How to Determine your Grocery Budget

Groceries make up a huge part of our monthly budgets. If you are not paying attention, you can eat up all the money that should be going toward saving for emergencies and fun stuff like vacations. To make sure that we don’t overspend and still get to enjoy the most important food, steak, we need to have a handle on how to determine a grocery budget.

Starting Out

For anyone who is budgeting for the first time, it is going to be hard to figure out this number. So while you are tracking all of your spending the first few months, a benchmark is going to be necessary.

Families who have been doing bargain shopping for a while can get their budgets down to $125 per person, per month or lower. If you are just starting out, I recommend you start with the $150 per person per month. And on your first month you may want to throw another $50 in there just to make sure you do not bust the budget.

Getting to Your Long Term Grocery Budget

There are a lot of factors that will contribute to what you spend on groceries. The biggest one is the types of food you prepare at home. If you are big into meat and steaks, then you are going to pay more for those items.

People who want all organic will pay a premium. Right now you can get ground beef for about $4 a pound. Ground beef that is grass fed and grass finished will cost you between $6 and $7 a pound with the same fat content. So the food you buy makes a huge difference.

The method for getting this all worked out is a three-month process. Write down everything you purchase at the grocery store over three months. This includes dog food, paper towels, diapers, etc. All of this is going to be factored into your grocery budget.

Keep track of stuff you purchased that was a splurge item. If you are in the middle of paying off debt or building up an emergency fund, we want to eliminate the splurge items and be boring for a while until we get our goals accomplished.

Once you do this for three months, you can see where you are overspending and know how much your family need to eat well for an entire month.

Getting Your Grocery Budget Smaller Without Sacrificing Good Food

My main goal with grocery shopping is to get to eat steak more often. You might think it is to save money but in the grand scheme of eating, steak is what matters.

To make sure I can eat steak more often and still keep my budget super low I use three methods:

Use Cash Envelopes

Studies have shown that when you pay with cash you spend less. Not only that when you put all your grocery money in an envelope, and you get down toward the end of that money, you know that dinners are going to get very creative for the last few days of the month.

Having the money for the month in cash will prevent you from overspending when you swipe the card. How powerful is the difference between cash and card? When McDonald’s switched to accepting credit cards, they immediately saw a 17% increase in sales.

Shop at the Discount Stores

Aldi is my favorite grocery store. While shopping at Aldi is an acquired taste for some, it is significantly less than doing your everyday shopping at your local grocery store. If you do not have an Aldi in your area, then I recommend shopping with Wal-Mart.

The person who shops at Wal-Mart will save 20% over the standard grocery store. Aldi shoppers will save close to 30% over shopping at a standard grocery store.

Use Coupons

Now Aldi does not have much that you can use coupons on, but as I explain in my post on how to coupon, you can get some amazingly good deals by couponing.

Currently, I use a slimmed-down approach to couponing. When using coupons I shop at the grocery store that is close to my house, I only use coupons that I can store on my phone or can be printed off my computer, and I only purchase items that end up being at least 60% off after coupon. That seems to be the threshold where I can guarantee that an item is cheaper than what I can get it for at Aldi.

If something does not meet those criteria, then I buy it at Aldi. I do make some exceptions on meat. There are times when meat goes on sale that it beats the Aldi price so I will purchase that without the 60% off rule. You do need to know what your discount store charges for items like this.

Add Some Excitement

I know a bunch of people who have added ready to cook meal kits to their monthly grocery budgets.  What you do is subscribe to one of the services like Blue Apron or Hello Fresh and they send you a box with everything you need to cook several meals.  This includes recipes and even the smallest ingredients and spices.  By doing this you can easily introduce new meals into your diet without having to spend a fortune on all the different ingredients to make these meals.

Now Go Get It!

Using these tips, you can not only eat very good food you can also make sure you are not overspending on that food. So take the plunge, get your grocery budget under control and make sure you aren’t eating your retirement.

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