Building a Budget Series. How Much Do You Spend On Food?

In this first of a series of blog entries on budget building, MoneyLend.net takes a look at the food budget, drawing guidance from the USDA on how much to spend.

Outside of housing costs, the biggest budget item for most people is food, and those that are right on the financial brink may find themselves blowing the food budget, and having to borrow money or use credit cards at the end of the month to make ends meet. Credit cards do have their place, and here at MoneyLend.net we take pride in directing you to the best deals on consumer loans of all types – but if you’re buying groceries on credit, then it’s time to re-evaluate your budget. Using credit for day-to-day expenses can be a dangerous path to getting overextended quickly.

When setting a budget, it’s always useful to have numbers to which you can compare your own spending, but those numbers are hard to come by. Ask people how much they spend every month on food, and you’ll get seemingly conflicting answers and a range that often doesn’t make sense. The first question people ask when they start to create a budget, is “Am I spending too much on food?” Can you afford to put that juicy Porterhouse in the grocery cart, or should you stick to hamburger? Or beans and rice? The USDA does offer some guidance in the form of a range of average costs, breaking the cost factor down into four categories: Thrifty plan, low-cost plan, moderate-cost plan and liberal plan.

The average cost for food per month as of the latest report issued July 2015 according to the USDA, for a single male between 19-50 years old is $186.90 for the thrifty plan, $240.90 for the low-cost plan, $303.20 for the moderate-cost plan, and $373.20 for the liberal plan. According to the USDA, costs for a female in the same age range is slightly less, at $165.20, $208.80, $258.40, and $328.50 respectively for the four different plans. A family of two in the same age range is figured at $387.30, $494.70, $617.70 and $771.90 respectively. Other figures for larger families and couples are also available.

The figures are for food only (not paper items and other household goods), and assume that all meals are prepared at home. Also, keep in mind that the numbers represent an average, and don’t take into account regional price differentials. A dozen ears of corn is obviously going to be cheaper in Des Moines than it would be in Manhattan, and if you live in the latter, all hope of a reasonable food budget goes out the window.

So which of the four USDA “plans” should you use for your budget? Let’s look at the USDA statistics again. Households on average spend about 10 percent of their income on food, although individuals and families with lower income will obviously have to allocate a higher percentage of income on food. Most financial advisors recommend staying below 15 percent. Start with a little math. A young couple taking in a combined $50,000 a year, allocating 10 percent to food budget, would spend about $416 a month, just slightly above the “thrifty” plan. Moving up to the “moderate-cost” plan would consume about 14.8 percent of the couple’s income, a percentage you may find completely acceptable if you don’t have many other expenses or debts.