How to Create a Grocery Budget

Creating an effective monthly grocery budget presents a challenge for many households. Whether you are food shopping for one, for a couple or an entire family, it's important to set a clear plan - especially if you're trying to cut food costs.

Today, Canadians spend an average of around $200 per month per individual on groceries.

Your food budget must incorporate your overall spending for three meals a day and has to reflect dining in and eating out at restaurants.

iCash, a trusted lender for online loans, has put together this guide to creating the perfect monthly grocery budget to help you save money when food shopping. We’ll look at how to calculate money for food, and ways to reduce your grocery bill overall.

How Much do Canadians Spend on Food?

Experts suggest that you should spend no more than 15% of your monthly income on food. To accomplish that, however, you need an effective grocery budget.

Today, the average food cost over a 30-day period per household (national standard of 2.4 people) is around $628 – this does not include restaurant meals or alcohol. If we look at spending per month in its entirety, that number jumps to $859.25.

Yearly, we spend around $7,536 for meals. Meat tops the list, at more than $1,481 per year, followed by dairy, at around $1,049. With regards to cereal products for breakfast alone, the average is over $420 each year. When it comes to eating out, that average is around $2,775 spent annually.

These numbers can vary substantially depending on many factors: the province you live in, your age, and the quality of the items you're purchasing.

Big meals out, including birthday or anniversary celebrations, can quickly add $200 or more to your regular food costs and can increase your expenses considerably over the year.

6 Steps to Calculate a Monthly Grocery Budget

Calculating food costs doesn’t have to be complicated, nor does it have to take a huge amount of time. There are a few key steps to follow in order to properly plan how much you want to spend on groceries throughout the month.

You will definitely want to avoid impulse buys, junk food, and food waste which can all add to your overall costs, making it hard to stick within those limits. Once that food budget is busted, you can always apply for a convenient e-Transfer payday loan to cover other expenses that may come up.

So, how should you set your food budget per month, and make sure that you stick to it? How much should it all cost, anyway?

Here are 6 easy ways to calculate your grocery budget:

STEP #1. Evaluate the Number of People in Your Household

The more people you have in your household, the more you should expect your monthly groceries to cost. That does not necessarily mean, however, that your budget will increase exponentially for every member.

In many cases, large families can buy in bulk or reduce overall food waste per person, which can decrease your general grocery expenses.

However, you do want to make sure that you have enough food on hand for every person under your roof. The average weekly grocery bill for one may look very different from a family of four. It’s safe to say that each additional person is going to add $200 to your grocery monthly budget and this must be kept in mind when planning ahead.

STEP #2. Consider Any Special Dietary Needs to Adapt Your Grocery Budget

Special dietary needs, including gluten-free or food allergies that require specific items, could increase your overall grocery budget per month. These foods are often more expensive than some of the other options you can buy.

This can send your budget creeping up – especially if those nutritional changes come up suddenly and an immediate change is needed.

Choosing the right food options can help cut your costs and make it easier for you to stick to a more efficient food shopping plan.

If you’re struggling with your grocery budget, consider removing some of those specialty items temporarily. Fresh produce and all-natural items are healthy and cost less.

Consider visiting a farmer’s market for fresh fruits and vegetables, which will not only help support local farmers, but also help lower your grocery bill as they are usually significantly cheaper than store-bought items.

STEP #3. Take a Look at Your Household Budget

A look at your overall household budget can help you better understand your grocery expenses and how much money you really have to spend on food.

In 2018, the median after-tax income in Canada was around $61,000. Compare that to average grocery store spending each year, which hovered around $6,000 between 2013 and 2019, and you can assume that the average household spends approximately 10% of their after-tax income on food.

Compared to the expert recommendation, which states that you should spend no more than 15% of your monthly budget on what you eat, most keep their food spending in check.

However, that does not necessarily mean that a recurrent grocery allowance will look exactly that way for your family. You’ll need to evaluate your household spending and saving, including what you have left over after paying your fixed recurring expenses (rent, utilities, etc.).

Then, consider what you have available for your food spending. Looking at it as a percentage, like the 50/30/20 rule recommends, rather than a set amount can help you evaluate your spending if your income fluctuates.

STEP #4. Evaluate Your Current Grocery Spending

Many families struggle to calculate exactly what they spend on food over 30 days, especially if they make many short trips to the store for an item here and there. The best way to evaluate your current grocery spending is to keep track of it, either digitally or manually with a spreadsheet.

You can download a type: asset-hyperlink id: 3VZt8pTy2sUFAZEdv4ijtM, or use a spending calculator app that will help you track your purchases.

When using either of these methods, make sure you include:

  • Your regular stock-up trip to the grocery store;
  • Mid-week trips to pick up missing essentials for a recipe;
  • Impulse shopping trips for special meals.

If you're trying to cut your overall costs and decrease your food spending, you may also want to consider tracking what you spend on eating out, including special events, breakfast grabbed on the way to work, and lunches picked up at your local restaurant.

STEP #5. Break Down Your Spending on Groceries

Create a breakdown of what you're currently spending in specific categories as you develop your grocery budget. You want to know what you're spending on breakfast, lunch each day (including weekdays and weekends), and dinner.

This is applicable to singles, as well as those with spouses and children.

Sometimes, as you break things down, you may discover areas where you are overspending. For example, if you have a sweet tooth, you may be tempted to overspend on sugary additions. If you regularly eat lunch out and don't stop to think about where you're dining, you may notice your midday meal expenses rising substantially.

As you create your budget, set aside specific segments for the most important areas. Break it down into segments that include:

  • Groceries (your base costs)
  • Lunches out (especially if you often need to go out for work)
  • Special meals and events

By breaking down your food categories, you can better determine how you want to spend the dollars allocated to those specific categories.

Remember, you can also shift your budget as needed to account for month-to-month changes. So, if you allocate 80% to groceries because you know you won’t be eating out often, you can always change that to 65% for the following month if your social calendar changes.

STEP #6. Monitor Your Food Expenses

It can be difficult to stick to a budget 100% as planned. Over time, as you monitor your expenses with easy-to-use apps and compare them to your spending habits, you’ll be able to shift the way you allocate your money and come up with a better strategy.

Take the time to compare your actual expenses with what you intended to spend. You may find that you’re left with more money in one area, or you may find that you need to shift what you spent in other areas to make more room for purchases that are important to you.

Keep in mind that each household's needs will look different. You cannot expect your food expenses to look exactly like a friend's, a neighbour's or even a budget expert! Your family's dietary needs, priorities, and meal preferences can make a big difference in how much you spend each month.

Sometimes, even the best budgeting plans can’t keep you and your family from needing some financial help with upcoming groceries. So, trusted online Canadian lenders iCash can help. You can safely and easily borrow up to $1,500 for your food bill without waiting for your next paycheck.

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