No one needs to be reminded about high grocery prices. The days of filling a shopping cart with expensive delicacies and “extra” treats are distant memories. In this economy, we need to be more budget-conscious. That takes discipline and awareness. This article explains how to plan for the typical cost of groceries per month. Some key takeaways:
- The United States Department of Agriculture (USDA) publishes monthly food reports that provide the typical cost of groceries per month.
- Creating a grocery budget is the easy part. Staying within that budget while you’re shopping is where people sometimes stumble.
- Your grocery budget should include all food costs. Forgetting to account for take-out or dining in is a common mistake.
Food prices aren’t likely to come down any time soon, but a sensible grocery budget can still help you feed your family without sacrificing nutrition or snacks. Think of each trip to the market as a strategic operation. You’ll need to know how much you can spend, where you can find the best deals, and when to go shopping to take advantage of lower prices.
The Average Cost of Groceries Per Month
The United States Department of Agriculture (USDA) publishes monthly food reports that provide the typical cost of groceries per month. The reports show thrifty, low, moderate, and liberal food plans you can use to calculate your grocery budget. They also have a category for Hawaii and Alaska food plans because prices are significantly different in those states.
USDA food reports also break down costs by age and gender. For example, a family of four could be made up of a male adult, a female adult, and two children. Food consumption projections for adults is based on their age. Children have their own separate category. Using the numbers on each report, you can see the range of what you can expect to pay (Range USDA Thrifty – Moderate Food Plans):
- Single person: $250-400 per month
- Couple (two adults): $500-700 per month
- Family of four (two adults, two children ages 6-11): $800-1,200 per month
The thrifty plan represents the most economical approach while still meeting nutritional guidelines. The liberal plan allows for more convenience foods, organic options, and dining flexibility. Low and moderate food plans fall somewhere in between. These ranges exist because food costs differ depending on where you’re from and what you eat.
Food costs in urban areas tend to be 10% to 15% higher than food costs in rural areas, while costs in coastal cities are generally the most expensive. Household composition plays a part because teenagers eat more than small children or elderly adults. You also need to account for lifestyle, like cooking at home vs eating out, and the dietary needs of your household.
What’s a Realistic Grocery Budget for You?
Learning how to budget groceries is an exercise in handling financial stress. Food, unlike other items we can purchase in stores or online, is not optional. That certainly adds to the stress caused by high prices, but working with a grocery budget can alleviate some of that. Here are a few steps you can take to ensure you’ll be able to afford your next grocery run.
Step 1: Track Your Current Spending
All journeys begin with a first step. In this case, you need to calculate your current average grocery cost per month. Follow the steps below to figure that out.
- Gather your most recent bank and credit card statements
- Separate your grocery purchases from dining out and convenience store visits
- Include any warehouse club purchases and specialty food stores
- Calculate your monthly average to establish a starting point
Many people discover they spend 20-30% more than they estimated when they track actual purchases. This reality check is crucial for setting achievable goals.
Step 2: Factor in Your Other Expenses
Calculating a grocery budget isn’t a stand-alone action. It’s part of your overall financial planning. With that in mind, your next step is to factor in other expenses:
- List fixed expenses: housing, utilities, insurance, debt payments, etc.
- Calculate variable costs: transportation, entertainment, clothing
- Determine the discretionary income available for food
Don’t forget to leave a margin for unexpected expenses. You could cover them with the 20% set aside for savings, but it couldn’t hurt to have an emergency fund and insurance to cover any health, auto, or home-related expenses.
Step 3: Adjust for Your Lifestyle and Goals
Your lifestyle and life goals are factors when calculating your average grocery cost. For instance, individuals on debt repayment plans will have less money to set aside for other expenses. Prioritizing lower-cost meals and eliminating expensive “wants” can help you achieve your debt repayment goal. The same principle applies to savings goals.
Other considerations for this step are your work schedule and health condition. Busy professionals with career advancement goals often need to eat “on-the-go.” Shopping for convenience foods can eliminate take-out expenses. It can also help you eat healthier because you’ll know the ingredients of everything you put into your body.
