How Much Are You Spending On Food?

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Does our family spend too much of our income on food?

As we review our Financial Progress Report Series, we have found that our food expenses continue to be one of our largest spending categories. Our food category includes groceries, dining out, coffee, alcohol, candy & pop and potluck/catering. Of all these subcategories our grocery, dining out and coffee expenses make up a large portion of our total expenses.

Considering that food plays an important role in human survival, we understand and expect that food will be a good portion of our budget. However, are we doing everything we can to keep our diet and budget healthy?  After using coupons, buying items on sale and using rebate apps such as Ibotta, is our annual food expenses higher or lower than the average? Are there more steps we can take to cut down on our food expenses?

These questions have been on our mind tremendously lately and it is about time that we find some answers.

 

Average Cost of Food

According to Value Penguin’s research, the average annual U.S. Household Food Budget in 2013 was $6,602. The food budget was then further broken down by food consumed away from home and food consumed at home. At that time, the U.S. household spent an average of 60% on food consumed at home and 40% on food consumed away from home.

 

 

According to The Street, Americans in the 1900s spent almost half their annual income on food consumed at home. However, trends have shown that Americans are spending far less on groceries now than ever.  This can be evident in the consumer’s expenditures report released by the US Department of Labor.

 

 

The average amount of money spent on food at home is slowly decreasing as the food consumed away from home is increasing. Keep in mind that these are average numbers. So if you spend far less or far more than this, there are other factors that impact your annual food budget. Factors such as your geographical location, household size, and household income may increase or decrease your overall food budget.

 

So, how did we compare to the U.S. Average?

After pulling our 2018 annual spending report, we discovered that we spent $4,319.77 on just groceries alone. Our grocery category consists of anything purchased at a grocery store that is intended for breakfast, lunch, dinner, and snacks. We would love to say this is all we spent on food in 2018, but it is not!

When we added our total annual dining out expenses together with our grocery expenses, our total annual amount spent on food increased to $7,998.50. At this point without even adding in what we spent on coffee, candy & pop, potluck dishes, and alcohol, our total annual food cost is more than the 2017 U.S. household average.

As we mentioned earlier, there are many factors that can contribute to a household’s overall food expenses. We determined that our 2018 food spending was well over the 2017 U.S. household average. However, when we consider our geographical location, family size, and household income would we still be higher than the average?

 

Household Size

In 2018, we grew from a family of three to a family of four. We learned from this article, that a traditional family of four spends on average $10,995 or 10.4% of your annual gross income.  If we based our annual food spending off just these averages, we spent less than the average family of four. However, we did transition to a large family size midway through the year which contributed to a lower average.

 

 

While we spent less based on the average dollar amounts, we cannot say the same for our average food spending percentage. As mentioned earlier, traditional families of four spend on average 10.4% of their annual gross income on food. In our financial progress reports, we noticed that our monthly food spending would range anywhere from 6% to 18% of our monthly net income. After comparing our total 2018 annual food spending with our annual gross income we spent an average of 16% on food.   Wow, we are spending 6% more than the average family of four!

However, we must also consider our household income as well as our household size. While we spend less in dollar amount but more in overall percentage with the traditional family of four, how do we compare to those in our same income bracket?

 

Household Income

Going back to the same article written by The Street, we examined the five income levels and determine which of the earners we could most closely relate to. Based on our annual gross income we find ourselves between the Second 20% and the Third 20% tier of earners. However, we are trending more towards the Third 20% tier of earners.

This income bracket earns an average of $52,431 a year. On average they spend a total of $7,061 annually or 13.4% of their annual gross income on food. When taking this into consideration, we are definitely spending over the average and even if we were to make as much as these typical earners, our food percentage will only drop down to 14.9%.  While more income would help bring our percentage down, there are still additional factors that are contributing to our higher than average food spending.

