How do you create a food budget that works? I mean, you could just buy what you want and let the chips fall where they may. You could buy only what you need, but sometimes, uh, you really need a gallon of high-end ice cream.
As boring as it sounds, having a food budget — a distinct allowance for grocery shopping — really is important. In fact, it's key to living within your means and achieving your financial goals. Without a food budget, it's very easy to let spending get out of control without a lot to show for it.
Here is my food budget 101 — start from scratch to achieve a budget that really works for you.
The Steps to Starting a Budget
Starting from scratch? Start here.
1. Choose a starting point.
At some point, you have to choose a number. I prefer using the USDA Food Cost reports as my guide. The report accounts for every member of your family and considers four different types of budgets to help you come up with a realistic number. Our tax dollars have already paid for the research, so why not benefit from that data?
2. Start tracking your spending.
You can save your receipts after each shopping trip and add them up the old-fashioned way, or you can track your spending in an app, such as You Need a Budget or Prosper. Either way, start keeping track of how much you spend so that you can know if your target is a realistic one for you and your household.
If your spending is well under budget, then you can afford to splurge a little more often or divert those funds to other financial goals. If your spending is over budget, then something has got to give: Either you start spending less or you find ways to increase your grocery allowance without sending your larger budget (housing, transportation, etc.) out of balance.
Need to get under budget? Consider these strategies for adjusting your shopping to your budget.
1. Make peace with compromise.
Perhaps you continue to buy your favorite coffee, but you decide to make more meatless meals. Maybe you can still indulge in a good steak dinner, but you save it for special occasions. If you're consistently over budget, it's time to make some compromises where you can.
2. Shop the sales.
A penny saved is a trip to France — eventually. By shopping the sales (instead of choosing groceries on a whim) you can still eat well without paying top dollar.
Speaking of sales, if you know you'll go through a bag of steel-cut oats every week and they happen to be on special, buy a few bags to take advantage of the deal. As long as you can use the hoard before it goes bad, you may as well buy it while it's on the cheap.
4. Choose your supermarket wisely.
While you can shop on a budget at higher-end stores, just know that some stores simply offer better prices than others. I recently started tracking prices at the stores where I regularly shop and I was stunned to realize that some were really not competitively priced. As a result, I'm changing up my go-to grocery store.
More on Shopping on a Budget
Creating a grocery budget isn't just about picking a number out of thin air and hoping the numbers magically align. You gotta finesse it. Thankfully, finessing your budget and making it jive with reality isn't rocket science. You can do this.
Do you have strategies or tools for budgeting around food?