Learn Budgeting 101 How to Create a Grocery Budget?

How to Create a Grocery Budget?

Creating an effective grocery budget presents a challenge to many households. Your food budget must incorporate your overall spending, whether you eat out or eat in for breakfast, lunch, and dinner.

Today, the average cost of food per month for one person in Canada is around $200 per month per individual on groceries.

Each year, Canadians can expect average grocery spending of around $7,536. Meat tops the spending list, at more than $1,481 per year, followed by dairy, at around $1,049. In cereal products for breakfast alone, the average Canadian may spend over $420 each year. On average, Canadians also spend $2,775 eating out each year.

AVERAGE GROCERY EXPENDITURE PER HOUSEHOLD PER YEAR

Food expenditures

$10,311

Food purchased from stores

$7,536

Bakery products

$687

Cereal grains and cereal products

$420

Fruit, fruit preparations and nuts

$930

Vegetables and vegetable preparations

$974

Dairy products and eggs

$1,049

Meat

$1,481

Fish and seafood

$274

Non-alcoholic beverages and other food products

$1,721

Food purchased from restaurants

$2,775

Restaurant meals

$2,458

Restaurant snacks and beverages

$316

Source: Statistics Canada. Table 11-10-0125-01 Detailed food spending, Canada, regions and provinces.

Shopping bag with veggies

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.

A big splurge meal out, including birthday or anniversary celebrations, can quickly add $200 or more to your monthly food cost and increasing your average food cost per month considerably over the year.

In general, experts suggest spending no more than 15% of your monthly income on food. To accomplish that, however, you need an effective grocery budget.

How to Calculate a Monthly Grocery Budget?

Whether you are interested in creating a monthly grocery budget for one, shopping for a couple, or shopping for a family, it's important to set a clear monthly plan - especially if you're trying to cut costs.

Many people, however, do not even know how to create a monthly grocery budget.

Impulse buys, junk food, and food waste can add to your food costs, making it hard to stick within those limits. How should you set your grocery budget--and make sure that you stick to it? How much do groceries cost per month, anyway?

The average cost of groceries per month for two in Canada is around $400, based on the average cost per individual. Your family's specific needs, however, may dramatically change your food budget.

STEP #1. Evaluate the Number of People in Your Household to Create a Grocery Budget for Your Family

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 household 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 member of the household. The average weekly grocery bill for one may look very different from the average grocery bill for a family of 4.

Family Size Average Food Cost Per Month

1

$200

2

$400

3

$600

4

$800

5

$1000
Family shopping supermarket

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

Special dietary needs, including a gluten-free diet or food allergies that require specialty food choices, could increase your overall grocery budget.

Specialty foods are often more expensive than some of the other options you can buy, which can send your budget creeping up--especially immediately after making those dietary changes.

However, choosing the right options can help cut your costs and make it easier for you to stick to a tighter food budget.

If you're struggling with your grocery budget due to a gluten-free diet or food allergies, consider removing some of those specialty foods temporarily, rather than investing heavily in allergy-friendly merchandise.

STEP #3. Take a Look at Your Household Budget

A look at your overall household budget can help you better understand your grocery budget 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 Canadian spends approximately 10% of their after-tax income on groceries.

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

However, that does not necessarily mean that a grocery budget will look exactly that way for your family. Evaluate your overall household budget, including what you have leftover after paying your fixed monthly expenses (rent, utilities, etc.)

Then, consider what you have available for your food spending. Looking at it as a percentage, rather than a set amount, can help you evaluate your spending if your income fluctuates.

STEP #4. Evaluate Your Current Grocery Spending

Break down what you're currently spending on groceries: your current grocery budget, even if you don't have a written budget or spreadsheet.

Many families struggle to calculate exactly what they spend on groceries over a month, especially if they make many short trips to the grocery store.

Download a grocery expenses spreadsheet, or use a grocery cost calculator app that will help you track your food spending. 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 food costs and decrease your food spending, you may also want to consider tracking what you spend on eating out, including special events, breakfasts grabbed on the way to work, and lunches picked up at your local fast-food restaurant.

STEP #5. Break It Down

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

Sometimes, as you break things down, you may discover specific areas where you are overspending. For example, if you have a sweet tooth, you may be tempted to overspend on sweet additions to your meals.

If you regularly eat lunch out and don't stop to think about where you're dining, you may notice your lunch budget rising substantially.

As you create your budget, set aside specific segments for the most important areas. You might, for example, have an overall food budget, then 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 in your needs.

STEP #6. Monitor Your Expenses

Compare your estimated expenses versus your actual expenses may vary more dramatically than you think.

It's rare for you to be able to stick to any category of your budget exactly. Over time, as you monitor your expenses and compare them to your budget, however, you'll be able to shift the way you allocate your food budget and come up with a better estimate.

Each month, take the time to compare your actual expenses with what you intended to spend. You may find that you're able to spend less than anticipated, leaving you with more money in another area; or, you may find that you need to shift your budget in other areas to make more room for areas that are important to you.

Keep in mind that each household's needs and budget will look different. You cannot expect your food budget to look exactly like a friend's, a neighbour's, or even a budget expert! Your household's dietary needs, priorities, and food preferences can make a big difference in what your food budget looks like.

Planning grocery shopping

9 Ways to Reduce Your Grocery Budget

Have you noticed your grocery spending getting out of control? If you're looking for ways to budget food, try some of these food budgeting tips to help you achieve your goals.

1. Spend some time clipping (or searching for) coupons.

Coupon users report, on average, 7% savings on their grocery budget when using coupons. Today's coupons are easier and more convenient than ever since many stores will allow you to save coupons to an app, rather than having to clip them and bring them in when you do your shopping.

