How to Critique Your Food Budget and Lower Food Costs

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The financial uncertainty caused by the COVID-19 pandemic is forcing many families to try to stretch their finances a little bit further. One common area of belt-tightening is the monthly food budget.

About 10% of the average American family’s disposable income is spent on food, according to the U.S. Department of Agriculture (USDA). This is divided roughly equally between food consumed at home (5%) and food consumed away from home, such as in restaurants (4.7%). 

Food Spending by Income Level

Additional data from the USDA reveals that while higher-income households spend more money on average for food each month than lower-income households, they spend a much lower percentage of their disposable income on food. For example, lower-income households spend an average of about $4,100 a year, or $340 a month, on food, which represents 35% of their disposable income.

Higher-income households, meanwhile, spend more than three times this amount on food: an average of about $13,300 a year, or $1,100 a month. But this represents only 8% of their disposable income.

“As their incomes rise, households spend more money on food,” states the USDA. “But food represents a smaller overall budget share for these households.”

Average Families’ Food Costs

If you’re wondering whether your family’s food expenditures are higher or lower than similar families, you can find out by reviewing the USDA’s Official Food Plans chart. This chart is published monthly and includes the average weekly and monthly amounts spent on food prepared at home for four categories of households: thrifty, low-cost, moderate-cost and liberal.

For the month of August 2020, the average food expenditures for a family of four in which the couple are between 19-50 years old and the two children are between 6-8 and 9-11 years old are as follows:

                   Thrifty       Low-cost       Moderate-cost       Liberal

Weekly       $156          $206             $256                      $311

Monthly    $677          $891               $1,111                   $1,346              

Remember that these are average family food budgets for the entire nation — food costs vary widely from one region of the country to another. But these averages can at least give you an idea of how your food expenditures compare to other families like yours.

Trimming Your Food Budget

The first step to take if you want to trim your food budget is to cut back on eating out at restaurants. More than half (54%) of total food expenditures go toward food consumed away from home, according to the USDA. You can usually prepare a meal at home that’s similar to what you’d eat at a restaurant for a fraction of what the restaurant meal would cost.

For example, if your family usually eats out at a restaurant three times a week, cut this back to one or two times a week at the most. Also consider eating at less-fancy and less-expensive restaurants — doing so could allow you to maintain the same frequency of eating out that you’re accustomed to.

Next, look for ways to save money at the grocery store. Start by critiquing the grocery stores you shop at most frequently because there can be big price differences between stores. A number of discount, no-frills grocery stores have opened in recent years that feature lower prices than big-box grocers, sometimes in exchange for having to bring your own grocery bags or rent a shopping cart.

Coupon-clipping is still an effective way to trim your grocery bill but it takes a little time and advance planning. The Sunday newspaper is usually chocked full of grocery coupons and these coupons also often arrive in the mail. If you prefer to go digital, you can download grocery coupons onto your smartphone and save yourself the clipping chore.

Finally, it’s always smart to visit the grocery store with a shopping list in hand. This will help you stay focused on finding and buying the items you need while reducing the temptation to buy things you don’t need. And never go to the grocery store when you’re hungry — this will help you avoid making impulse buys just because something looks especially tasty while your stomach is grumbling.

How Will You Use Your Savings?

Regardless of your current financial situation, it can be smart to sit down with your family and talk about your food budget and ways to lower it. Every dollar you save on food expenditures can be put to other uses — whether it’s beefing up your retirement or college savings accounts or saving up for a post-COVID celebration vacation.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC's ("Frontier") investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.

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