Do you know how much you spend on food? As a follow up to why we use a cash budget, I’ll take a deeper look into how much we spend on food each month. Food is obviously a necessarily expense, but we don’t all spend the same amount.
The graph above represents the total amount we spend on food and compares the amounts across income brackets. The BLS does a good job of not revealing the exact amounts for each income ‘quintile’, but I did find the top tier is a pretax income greater than or equal to $93,358. From that, I’ll guess the following for the other tiers:
Lowest 20 percent = less than $24,000
Second 20 percent = $24,000 – $46,000
Third 20 percent = $46,000 – $70,000
Fourth 20 percent = $70,000 – $93,358
Highest 20 percent = $93,358+
You can see the wide discrepancy in spending on food between the lowest and highest income brackets in the chart above ($7,200 annually). That’s a pretty amazing difference. What we don’t know is if it’s at all a product of family size, as this isn’t included in the data. However, I would assume family size isn’t that big of a variable.
My initial guess was the major difference in the amount spent by income bracket would be attributed to food eaten ‘away from home’. This would easily support the assumption that rich people are always eating at fancy restaurants.
Instead, it appears the amount spent at home vs away from home stays proportionately the same throughout the brackets, but it does rise slightly more at the top. For example, the 2nd tier spends about $500 more on eating out than the first tier; they also spend around $500 more on food at home. It just shows that we do eat more expensive food at home and at restaurants as we make more money. When you compare food costs at Wal-Mart with that of Whole Foods, you can quickly see how this is possible.
So how much should you spend on food?
If I look at how much we actually spend on food, our total is probably around $700 per month. However, our monthly food budget is around $900 ($500 for groceries, $400 for going out to eat) because groceries includes all home goods. If we look at the total amount just on food, we’re probably around $8,400 per year, and that’s without kids!
If we needed to cut our budget down we could. Since we are able to, we do try to buy organic meat and fruits/vegetables. We could also cut out our going out to eat budget , but there are just so many great places to eat in New Orleans!! The entertainment amount includes alcohol as well… an often forgotten budget killer.
As I discussed in the cash budget section, you should track how much you currently spend, and then start tracking the actual amounts each month. Most people can easily cut out their ‘going out to eat’ fund if they really need to tighten up their spending. Also, you can get creative with coupons and read about additional ways to save.
Another interesting chart is how much we spend on meals away from home. The chart below reviews where the money is spent by income bracket per week; breaking it into breakfast, lunch, dinner, and snacks. It’s pretty amazing the first tier spend on average $60 less per week on food away from home than the top tier.
There you have it, our food expenses are mostly a product of our income, and if we need to get serious and cut expenses, it should definitely be possible. Are you surprised how much the average household spend on food? How much do you spend on food? Make sure you check out the detailed breakdown of food expenses as well.