A regular reader, Mike sent me the following email:
Subject: Question for your readers
Body: My wife and I live by ourselves. Our largest monthly expenses are her student loans, the mortgage, and then food. Are we spending too much on food? We average about $200/mo on sit down restaurants, $200/mo on fast food, and about $150/mo on groceries. This comes to about $9-10 per person/day. Too much? Tips to save?
I like how Mike is focusing on the biggest expenses and looking to bring them down. It’s much better than attacking the small things (though the small things can add up to be equal or more than the top big expense).
People typically spend a good amount on food, especially eating out. The USDA has some guidelines on how much people spend on groceries. Using the most recent data, a typical couple in the 19-50 range (a typical Lazy Man reader) would spend between $87.30 and $111.50 a week on thrifty or low-cost plans. I’m going to presume that the typical Lazy Man reader is going to be skewed to the more frugal options since we tend to be more mindful with our spending. The average of the thrifty and low-cost plans comes to about $100 a week for a couple or a little more than $14 a day. Per person this works out to be $7. Mike’s $9-10 per person estimate for all food (groceries & restaurants) comes in at around $136 per week which puts him almost exactly at the USDA’s moderate cost number of $138.70. Since the USDA’s number is about groceries only Mike appears to be doing great overall.
As for tips to save, I’ve got some Amex Blue Cash will put 3-6% back in your pocket on groceries. Unfortunately, Mike emailed me back to say that his grocery store doesn’t take credit cards (imagine that!). All is not lost though, he can use a debit card that can earn up to 2% back from Perkstreet.
As for restaurants, Mint has some good ways to track spending. (Side Note: It’s been too long since I’ve checked out their tools myself. That’s going on my to-do list.) It looks like Mike has already done the math to compile the $400/mo. number (I’m combining fast food and sit down restaurants). I don’t have comparison numbers for restaurants, but sit-down restaurants would be the place to focus on saving money. The cost per meal at one can be ten times what you can make at home. I have my own set of tips for save money at restaurants. One can consider eating out at a sit-down restaurant as entertainment too as the ambiance typically plays a role in the value.
Fast food restaurants can be cheap if you make the most out of value menus, but they typically don’t win any awards for great nutrition. From a cost perspective, a dollar McDouble is a pretty frugal meal… four of them a day (around 1500 calories) would set you back $120 a month, which is a pretty low food budget. I’m not recommending that, we say how that worked out for Morgan Spurlock in Super-Size Me, but the numbers illustrate how an occasional fast food trip can fit a frugal budget.
It’s hard to put a strict “you should spend $X amount on food” guideline in place. Geographic region, diet requirements (some people choose to pay more for organic), and other factors (time to clip coupons) can move your food budget in either direction. This is why I would focus on making sure that my spending is in a fiscally responsible range. Some of the tools I mentioned above can help provide a sanity check to make sure they are fiscally responsible.
Getting back to the subject of Mike’s email. He wanted to put the question to the readers. So now it is your turn to give feedback. I’m particularly interested if someone can find some food spending to income ratio numbers. That strikes me as a valuable piece of the puzzle.
If you have a personal finance question contact me and perhaps you can be featured in a future Lazy Man and Money article. And don’t be shy, we’ll keep things anonymous.