However, when using coupons, remember not to use coupons on an item you would not have purchased had you not had the coupon in hand.

Coupons should help you save money, not entice you to buy a product your family would not otherwise have considered. If you buy a $3 product and save $1 on it, you have still added $2 to your grocery budget.

2. Embrace the art of meal planning.

Take the time to plan your meals. Sit down and decide what you're going to fix for the week, then purchase only the ingredients for those meals. The savings will add up quickly.

Canadians waste, on average, 396 kilograms of food per person per year. Over the year, that's a lot of food waste! Much of that waste comes from failing to plan for your meals.

As you're planning your meals, make sure you create plans that allow you to use what you have available. If you have a small backyard garden, plan to use the produce you've grown in as many meals as possible.

If you have pantry staples adding up, create meal plans that use up what you already have. This simple strategy can help you avoid food waste and save on your grocery budget.

3. Get in the habit of packing your lunch ahead of time.

Meal planning and meal prep can make it easier than ever to prepare your lunches ahead of time.

You may not have time to put a lunch together each morning, but you can find time on the weekend to put together lunches you can grab and take with you all week long, decreasing your food spending and making your grocery budget more manageable.

Every day, Canadians spend between $7 and $13 on meals out during the workday. By packing your lunch instead, you could save more than $3,000 per year, making your grocery budget drop considerably.

Include lunches in your meal plans. Plan to use leftovers from your other meals to help further reduce food waste and save even more.

4. Make smarter shopping choices.

There are two great strategies for saving considerably on your grocery budget with smarter shopping choices: purchase store brands, and buy in bulk when you can.

In many cases, store brands are the same product with slightly different packaging. In others, your family may even enjoy the taste of the store brand more. You could save $20 per week or more on your grocery budget by switching to generic brands.

Buying in bulk can save an average of 20% on many purchases, which can leave you with more room in your grocery budget for other items or allow you to cut costs. Bulk shopping often allows you to buy more for a lower overall cost.

Be careful, however, not to overstock! Bulk items like produce, cheese, and even meat can go bad before you get around to eating them, which means more food waste and an increased budget.

Try calculating how much your family will really use for specific items so that you don't buy more than you need, and make sure you break down large, bulk packages into smaller sizes that you will be more likely to use as soon as you bring them home.

5. Start with a grocery list (and stick to it).

Put together a grocery list that includes all the items you need. As you're putting together your meal plan for the week, add any items that you don't already have in your pantry to your grocery list.

Include items that you routinely pick up at the grocery store, including toilet paper and cleaning supplies, as you notice that they're missing. Get in the habit of placing pantry staples on the list as soon as you run out of them. This will help prevent over-buying and allow you to stick to your grocery budget.

One of the biggest challenges in sticking to your grocery budget is going shopping without a list. You may enter the store knowing that you need to purchase groceries, but you might not know what specific items you need.

By the time you get to the end of the store, you've grabbed plenty of items that you didn't really need and several impulse purchases--and as a result, you may be well over your grocery budget.

6. Freeze your leftovers for later use.

Leftovers make great, low-prep meals for days when you're shorter on time or don't feel like cooking. Even better, they allow you to decrease your food waste and make the most out of all of your food spending.

Unless you have a big family, chances are, most recipes make more than your family will eat at a single meal.

Learn how to freeze those leftovers effectively, and plan to use them before they go bad. This is especially effective if you make large dishes and casseroles, which you can easily split in half while you're prepping.

Keep track of when you put those items in the freezer by adding masking tape with dates or using dry erase markers to note the date when you put those items in the fridge. Make sure to include freezer items in your meal plan!

As you decrease your food waste, you may notice your grocery budget decreasing substantially.

7. Plan your shopping with care.

Pay attention to where you do your shopping. Often, you can see considerable cost savings just by choosing your grocery store with care.

Try comparing your budget and the products you get between different grocery stores to find the best fit for your family. Not only should you compare overall costs of shopping at different stores in your area, you should pay attention to weekly sales and ads.

Often, you can save money and decrease your grocery budget by visiting a different grocery store when they have particularly good sales.

Another great strategy for saving on your food spending. Try price matching. Many big box stores will price match on grocery ads. Take the time to flip through grocery ads before you go shopping to maximize your savings.

8. Cook from scratch.

The ingredients required for many of your favourite recipes often cost less than pre-packaged convenience foods. They're also healthier for your family, which means you may save on medical expenses, too.

Get in the habit of cooking from scratch, rather than relying on prepackaged foods. As you get better about meal planning, you can more easily select dishes that will be easy to cook from scratch for your busy nights.

Utilize your slow cooker on a regular basis. Not only will it ensure that you have dinner simmering away when you and your family are ready to eat, a slow cooker naturally tenderizes cheaper cuts of meat, which means you can plan to cut some of those meat costs, which represent the most money most Canadian households spend in their monthly food budget.

9. Choose in-season, local, or frozen produce.

Seasonal produce often costs less than out-of-season products, which have to be shipped in from further away.

Get creative with your meals and make the most of what's fresh and, when possible, local. Not only is it cheaper, you may find that it tastes better and fresher.

Take a look at the fruits and vegetables that are in season before you plan your grocery shopping trip. If you do need to utilize out-of-season produce for your recipes, consider the benefits of frozen produce, which can pack the same nutritional punch while allowing you to decrease your food spending.

Your grocery budget can have a big impact on your overall spending. Each month evaluate your food spending and make sure it still fits your needs. With these strategies, you can create a more effective food budget, allowing you to eat better and experience cost savings at the same time.

If you need financial help with upcoming groceries, iCASH can help. You can borrow up to $1,500 to pay for your grocery bill without waiting for your next paycheck.

iCASH loans NOW OPEN
24/7