3 Easy Ways to Make Your Family’s Grocery Budget

Do you want to get more control over your family’s grocery budget?

Are you running out of money at the end of the month?

Most people know the money-saving benefits of making a grocery list but still aren’t making a monthly budget for household expenses.

Before you can get control over your money and lower your food bills, you need to know how much you have to spend, how much you need for expenses and a plan for how you’re going to spend your money.

Keep reading to learn how to calculate how much you should spend on food every month.

What Are the Benefits of Budgeting?

A budget helps you plan your money, so don’t spend more than your income, and it teaches you to be more deliberate about what you choose to spend your money on.

Knowing what you have and how much you need for expenses can help you reach your financial goals.

A budget keeps you from wasting money on impulse buys and things you don’t need. Instead, you can choose what you want to spend your money on, like a vacation, or retirement savings, to pay down debt, save for a large purchase, or put it into savings.

How Much Should You Spend on Groceries?

According to 2020 data from the Bureau of Labor Statistics, $4,942 was the average amount U.S. households spent on groceries that year. That’s an average of about $411.80 per month. Depending on what region of the country you live in, $411.80 may sound doable or impossible. 

How much you can spend on groceries depends on the cost of living in your area, rent or mortgage, where you shop, and your meal planning and grocery shopping strategies.

The USDA’s Thrifty Food Plans are healthy food plans for four different cost levels: thrifty, low, moderate, and liberal. The food plans reflect the current guidelines of the 2020-2025 Dietary Guidelines for Americans.

The plans estimate the U.S. average cost to buy nutritious food and beverages to make meals at home for a family of four (2 adults 20-50 years old, 1 child 6-8, and 1 child 9-11 years old)

  • Thrifty plan: $932.20 per month
  • Low: $1009.40 per month
  • Moderate: $1,255.20 per month
  • Liberal: $1,520.90 per month

How to Make a Grocery Budget

A budget is knowing exactly how much money you have coming in, what your total expenses are, and a plan on how to spend, save and invest it.

Expenses are things you need or want and can be fixed or variable.

Fixed expenses include the rent or mortgage, utilities, insurance, and fixed loan payments. Fixed bills are the same every month, and there’s no flexibility in how much you pay or whether you can pay them.

You have more control over flexible expenses, which include revolving credit card debt, entertainment, and even the grocery budget. 

Food is a necessity, but you have flexibility over what you buy and how much you spend.

The grocery budget is one of the most flexible expenses. So, learning to be a frugal grocery shopper can free up money in your budget so that you can spend it on something else. For example, I tapped my food budget for extra money when I decided to pay off my credit card debt.

You don’t need a complicated system. A simple budget listing your income and expenses is all you need to get started. 

Here are a few of the most popular budgeting methods. Or combine elements of each one to create a budgeting system that works for your family’s household.

50/30/20 budget

The 50/30/20 is a budgeting method that helps you plan where you want your money to go. You divide your take-up pay into three categories: need (50%), want (30%), and savings and debt payments (20%).

Ideally, your grocery, transportation, and housing expenses are no more than 50% of your take-home pay, but that may not be realistic for everyone. For example, if your rent or mortgage is high, you live in a high-tax area of the country (like me!), or you’re living on one income, you may have to adjust your budget so that you’re spending more than 50% of your income on needs and less on wants. 

In that case, you would have less for “wants” and savings.

Where does food fit into the budget? That depends.

Food for the home fall is a necessity, so it falls under “needs.”

For example, if your total household income is $4,000 per month, here’s how you would divide it:

  • $2,000 for food, transportation, and housing
  • $1,200 for entertainment, eating out, travel
  • $800 for savings and debt payments

However, eating out might be budgeted as entertainment and fall under the “want” category since it’s not a necessity.

Spreadsheet

A basic spreadsheet helps you plan your monthly budget and track your expenses. 

I use a Google Sheets spreadsheet to track where my money goes. My spreadsheet has evolved into a detailed annual budget that helps me balance each month’s bills and budget short- and long-term financial goals.

Before the month begins, I know whether I’ll have enough money to cover expenses. I plug in extra bills and purchases on the spreadsheet as they come up. Then, I adjust the budget, so everything remains balanced. 

When an unexpected expense comes up (and it always does), I add it to the “miscellaneous monthly” section on the spreadsheet and adjust the budget accordingly.

For example, if my son needs a new baseball uniform that wasn’t on the budget, I enter it under miscellaneous expenses. If that changes the month’s balance to a negative number, I know I need to take money from another flexible expense to cover it. Taking money from savings is the last resort.

Ideally, you want to plan for as many expenses as possible and even plan for entertainment and savings. If you don’t plan for savings, then it’s less likely to happen. And entertainment that’s not on the budget usually ends up on credit cards.

Envelope system

Some people like a more hands-on system to take them to the store, like Dave Ramsey’s envelope system. However, this cash-based budget works well for budget expenses that require in-person transactions such as gas, groceries, and eating out.

First, you create envelopes for each budget category. These categories include household supplies, groceries, entertainment, gifts, gas, utilities, etc.

Next, you determine how much each budget category needs each month. You can fund the envelopes weekly, or bi-weekly, or if it’s easier, you can do it all at once at the beginning of the month.

Monthly expenses for many categories vary, so you would divide the total you need for the year by 12 months. 

How do you know what to set aside for each category? 

Track all of your expenses for at least a month. 

Add how much you spent on each category at the end of the month (or after a few months). 

There are two main rules to follow:

  • When an envelope runs out of money, you’re done with that spending category until you can refund the envelope next month
  • Don’t borrow from other envelopes

If you keep going over budget, reevaluate the amount you planned for that category. You may need more.

An easy way to track how much you’re spending on food is to save your recipes or use a spending app to track your spending for at least one month. Once you know how much you are spending, you can make a realistic budget. You can divide your monthly expenses by four to estimate how much you should spend on groceries each week to stay within your budget.

You can also use an app like Goodbudget, spreadsheet, or a simple budgeting notebook to track each category. 

Wrap It Up

The bottom line is that the cost of groceries is the most flexible necessity. So, the more you save on groceries, the more money you’ll have available for things you want, debt repayments, savings, and investing.

What are you struggling with? Let me know in the comments below!

About Jennifer Messineo, MS, RD

I’m a food loving Registered Dietitian. I help families plan meals, reduce food waste and save money on food!

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