Are you spending $1300 on groceries every month? Do you want to save money on groceries every month? USDA (United States Department of Agriculture) publishes a cost of food report every month. This report outlines what Americans are spending on groceries.
As a FIRE seeker, I always look at this report and wonder why are people wasting money on groceries? Don’t get me wrong I am a foodie and I love good food but that doesn’t mean that I should waste money on buying groceries. In this article, I will give you some tips to save money on groceries every month.
We (my wife and I) strive hard to keep our grocery budget below $700 every month. I have also done several experiments to see what makes the grocery budget shoot up. Based on the above report these numbers are really frugal for the family of 4 (My wife, 2 kids (14 and 11) and me). That said, we have conducted several experiments to find a balance between our time vs. money.
As a result, we found we can spend almost 2x of our grocery budget (from $700 to $1300+) and we barely save 60 mins in a week. To me, that’s not a great deal I can easily spend 60 mins in doing the research and preparing my meals and invest the extra money.
It is really hard to maintain your family grocery budget below the average American family. But with a bit of extra effort it is doable and here is another bonus – Did you know extra $600 a month invested would be $750,000 in 30 years? I think knowing this you would be motivated to do the right thing and save money on groceries.
What does an Average American Spend on Food Every Month?
The report published by USDA goes in great depth of details. It also shows how food expenditures differ based on age, gender, and family size.
I’ll use the numbers for a family of 4 (as it applies to my family and is easier for me to draw comparisons with) but you can find other numbers from the USDA Cost of Food Report.
This report goes into 4-plans – Thrifty, Low-cost, Moderate-cost, and Liberal and the monthly costs for a family of 4 (with 2 big kids) are $646.80, $849,80, $1062.10, and $1287.50 respectively. As you can see there is a large gap between the lower end and the higher end of the expenses.
Comparing these numbers with a grocery budget of $700/month for my family makes me extremely proud. I am glad we are doing something right. That said, there are other factors that can affect the amount of money you spend on buying food like the cost of living, your goto stores, and if you buy domestic vs. imported food, how much time can you spend in researching and food prep.
In my case we live in the Greater Seattle region, a fairly high cost of living area but not insane like the Bay Area or New York. There could be other factors that might affect the cost of food but I urge you to try and I am sure you’ll be able to cut 20% or more on groceries with a little effort.
How to Save Money on Groceries and Eat Healthier?
Saving money is hard especially when it comes to food. I bet you want to feed the best possible healthy and nutritional food to your family and loved ones. So do I?
Why is saving money on food every month important?
I started focusing on physical health about a year ago and the most important realization was to stay healthy. It’s 70% food intake and 30% workout. It occurred to me there is a big similarity between financial health and physical health.
As consuming less food is crucial for staying healthy, consuming (spending) less money is vital to financial health. The less you spend now, the less you need to retire. The less you need to retire the sooner you can actually retire.
The key thing is to balance the grocery budget with a healthy, nutritional diet. After all, you can’t eat Ramen and noodles (my Indian friends read it as Maggi Noodles) for a long time. So, here are some best tips on how to save money on groceries and household items and live healthier.
Tips for Saving Money on Groceries Every Month
We’ve made several versions of grocery budgets and went back to the drawing board quite a few times before we actually found the plan that works for us. It took us a few years to reach here but you can start saving money on groceries today. I will share with you our secrets to keep our grocery budget at about $700/month.
Like everything else in life, you need a plan. No, I don’t mean a plan on how to cut your food budget but a meal plan.
Build a Meal Plan
I bet this happens to you too – when you are ready to make a meal but the ingredients you need aren’t in the pantry. There is so much food in the pantry and fridge just not what you were looking to make that special meal.
But this wouldn’t be the case if you had a meal plan that lays out all the meals that you plan on cooking. That would also save those last-minute runs to the grocery store which usually end up in a lot costlier than they should be.
If you have kids I recommend including them in the meal planning. This will reduce disagreements and arguments later on. If you have kids you know what I am talking about.
Start Taking Lunch From Home
Eating out is the biggest enemy of your food budget. When I was working for Microsoft a few years ago I used to eat my lunch out every day and it cost me $8/day on average. But now I make my salad from home and take it from home and the cost is less than $2 for both of us.
I get organic Romannie lettuce, carrots, tomatoes, eggs, nuts, and chicken in bulk from Costco. Every evening after dinner one of us will cut the veggies and the other one will marinate and grill the chicken. We prep our salad in the night before we sleep so in the morning we just have to put it in a box and our lunch is ready.
