How much you should spend on groceries each month will depend on factors such as the number of people living in your household, your lifestyle and even your dietary preferences. There’s no way around the fact that food is a significant line item when it comes to budgeting, but there are ways to make it easier on your budget than throwing caution to the wind and getting takeout three times a week.
Whether eating at home or out on the town, it’s helpful to give yourself some guidelines so that you and your bank accounts are on good terms. We cover some rules of thumb for how much to spend on food a month so you can better ensure you’re staying on track with your budget.
What Is the Average Cost of Groceries Per Month?
The average U.S. household spends $7,316 on food every year, according to a recent Bureau of Labor Statistics (BLS) consumer expenditure survey . That amount — about $609.67 a month, or $152.42 each week — represents nearly 12% of consumers’ income.
Of course, the amount people spend on sustenance can vary widely, depending on age, household size, dietary restrictions and where they live. For instance, the consumer expenditure survey noted that single-parent family households with children spent more on food compared to single folks. Your eating habits, including how often you dine out or order in as well as a penchant for impulse grocery buys, also affect your bottom line.
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What Should My Monthly Grocery Budget Be?
When it comes to how much you should spend on groceries each month, the answer will depend on your situation. However, you can use the following guidelines to help you develop a reasonable monthly allowance for your grocery budget.
By USDA Guidelines
The U.S. Department of Agriculture offers a series of monthly food budgets that represent the cost of a healthy diet at four price levels: thrifty, low cost, moderate cost and liberal. These budgets can serve as a benchmark against which you can measure your own monthly spending on food.
Keep in mind that the USDA assumes that all meals and snacks will be prepared at home, and that costs will vary by age, gender and family size. It updates each plan to current dollars every month using the Consumer Price Index for food.
For example, in August 2021, the USDA pegs the monthly cost of food for a female who is 20 to 50 years old at $209 for the thrifty plan. For females ages 19 to 50, it’s $225.30 for the low-cost plan, $275.40 for the moderate-cost plan and $352.10 for the liberal plan.
The USDA budgets more for couples within the same age ranges. For instance, a household of two might spend $459.80 on a thrifty plan, $495.66 on a low-cost plan, $605.88 on a moderate-cost plan and $774.62 on a liberal plan.
By Household Size
Your household size should determine how much you spend on groceries each month. As you saw in the USDA guidelines above, different household sizes as well as the ages of individuals affected the amount spent on food each month.
Let’s say you are a family of four with one child aged 6 to 8 and another between the ages of 9 to 11. According to the USDA guidelines, you might spend $842.70 a month on a thrifty plan, $885.60 on a low-cost plan, $1,093.20 on a moderate-cost plan and $1,339.40 on a liberal plan.
The USDA guidelines can provide a starting point for a food budget, but they don’t consider all the variables that can affect cost. That’s why building a personal food budget while using these numbers as a benchmark is best. To do so, you can look at your past monthly spending on food and then compare that number to the USDA food budget guides.
If your spending is much higher than the USDA’s estimates, it’s essential to determine why. It could be due to unavoidable factors like where you live, or it may stem from discretionary decisions, such as eating out at restaurants. If it’s the latter, it may be helpful to look for ways to cut back on spending, so you can redirect money to other goals like building an emergency fund.
How Dining Out Fits Into the Equation
The USDA’s budgets only consider food prepared at home, yet a food budget will likely also need to account for meals eaten at restaurants. The BLS reports that the average household spends $4,942 a year on food at home and $2,375 a year on food away from home (note that the food away from home figure was a decent amount lower than in previous years, likely due to the pandemic).
Eating at restaurants is more costly than preparing food at home, so restaurant spending can be an excellent place to start making cuts when looking for wiggle room in a food budget.
Strategies to Keep Track of Your Food Spending
There are a number of budgeting strategies that can help you keep track of your spending. Here are some to consider if you’re trying to keep better track of your food spending:
The 50/30/20 Rule
The 50/30/20 rule is a simple strategy for proportional budgeting that breaks down a budget into three categories of spending. Here’s how it works:
• 50% goes to essential needs. These are necessary expenses, such as rent, groceries and health insurance.