 

Geographical Location

We live in a geographical area that is considered the heart of are Michigan area. The area is surrounding by multiple inland lakes and a variety of fruit and vegetable farming fields. Due to the nature of our geographic location, we have assumed that with easier access to farmed produce, we have lower food cost overall.  Since we have learned that our annual food spending is over the average for similar household size and income those previous assumptions are now changing.

At this point, we needed to learn more about what the average food expenses were in our area. During our research, we found this website that allows you to calculate the annual cost of living based on your location and family size. This tool was designed to assist families in budgeting for a modest but adequate standard of living. You can easily view a projected monthly or annual cost of living based on your family household size and geographical location.  Since we are looking at our overall annual cost of food, we chose to display our annual results below.

 

 

As a reminder, we spent over $7998.50 on food in 2018. Based on previous research we found that we spent anywhere from 3% to 6% more than the U.S. Household average compared to our household income and size. However, this did not appear to be the case when comparing our geographical location. According to this budgeting tool, we should plan to spend $8,318 a year on food in our area. We were surprised to find that our annual food spending was lower than the expected food cost for our geographical location. In fact, we found this to be a similar trend with each of the different categories that are recommended. Either the actionable steps we have taken to reduce expenses are working or we found a flaw in the formula for this budget tool.

Have you tried out the budgeting tool yet? How did your results compare to your current or previous spending?

 

Our Overall Food Cost Comparison

After researching the average cost of U.S. Household food spending with different contributing factors, we found that we spend more than the average. Compared to similar household incomes and family size, we averaged a higher annual food spending in 2018. However, when comparing our annual food spending to our geographical location we spent less than similar households.

We believe that the use of coupons and taking advantage of rebate apps like Ibotta has lowered our grocery expenses. This is evident in our ability to spend less than others within our geographical location. However, we believe there are more steps we can take to reduce food cost that will bring us closer to the U.S. average or below.

 

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So, what can we do moving forward to reduce our families food cost?

We now have a better understanding of how much we spend on our annual food expenses. This important information will assist us in reducing our food cost. By reducing our food cost, we can then contribute more to our debt repayment and investments. We discovered that we are spending more than the average on food and well that doesn’t sit great with us. Our mission now is to find ways to reduce our overall food expenses while still enjoying our love of food.

We realized that a good portion of our food budget consists of us buying food through dining out services. Our first goal in reducing our food expenses will be to cut down on our annual dining out expenses. This will mean that we will need to prepare more meals at home and this may increase our grocery expenses slightly.

 

Are we ready to begin working towards reducing our food expenses?

Much of the failure that resulted in us dining out more is our lack of planning. We do not plan efficiently for nightly dinners which leave us with having to make last minute decisions. To ensure that we are successful with our goals we will need to make changes and take action. Some of these changes will involve meal planning and meal prepping.

Not too long ago we were planning out our weekly meals and meal prepping on Sundays. Even when we battled those long and exhausting days, we still managed to cook at home. However, as we welcomed our second daughter, we began to struggle more with time management. We started opting in for what was easy and convenient at the time. This led us to sacrifice other financial goals and a healthy diet.

 

 

How are we going to reduce our spending on food?

Moving forward our goal is to begin using a simple weekly meal planner. With just a quick search on Pinterest, we found a few that we love from Our Handcrafted Life and Passionate Penny Pincher.  We can not wait to start utilizing these weekly meal planners and start controlling our food budget.

Additionally, we would like to get a better system down to prepping our food. Since we have such a busy schedule, we need to have easily accessible meals ready to go. Our next goal will be to choose a day that we will prep the majority of our meals for each family member for the week. This will really save us time throughout the week so we can focus on family time and self-care.

Lastly, we are hoping to reduce more than our food budget with these changes. Over time as we adapted poor eating habits, we have gained a few extra inches and pounds.  We were introduced to these tips on how to eat healthier without breaking our budget. We are definitely planning to apply these tips to our next meal planning session and shopping trip.

Have you ever used a weekly meal planner? Did you hate it or love it? What has helped you lower your food spending?