Saving money is a big benefit of taking lunch from home and the other benefit is you know exactly what is going inside your body. You know all the raw ingredients unlike getting lunch at a restaurant. Overall this simple step could be a big money saver on your food budget.
Make a shopping list before you go to the store
The worst mistake is going to a grocery store without a preset shopping list. There are several shopping list phone apps but I prefer Notes app on my iPhone which is simple to use and can be shared with my wife easily.
Not having a shopping list will result in you buying extra stuff. So before you head out to the grocery store make the shopping list and do check your cupboards and pantry to make sure you don’t already have the ingredients at home.
When in-store stick to the list. If it’s not on the list it doesn’t belong in your cart. This is pretty hard to follow but trust me trying to avoid impulsive buying without a shopping list is almost impossible.
If you take your time in crafting the shopping list you’ll also avoid last-minute store runs. This will help you stay on the budget.
Pro Tip: Never go grocery shopping hungry.
Shop and Plan around the Promotions
Almost all grocery stores online and in-store run various promotions every day. Knowing the cheapest grocery prices upfront and then finding out all promotions can help you save big.
Keep in mind a sale is not always a sale. So knowing which stores are cheaper and then comparing prices is key to saving money on food buying.
Certain things that have a longer shelf life or you consume regularly can be bought in bulk from wholesale stores like Costco. We buy things in bulk and freeze the extras to be used on a later date from Costco, which is one of the best places to shop for your groceries and food items. But you may have other stores which might be cheaper in your neighborhood.
Buy fruits and veggies that are on sale and in season. Also shopping at the farmer’s markets in the evening will get you better discounts and lower prices.
Pro Tip: If you want to save money on groceries you need to stay away from Wholefoods and other like stores which are a total ripoff and the prices are usually more expensive than your local Costco. You can also shop at local community stores and farmer markets as they also have good bargains from time to time.
A lot of stores including Costco and others send out coupons, manufacturers have rebates. You can find them and use them to save even more money. The best places to find coupons to save money on groceries.
Avoid Wasting Food
Did you know that average American wastes over 200 lbs of food every year? According to USDA estimates, about 30-40% of food is wasted. And the USA is the biggest food waster in the entire world.
You should avoid food wastage at all costs as it is good for your wallet and the excess food an be used to feed hungry people. So simple rule to live by if you buy it you consume it.
If you can cut your food wastage by half you’ll probably be able to save 15-20% of your grocery budget.
Grow your own Herbs & Veggies
Buying fresh herbs from the store can get pricy really quickly. The other night I needed a few leaves of mint to make a dipping sauce and the tiny pack cost me $3.99 at the local Safeway store. I wish I had mint in my kitchen garden.
If you have space (even a little space will do) in your home try and grow herbs and veggies like basil, tomatoes, cilantro, etc. This will save a lot of money and you’ll have the fresh herbs available when you need them.
Shopping online can be a great hack when trying to save money on the grocery. A lot of stores offer curbside pickup and delivery (some are free others might charge a small fee).
So you can order the exact list of things you want and pick it up at the time you want. This way you’ll avoid going into the store and prevent that impulsive buying.
Use a smaller cart or basket
Shopping carts have changed our shopping habits and kind of forced us to buy more. Probably it is time for us to take a step back and start using a basket.
On your next trip to the grocery store try to use a basket instead or pick up a small cart and stick to using only the top shelf of the cart.
A lot of big stores have their own brands and buying store brand products is much cheaper than buying another brand name. Still, wondering if generic products are as good as brand name?
“Taste Testers” a group at consumer reports found that most store brands are as good as big retail brand names but cheaper by 20% or more.
So go ahead and pick that store brand pasta and your favorite recipe will turn out equally good if not better.
Use a cash-back credit card
My personal favorite is the Costco Citi Visa card. It offers 4% on gas, 3% on travel and dining, 2% on Costco and Costco Online and 1% on everything else. If you have a Costco executive membership you can also get 2% cashback from Costco.
These great cashback rewards and no annual fee. It can’t get any better.
My other favorite card is Fidelity Visa Rewards card which offers a flat 2% cashback on everything and the good thing is the cashback comes right into your bank account every month.
So, pick your favorite and use it on your next trip to the grocery store. I think paying in cash is a big mistake but it depends on every person.
Changing a few habits can help you save money on groceries every month, stay on budget, and help you reach your money goals faster. Saving more money means you’ll have more money to invest, pay down the debt, or down payment for the next real estate investment.
Try out some of these grocery hacks to save on your next trip to the store. You should create a budget and Personal Capital is a great tool to track all your budgets, bank accounts and investment accounts in one place.
I am eager to know if these tips help you save money on food. Do let me know via comments?
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