Alert Message
Thanks for signing up! We hope you enjoy our newsletter, The Teller.
money

Your Food Budget: What’s Eating Your Money?

The battle for your wallet is often quietly fought at the dinner table, where the desire for convenience and comfort duel against nutrition and cost.

In a world where big-box and discount stores sell in bulk, meal kits sell precise-but-pricey DIY takeout, and home grocery delivery provides convenience, it’s hard to decide how much time and money to really spend on feeding yourself.

And since most of us eat three meals per day—or more than 1,000 meals annually—the small decisions we each make about eating can have big consequences and expenses over time.

Food costs—for grocery shopping, takeout, meal kits, and dining out—are frequently flagged by financial planners as forms of discretionary spending that can be reduced in a household budget.

According to Earnest data, we know that each trip to the grocery store, for example, results in roughly $50 of spending. Our data also shows that the average transaction at Starbucks in 2016 was nearly $9. If you’re going every weekday, that adds up to $2,340 per year. (You can read more data about food spending here.)

Food is More Than Cost

But it’s hard to focus solely on price when it comes to food. It’s a values-driven and sentimental purchase—providing yourself or loved ones with nourishing food, from the highest-quality sources you can afford, is often as much a priority as managing the costs.

What we eat is political, too. Farming is hotly debated: Is it better to buy affordable fare from factory farms, or invest in local organics that may cost more but provide enhanced nutritional and environmental benefits?

Food waste is a challenge, too. Despite an abundance of food choices, more than one-third of American food is discarded before it’s eaten, due to practices used by farms, stores, and institutions to deal with bruised and “ugly” produce or conservative expiration dates, according to USDA data.

Here’s a look at some questions to ask yourself if you’re re-thinking your wallet’s relationship to your dinner plate.

What’s a reasonable food budget?

Many financial advisors and gurus recommend spending no more than 10%-15% of take-home pay on food, a figure that includes restaurant dining and takeout. By this measure, a couple with $70,000 in adjusted income should keep an annual food budget in the $7,000 to $10,500 range.

These figures somewhat mirror USDA data. The USDA’s most recent “cost of food” research indicates that the average amount a couple under 50 pays for food each month ranges from $384.60 on the very low end to $764.90 on the high end. (Older couples–51 and up—pay $20-60 per month less.) That adds up to an annual expenditure ranging from $4,615 to $9,178 per year, an extremely broad range.

Dining out a lot, perhaps for work or work-related travel? The IRS sets “per diem” (per day) rates on how much dining is deductible per day, and generally that comes in at $57 to $68 per day depending on location. This isn’t a guideline on what to spend, but rather a range that’s permissible if you’re deducting business expenses. In some cities, this is a generous amount, in others less so.

Consider a Grocery Audit

Wondering where your food spending goes and your food waste comes from?

One budget-minded food blogger encourages families to undertake an occasional “grocery audit.” This entails answering some obvious questions like whom you’re feeding and what the family enjoys eating, your target spending, what you’re actually spending and on what, what you have on hand for future meals (pantry/freezer), and whether you can reduce these expenses without—and this language is interesting—“paying in some other way.” By this, she means spending excessive time shopping, compromising too much on food quality or nutrition, or under-feeding the family.

Those who conduct a grocery audit may learn they splurge on packaged snacks that could be made ahead at home (popcorn, trail mix, baked treats), that they prepare excessive dinners leading to uneaten leftovers, or that their produce spoils due to busy lifestyles or poor storage technique.

Often, small behavior changes like fewer and larger shopping excursions to stores where bulk buys are discounted, a meatless Monday tradition, a weekly cook-ahead session, or a better understanding of what to keep in the family pantry or deep freeze can help curb costs or reduce the need for impulse dinner buys on busy work nights.

Organic vs. Non-Organic

Nutritionists as well as modern home economists frequently point out that, while organic foods are “feel-good” foods for many shoppers (it’s nice to support the local organic farm or certain growing practices), they’re also more expensive—on average, they are 47% more expensive, according to recent Consumer Reports research. This isn’t true for every organic product, though, at least not at larger grocers, according to the publication. But if organic is a priority, read labels at the store or farmers market.

If you have to pick and choose which items to buy organic in order to respect your food budget, look to the Environmental Working Group, a think tank, which compiles a list of the so-called “dirty dozen” produce items that are best purchased organic, since non-organic growing practices for these items may expose them to more pesticides or may mean these foods having lower nutritional content. EWG also publishes list of the “Clean 15” items which are the least likely to contain pesticide residues and thus can be bought non-organic.

The Cost of Convenience

The rise of online food delivery (for groceries or for takeout) and meal kits, which sell a complete meal’s worth of pre-measured raw ingredients for make-at-home recipes, create new types of food spending options.

On the one hand, having groceries delivered saves valuable time you might use breadwinning at work or with family. On the other hand, online grocery shopping may cost more than the IRL version. As Amazon and regional providers like Fresh Direct circumnavigate traditional grocery shopping, or in Amazon’s case enter the field with the purchase of Whole Foods, big-box grocer Costco is launching free food delivery for non-refrigerated pantry goods orders worth over $75.

Consumers have to decide whether they’d rather pay more for someone to deliver their food or waddle down stuffed aisles and wait in busy check-out lines to get deals. They also have to decide if they want to buy “pre-assembly” food (many upscale grocers sell raw, chopped produce ready for your salad, pasta, or hummus dipping) for an up-charge or buy a whole vegetable to cut up themselves. Is the ritual of preparing one’s own food fun and a social time with friends or family, or is it a hassle on a busy night or weekend day?

Another trend—delivered “meal kits”—attempt to provide convenience, mitigate food waste, and offer nutritious well-rounded meals. Meal kits cost $9.99 to $13.50 per serving and cater to a consumer who can afford to eat out more often that the average food buyer, according to CNBC. These prices are higher than most make-at-home meals, in line with lower-end takeout or food carts, but cheaper than sit-down restaurant dining. According to CNBC, meal kits aren’t competing with grocery shopping as much as dining out—providing the sort of busy urbanite who goes out because they forgot to shop (or because they don’t cook often) with a full meal’s worth of food they can prep using basic instructions and in relatively little time.

One thing’s for sure: We’re both closer and further from our food than ever before. With a world of choices—organic or not, big box bulk discounts or micro-batch meal kits, old-fashioned prep cooking or newfangled assembling—our food costs are intermingled with our values about nutrition and whether the time we spend in the kitchen is pleasurable, a chore, or a little bit of both.

New to Earnest?
Earnest is a technology company using software automation, smart design, and exceptional service to restore trust in the lending industry and help clients take control of their finances.