Ask LH: How Do I Figure Out My Monthly Food Budget?

Ask LH: How Do I Figure Out My Monthly Food Budget?

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)

Dear Rookie,

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:

If readers have additional food budget tips, let’s hear them in the comments.

Cheers Lifehacker

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  • First you need to understand how much you’re spending. I use thebirdy for that and log every single expense into that. Then I go Oh I spent 500 bucks last month on groceries.. My goal is to spend 450 this month.. and lower expenses accordingly.

  • Just get the software YNAB (You Need A Budget).

    If you go over or under in the budget, it gets forwarded onto the next month and you can adjust the budgeted amount if need be.

  • In my budget, I have separate entries for Groceries and Eating Out. With Groceries, I entered an average, normal amount for the month (allowing for four and a bit weekly shops). If I underspend on Groceries, it’s usually because I’m Eating Out more and the leftover goes to Eating Out or something else. If I overspend, I deduct that much off my Eating Out limit, and towards the end of the month I try to cut back on Eaiting Out, which is easier to do than Groceries.

  • We’ve been budgeting the food for years. To figure out the amount, you can start with an average of what you’ve spent in the last few months. You need to know, so keep track. Credit makes it hard to keep to budget, so if at all possible, open an bank account for food and deposit your preset amount on it. Link it to your debit card and use only that to buy food. That way you can very easily figure out how much is left for the week or month. To keep to budget you may have to get creative towards the end of some months, that’s the whole point, eventually you will adjust your habits. You can always adjust the amount down the track.

  • honestly, it’s not about how much you spend on grocerys; but how you spend.. Shop @ aldi & local markets & you’ll save a stack of money compared to shopping at the major supermarkets (who ironically spend big $$ advertising how cheap they are)..

    My partner & I spend about $75-$100 / week on groceries using this method & we eat very well.

  • Envelopes. The answer is envelopes. At lease when you’re starting out.

    Let me explain. For items that you spend your money on more than once per pay cycle, (ie – not bills etc) it’s much easier to keep track of your spending if you use cash. You can see what you spend and what is left, because it’s right there in front of you.
    But it becomes even easier to stick to a budget when you have a different pool of cash for each part of your budget, instead of one huge swamp.

    This is where the envelopes come in. One envelope for grocery money, one envelope for dining out, one for entertainment, one for petrol, etc.
    You can use whatever categories you want to, but having it broken down into categories really helps to keep you aware of your spending habbits versus goals.
    And it’s less tempting to spend that little extra today and kid yourself you will make it up later.

  • Love the envelope idea smurfydog! My mother used that for years when I was younger and I always found it fascinating watching her juggle the envelopes and the cash to make the budget work. It’s simple but extremely effective and we managed to survive for years like that through some very tough times.

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