How to Prepare a Grocery Shopping Budget

National Grocery Spending Habits

Grocery budgets can vary depending on your location and the size of your family, not to mention income. Getting a handle on grocery shopping spending can mean the difference between paying off debts or going hungry; or even be as simple as figuring out whether you will be eating steak or noodles the last week of the month.

Everyone’s situation will be unique, depending on their circumstances. A general idea of what people of the same income level, geographic location or household size can help you determine if your budget needs work.

IRS Collection Financial Standards

The IRS Collection Financial Standards is a listing of five categories that are used in calculating repayments for persons who owe back taxes. The table is fairly simple, with a single category for food. One to four person households are given a breakdown for the food category. They are:

• 1 Person=$277
• 2 Persons=$528
• 3 Persons=$626
• 4 Persons=$752

Compare your total grocery budget to these amounts. If yours is double the amount than the standards, you may want to consider revisiting your grocery budget, even if your overall personal budget is okay.

Consumer Expenditure Survey

The 2006 Consumer Expenditure Survey by the U.S. Department of Labor offers a closer look at what Americans spend their food budgets on. Not only are averages given for individual categories like dairy products and meats, but you can check your spending against others whose income matches your own.

This chart shows annual amounts, so divide by 12 to find out monthly spending averages.

Income, Expenditures, Poverty, & Wealth: Consumer Expenditures

The U.S. Census Bureau provides the table Average Annual Expenditures of All Consumer Units by Region and Size of Unit: 2005 which allows you to check your spending against that of people who live in your area of the country. Regional costs do vary, as the cost of living rises in areas like the Northeast. You can also use the data to check against household size expenditures, from one to five persons.

Like the CES, this table breaks down grocery spending into specific categories. Divide the amounts by 12 to find your monthly average.

How to Prepare a Grocery Shopping Budget: Instructions

Making a grocery budget is similar to a small-scale version of making a full budget. Keeping track of spending and cutting back in certain areas can reduce your budget.

Track Grocery Spending

To get started with your grocery budget, you should track your monthly grocery spending habits. Save every receipt you get, from running to the corner store for milk on Sunday morning to the bi-weekly supermarket trip. At the end of each week, total up the amount you have spent, dividing items into categories like:

• Produce (fruits and vegetables)
• Grains (rice, breads)
• Proteins (meat, peanut butter, beans)
• Pantry staples (flour, sugar, spices, soup stock)
• Dairy (cheeses, milk)
• Snacks/convenience foods (cereals, freezer items, cookies, chips, soda)

Be sure to use the regular price of the items if they were on sale and add any grocery coupons back into the total. This gives you a realistic look at exactly how much things cost when they are not on sale and you are out of coupons.

At the end of the month, total up each section of your grocery bills and add them together. Plug your final number into a budget worksheet that includes the rest of your monthly expenses. If your expenses are greater than your income, the grocery section is one area where you can save money.

Reduce Food Costs

To cut back on your food costs, look at each category of groceries you purchased. Figure the percentage of your total grocery bill within each category. Because snacks and convenience foods are often costly and nutritionally weak, you should cut this category back first. If it happens to be one of the biggest spending areas, you should aim to cut it in half. Otherwise, try reducing it by 20 percent. Implement this plan by:

• Buying in bulk and portioning snacks
• Making your own snacks
• Clipping grocery coupons and using them when product is on sale
• Switching to store brands

Protein is another area where costs can be reduced. While beans and peanut butter are fairly cheap per serving, meats can add entire dollars to otherwise thrifty meal plans. Cut costs by:

• Buying cheaper meat cuts (make burgers out of ground chuck instead of ground sirloin)
• Deboning chicken and turkey breasts, thighs and wings yourself
• Watching flyers for bulk product sales (you may have to split 10 pounds or more into individual packages for freezing)
• Picking up reduced-for-quick-sale meats and freezing for later use
• Serving more frugal vegetarian dishes

Aim to cut the rest of your food categories by the amount your overall grocery budget needs to be reduced. Frugal grocery shopping skills combined with comparison shopping and coupons can make a huge dent in your monthly bill.

Budgeting Choices

When preparing your household budget and your grocery budget, you will have to make a few choices. Is dining out going to be under miscellaneous expenses, grocery/food expenses or entertainment expenses? Household cleaners and toiletries can also be picked up at the grocery store. Create a separate category for these items or adjust other categories accordingly.

Learning how to prepare a grocery shopping budget can help anyone who is having trouble saving. Money management skills like budgeting help everyone, from those trying to repay debt to those who are saving for that special cruise.