Step 4: Plan for Regular Adjustments
A grocery budget is a living document. In other words, you don’t just do it once and expect things not to change. Several life circumstances could dictate a modification of your original numbers. Do the following to ensure you look at that regularly:
- Review your spending monthly for the first three months
- Adjust for any seasonal price fluctuations
- Account for household changes (new family members, dietary restrictions)
- Modify your budget based on income changes or financial goal shifts
Don’t make the mistake of underestimating food costs. You’re better off with a higher set-aside than a lower one that requires additional funds every month.
Tips for Grocery Shopping on a Budget
Creating a grocery budget is the easy part. Staying within that budget while you’re shopping is where people sometimes stumble. When you go over budget, you run the risk of having to draw from your rainy day fund. The following steps can help you avoid that:
- Make a list before you go shopping: Knowing what you need or want to buy, and purchasing only those items, will help you stay on budget.
- Raid your pantry first: Use what you have on hand before buying new groceries. You can also plan meals around what’s in your pantry.
- Change where you shop: Your favorite foods might be available for less at a discount retailer, warehouse club, or farmers market.
- Choose generic/store brands: Store brands can be 20% to 70% cheaper than name brands. Test this with staples like rice, pasta, or dairy products.
- Use discount apps and digital coupons: Many stores offer coupon tracking as part of their app experience. Some even couple that with a rewards program.
- Avoid impulse buys: Never go shopping hungry. Eat before you go and stick to your list at the grocery store.
- Weigh the cost of delivery vs pickup: Grocery delivery services are convenient, but most cost money. Would it be more cost-effective to shop in person? On the other hand, delivery or pickup orders can prevent impulse shopping, keeping you from overspending.
How to Lower Your Grocery Costs Long-Term
Aside from budgeting, there are several ways to lower your food costs. Most of these are common sense, but that doesn’t make them any easier to follow.
- Cook at home: This is the simplest and most obvious way to save money. Cook at home to eliminate take-out and dine-in expenses.
- Batch cook and freeze meals: This is an extension of the first tip. When you cook, batch cook and freeze meals to get you through the week.
- Shop in bulk: Non-perishables and family staples can often be bought in bulk at warehouse or discount stores.
- Reduce food waste: Throwing away spoiled or expired food is essentially tossing your money into the trash. Try to avoid that by storing food properly and repurposing leftovers before they go bad.
- Grow your own produce: This may not be possible for some people, but it can save you money if you’re able to grow your own produce.
How Much Should Different Households Budget? Quick Reference Guide (range USDA Thrifty – Moderate Food Plans):
Single Adults
- Budget range: $250-400 monthly
- Lower end: Basic nutritious meals, limited convenience foods, generic brands
- Higher end: Organic options, specialty ingredients, some prepared foods
- Considerations: Smaller package sizes often cost more per unit; batch cooking helps manage costs
Couples
- Budget range: $500-700 monthly
- Lower end: Home cooking focus, strategic shopping, minimal dining out
- Higher end: Variety in meals, organic/specialty items, moderate convenience foods
- Considerations: Can take advantage of bulk buying more effectively than singles
Families of Four
- Budget range: $800-1,200 monthly
- Lower end: Careful meal planning, bulk cooking, generic brands, minimal processed foods
- Higher end: Name brands, convenience foods, dietary accommodations, occasional dining out
- Considerations: Teenage appetites significantly increase costs; young children eat less but may be pickier
Large Families (5+ people)
- Budget range: $1,000-1,600 monthly
- Strategies: Bulk buying becomes more cost-effective, batch cooking is essential, focus on filling, nutritious basics
- Considerations: Cost per person often decreases with larger families due to economies of scale
Common Grocery Budgeting Mistakes to Avoid
Forgetting to account for take-out or dining in is a common mistake when creating a grocery budget. You’ll want to separate household supplies that you buy at the supermarket from food costs. They should be in a different bucket. It’s also best to never shop without a plan and always set a realistic budget that doesn’t underestimate food costs.
Keep in mind that budgets are dynamic. Ignoring fluctuating prices due to inflation or seasonality can be dangerous. Staying on budget when you shop for groceries could make this your best year yet, even with the higher food costs, provided you follow the steps outlined in this article. Speak with one of our financial planners if you have further questions on this.
