Over the years I have struggled and failed to come up with a realistic budget and then stick to it. There is always some special event that would throw me off budget. This all changed when we got engaged and I realized that we would need to save a good chunk of money in the next year to help pay for the wedding. One of the largest variable categories in your budget is food. (variable meaning that you can change it with ease. A mortgage, car payment or insurance would not be variable.) While it is one of the biggest, it can also be one of the easiest categories to make cuts in.
I created my grocery budget by running through the last four months of my credit card statements and totaled up how much I spent on groceries and eating out each month. (Keep in mind that if you use cash for anything you will want to include those purchases as well.) I kept the grocery total and the eating out total separate. It is easier for me to keep them separate each month, but feel free to combine the two if it is easier for you.
After you have your totals, find the average amount that you spent each month. (grocery total of all 4 months/4 = average). Now take that average and add $20. This will be your new budget for the next month.
Why add $20? Since you took the average of the month’s that means that you spent more than your new budget amount in previous months. You do not want to start this exercise by blowing your budget the first month out. The extra $20 gives you a little wiggle room.
Keep track of your expenses by either writing them down on a designated notebook or in an excel spreadsheet. You need to keep a running total of how much you have spent from that category and how much you have left. If you want until the end of the month to total all of your receipts up, then chances are good that you will go over your budget.
I have gotten into a habit of updating my spreadsheet within 1-2 days of my purchases. Doing this once a week when you start would be sufficient. Totaling up your purchases at least weekly will give you an idea of where you are at in your budget.
If it is week 3 and you realize that you only $20 left to eat out for the month, then you can prepare for that by spending a little more in groceries. This also helps you see that you might need to do some meal prepping this week in order to curb you desires to eat out.
Review your budget once the month is over. How did you do? When reviewing at the end of the month you need to take two considerations in mind:
1) Did I stay under budget?
2) What was the meal quality like?
Looking at both of these points is crucial to sticking to your grocery budget going forward. Below I discuss why each of those points is so important.
1) Did I stay under budget?
If your answer is yes the congratulations! Skip to number 2.
If your answer is no, then let’s figure out what happened. Now if you were over budget by $10 or less then I would consider this a win! This is your first month of trying out your grocery budget. Mistakes will happen. You are still learning. Skip to number 2.
If you went over budget by more than $10 ask yourself the following questions
o Was I updating my receipt totals at least weekly?
o Did an unexpected event occur?
o Did I have a bunch of impulse buys? (grocery items that you bought but didn’t really need)
o Did I have a lot of perishable food go bad this month?
Finding out why you went over budget will help you plan for next month to correct it. Maybe you need to start making a grocery list. Or maybe you need to make yourself total up receipts more often. Don’t get frustrated if you went over budget! Keep in mind that this will always be a work in progress and it takes practice to practice self-control when making purchases of any kind.
2) What was the meal quality like?
This question is often over-looked or ignored completely with other recommend budgets and it is why you will fail at staying under budget.
Did you realize that you ran out of grocery money and then had to eat ramen noodles for a week straight?
Did your family complain that they did not want to eat spaghetti for the sixth time this month?
Were you eating really extravagant meals?
Were you trying new recipes and ended up not liking them?
Making sure you and your family members are happy with the meals is important. You need to ensure that you have enough meal variety that your family won’t get tired of certain meals every month. If you are trying to stay under budget then you probably shouldn’t be making T-bone steaks twice a week.
Again, take you answer to these questions and use them to plan for next month.
Review Your Budget
So now you have your grocery budget and eating out budget set. You are reviewing your receipt totals on a weekly basis and also complete a month-end review. Am I done?
Not quite. After you have been actively using your grocery budget for at least three months take a look back at how you did. Were you under budget every month? Were you over budget every month?
If you were under budget every month and were happy with the quality and variety of your meals then consider lowering your grocery budget. I would recommend lowering it by only $10-$20 at a time. You don’t want to take $50 off it only to go completely over the next month.
If you were over budget then you need consider raising your budget. It is possible that the budget amount that you came up with is just too low for your family at this point. Raising your grocery budget amount isn’t the end of the world. Your budget needs to be realistic and work for you and your family.
You should review your grocery budget and eating out budget at least 4 times a year. Life happens and things change. Your grocery budget is not set in stone and should change with other changes in your life.
I realize that I called out having a separate eating out budget but that I didn’t really discuss it. There isn’t a lot to review on this one other than reviewing your receipts each week so that you can make conscious decisions to not eat out if you know you don’t have much left in that budget.
My #1 Tip for Sticking to Your Grocery Budget
There has been one change that I have made that has been the key to my success. Using a calculator while shopping. Making just this one change has completely changed the way that I shop. I keep a running total of how much the items in my cart cost. This way I know exactly how much I am spending. Sometimes there are amazing sales on items that you use regularly. While I don’t encourage a ton of impulse buys, there are a few items that are worth buying when on sale.
They key is knowing how much you have spent on the groceries in your cart and if you have any extra money. By having a running total on your calculator, you will already know the answer to this. If I have an leftover money in my budget before I check out, I will check my Alexa grocery shopping list. (I use Alexa – Amazon Echo in my kitchen and it is extremely handy to tell her to add something to your grocery list as you are cooking! I cannot tell you how many times I forget to add something to my list when I run out of it because I was in the middle of cooking.)
My Amazon Echo grocery list is something that I will check before I make my grocery list. Anything that I need immediately will be added to this week’s shopping list. When I am getting ready to check out at the store and have some extra $$ in my budget, I will check the app. Is there anything that I need that I can purchase with the leftover money from this week’s budget? Using this technique helps so that you aren’t having to buy a ton of staples in one week and blow your budget.