How to Calculate Your Monthly Food Budget
Some recurring expenses in your budget are the same every month, so it’s easy to predict. But some budget items are more difficult to maintain, such as food. After all, food is a must, but there is much more to be spent than is needed – and especially with the onset of the pandemic, this is exactly what many of us seem to be doing. According to a recent survey by LendingTree , spending on food supply, in particular, have jumped 17 percent since the beginning of the pandemic, with 31% of respondents said they “always overspend” when buying products, despite the fact that in general they are less likely to go to the store … If you have a problem with overspending on groceries, with a little research, you can determine a realistic range for your budget and stick to it – even now. Here’s how to do it.
Find the Right Food Percentage in Your Total Budget
When you first set your budget, start by adding fixed costs and savings goals (pay yourself first!). Then see how much you can allocate for variable and discretionary spending. Food will fall into this category and should obviously not exceed your remaining variable cost budget.
Before the pandemic, Americans spent about 10% of their disposable income on food (a historic low; before 1955, this percentage was about 19% ). Five percent of this spending is spent on food at home, and 4.7% is spent on eating out. Overall, food costs have declined over the past few decades.
If you just want a quick gut check, take a look at your past food expenditures. What percentage of your household income goes to groceries, eating out and takeout? If food accounts for about 10% of your after-tax and fixed-cost income, your food costs are about the same as the average person. Spending more or less may mean nothing because everyone is different, but you can look at your other spending categories to see if there is any imbalance.
If you want to refine your plan or compare your spending with some of the actual food budget figures, let’s move on.
Compare your spending on food with others
If you need more details, the USDA recommends weekly and monthly food costs at four different levels. These meal plans are the backbone of the Supplemental Nutrition Program (SNAP), formerly known as food stamps. These meal plans represent what the USDA estimates represent the cost of a “nutritious diet” for households at parsimonious, inexpensive, moderate, and liberal levels of costs.
A Lean Eating Plan is good for your health, but it is cheap and designed for people with minimal resources (this is the only thing SNAP payments are based on). Low to moderate cost plans are 30% and 63% higher than the Savings plan. A liberal is twice as expensive as frugality. None of these plans include meals outside the home, such as take-out meals.
You may be surprised by the recommendations. The Lean budget for a family of two under 50 is $ 402.20 per month; The Liberal Meal Plan budget is $ 798.70 for the same family of two as of September 2020 . (You can find the most recent monthly reports here .)
Track your expenses and update your budget
If you’re still having trouble picking the right number for your budget, consider starting from scratch . Instead of boiling down grocery shopping to a figure that might seem arbitrary, spend a month tracking what you buy – and how many are actually being used. Then use that amount as a basis for your budget for the next month and keep adjusting based on the season or home events. This can help you view your grocery purchases separately from the money you spend on out-of-home dining or delivery.
Once you know which range is normal for your family, you can take steps to reduce that amount, if necessary. You may find that following coupons is enough, or you may find that meal planning is the best way to keep your budget on track. If you eat a lot of takeaway or delivery and find that it doesn’t fit into your budget, you can find ways to cut it without cutting it entirely.
This post was originally published in February 2012 and was updated in October 2019 by Lisa Rowan and January 5, 2021 by Joel Cunningham to include updated context and more complete and accurate information.