Dear Lifehacker, I'm finally setting up a budget, and while budgeting regular expenses like bills is easy, I'm having trouble with food. I know in general what I spend every month on groceries, but it also varies a lot. Unlike my utility bills, which I can easily compare to other services to determine if I'm overspending, it's hard to tell if I'm spending too much on food. Is there a magic formula for creating a more accurate grocery budget? How much should I really be spending on food? Thanks, Rookie Budgeter
Photo by Timothy R. Nichols (Shutterstock)
Figuring out what to put on the line next to "food" in your budget can be really tricky, because although food is a necessity, how much you spend is up to you — there's really no right or wrong number. You can spend a huge proportion, or you can spend as little as $3.50 a day. That said, you do have to create a budget if you want to make the most of your money.
Find The Right Proportion For Food Spending
When you first set up your budget, start out by adding your fixed, necessary expenses and your savings goals (pay yourself first!). Then see how much you can allocate to variable and discretionary expenses. Food will fall into that category, and obviously shouldn't exceed your remaining budget for variable expenses.
Australians are spending less on food in recent years than we used to, but food still typically comprises 17 per cent of the average Australian household budget. That doesn't necessarily mean that this is a sensible proportion — in some countries, the figure is closer to 10 per cent. But it does give you a benchmark of sorts to compare yourself against.
To see how you measure up, take a look at your past food spending. What percentage of your take-home income goes to supermarket shopping, dining out and takeaway meals? (Make sure you include the latter two: they will very likely account for quite a large proportion.)
If you're around 17 per cent, that's pretty typical. If it's well below, you're already spending pretty effectively. If it' way higher, you might need to rethink your shopping and dining out strategies.
Rethink your shopping list
We've offered plenty of hints in the past for improving the value you get from your food budget. If you feel you're spending too much and want to get closer to that 17 per cent figure, these tactics can help:
- Our top 10 tips for supermarket shopping has lots of great advice, including perennial favourites such as making a list and not shopping hungry
- Shop less frequently. That forces you to plan more carefully and use what you have.
- Experiment with house brands. Not everything will be good, but in many cases you really can't spot the difference. Work through your staples and identify where brand-name goods are a waste of money.
- Careful planning means you can eat like a foodie without spending like one.
If readers have additional food budget tips, let's hear them in the comments.
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