How to Create a Grocery Budget That Works For You

Make Sure Your Food Spending Is on Track

woman holding receipt while pushing grocery cart

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Following a budget can help you put away savings and make sure your spending is on track. While there are expenditures that you can't easily control like rent, car or mortgage payments, and the like, you can take control of your food spending. Follow these simple steps to create a food budget that works for you and your family, and learn some tips and tricks for saving money on your grocery bill.

Track Your Spending

Before you make a budget, do your research. Take a look at receipts and your bank statement and note what you've spent over the last month on groceries. Include little snacks and odds and ends—any food and drink. You may also want to measure your spending for eating out and takeout since it can influence your final grocery budget. Keep the total amounts separate, dividing them up based on how you'd like to measure your spending. Categories might include: groceries, eating out, drinks out, coffees runs, etc. Adjust these categories depending on your lifestyle.

For an especially accurate picture, perform this exercise for two different months and average the amounts. This will give you a starting point.

Do Some Research

It can be helpful to compare your own data against some national averages to gauge your spending habits. The USDA has done extensive research to estimate the average food costs for people of different ages and families of different sizes. They include different levels of weekly spending, from "thrifty" to "liberal." These plans are updated monthly to reflect current food costs, and it can be helpful to compare your grocery spending to the government's data.

Choose a Goal

After you've done research on your own spending as well as research on average spending for a family of the same size, it's time to choose your budgetary limit. Do you want to spend less on groceries? If so, how much less? Or do you want to maintain your current budget? This will all depend on your financial goals and eating habits. What USDA column does your spending fit into? Are you in the "liberal" column and want to shrink your grocery bill to fit into the low-cost column?

Whether you're saving to pay off a loan, adding to your vacation fund, or just want to be smarter about the way you shop, setting a clear budget is key. Choose a realistic number that also helps you achieve your goals.

Stick to Your Goal

Once you've decided on a budget, now comes the tricky part—sticking to it. There are a number of tactics that can be used to keep your spending on track. Use any or all of them to help you stick to your budget like glue.

  • Examine what you're spending extra money on, whether that's wild-caught salmon or brand-name cereal. Decide where you can switch to a more affordable option and where you'd like to keep splurging.
  • Track your spending on a weekly basis. Your monthly budget will have to last all month, so ensure you don't end up with only a few dollars left for the last week or two.
  • If you're not great at tracking your spending, buy your groceries with cash for a month or two. Take the budgetary amount out at the beginning of every month. If you shop weekly, you can even divide the cash up by week into four separate envelopes. This is a very visual way of tracking your spending.

How to Save

If your budget calls for you to cut costs, there are a number of different ways to save money on groceries:

  • Choose Your Stores Wisely: If you do a little research, you may find that your regular grocery store doesn't actually offer great prices. Check out other local stores and do some price comparisons. Check out discount and salvage shops.
  • Shop Sales: Watch for great deals and, if you're willing, use coupons. Note that some sales require a store membership, so don't forget your card.
  • Make a Meal Plan: Make a plan for the week before shopping to keep you on track in the store and minimize unnecessary purchases. There are a number of meal planning apps available.
  • Cut Down on Meat: Meat can be a considerable grocery expense for many families. Cutting down on buying meat will shrink your grocery bill and improve health. Try elimination one or two meat mains a week.
  • Buy Store Brand: Store brand items are typically much cheaper than name-brand items, and they are often the same quality.
  • Buy Bulk: Items sold in bulk are usually much cheaper per ounce than foods sold in smaller amounts. If an item that you use on a regular basis is offered in bulk, buy the bigger size to save costs in the long run.
  • Don't Waste Food: And while bulk buying can be a moneysaver, throwing away food is not. Pay attention to what you buy and expiration dates, and use foods before they go bad. Otherwise, you're throwing money in the trash.