• 30% goes to discretionary spending. These are fun purchases that you don’t technically need to survive.
• 20% goes to savings. The 50/30/20 method separates discretionary spending and saving for financial goals, such as retirement, a down payment on a house or paying off debt faster.
The 50/30/20 rule is a relatively simple form of budgeting, so it can help individuals keep their eyes on the big picture and avoid getting bogged down in minute details. That said, because it isn’t detail-oriented, it can be hard to pinpoint problem areas, such as places where overspending occurs.
The Envelope Method
The envelope method seeks to make budgeting more concrete by limiting most spending to cash transactions. It works by allocating a set amount of cash each month to different spending categories, such as groceries or entertainment.
At the beginning of the month, write each category on individual envelopes. Decide how much you want to spend in each category for the month, and put enough cash to cover that amount in each respective envelope.
This method takes discipline. You can only use the cash in each envelope to make purchases in that category. When the money’s gone, it’s gone for the month. That means you can no longer do any spending in that category.
A zero-based budget is one in which you assign each dollar of your income a specific purpose. For example, you may decide to spend $1,000 on rent, $325 on food, $200 on student loan payments, $100 on savings and so on, until there are zero dollars left without a job to do. While this type of budget can take a lot of effort, it can help you think carefully about every dollar you spend and be mindful of setting aside savings.
By getting your budget on track with a checking and savings account with SoFi, you’ll have enough to work toward financial goals, like paying off student loans and saving for retirement.
Tips to Help Reduce Your Food Spending
Whether your food budget has gone out of control or you’re interested in spending less in general, there are several ways to lower your food budget.
Try Meal Prep
Shopping at a store without a plan can be a budget-buster, as it can lead to unneeded purchasing. To stay on track, create a meal plan that lays out breakfast, lunch and dinner for every day of the week.
Once you’ve created a menu, check to see what ingredients are already in the kitchen. Make a list of the items you’re missing and the amounts that are needed. Buy only those items at the store.
Consider planning some meals that have overlapping ingredients, as buying ingredients in larger quantities can be cheaper. You’ll also want to consider preparing meals you like and can cook relatively quickly. That way, you’re not tempted to get takeout one day when you’re tired and don’t feel like cooking.
Take Advantage of Coupons
Using coupons can help buyers save money at the checkout counter. Grocery stores or major brands often offer discounts in coupons — look for them online, in a grocery store flyer or in the mail.
Before you buy, however, make sure you actually need the food item. If there isn’t anyone in your household who will drink that carton of oat milk, it’s better to leave it on the shelf than to cash in your coupon.
While taking advantage of an individual coupon may not add up to much savings, using many coupons over time can start to open up space in your food budget. The same is true of buying store brands, which may be a dollar or two cheaper than their name-brand counterparts. Over time, and multiple purchases, those couple of dollars can add up to significant savings.
Having meals or ingredients ready in the freezer encourages you to eat at home instead of making the excuse of having nothing to eat in your house. It can be as simple as buying frozen vegetables, some form of protein or straight-up frozen meals (it’s still cheaper than dining out). You can even make your own freezer-ready meals by cooking additional portions of meals — eat some for dinner, then freeze the rest for later.
Shop at Discount Grocery Stores
The cost of food can vary widely from store to store, so consider visiting different stores to find budget-friendly prices. A great way to check if a grocery store offers lower prices is to look at their weekly flyer. You’ll be able to find sales and other advertised goods and identify which stores offer the best deals on items you’re most likely to purchase.
Some stores may offer certain foods in bulk, such as grains, nuts, coffee and dried fruit, which can be cheaper than buying the same packaged food items.
Getting a handle on how much you spend on food can help you build a larger household budget. That way, you may be able to set aside money for savings or other financial goals.
As you can see, there’s no hard-and-fast rule for how much you should spend on groceries each month, as that varies based on your unique situation. However, everyone can likely benefit from giving their grocery budget a hard look and seeing if there’s anywhere they’re overdoing it.
Envelope and spreadsheet averse? Another way to track your grocery budget is with SoFi Relay’s money tracker app, which lets you easily set monthly spending targets and see where you’re spending the most.
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