on groceries? Try your hand at couponing.)
Use some trial and error
When trying to come up with what amount you should spend on groceries, start somewhere, and then see what is comfortable for you. If you feel like your spending is too high, challenge yourself to reduce it by 10% each week until you reach your target spending range.
Don’t expect to start spending half of what you spend now overnight. The key is to put in the effort and gradually make changes. You’ll see the results of your hard work, which will motivate you to keep trying.
And give yourself a little grace. If you overspend one month, it’s okay, try to do better next month. Track your grocery spending while you try to reduce it so that you’ll be able to gauge how you’re doing.
How much do you currently spend on groceries per month? Share in the comments! If you’d like, share your family size and location for reference.