When we set out on our journey to financial independence we did a thoughtful and detailed analysis of the areas we wanted to spend on without cutting back (mostly kids and travel), and what we want to cut back on significantly to increase our savings rate. One of the areas that was and continues to be a problem area for us is our spending on food. In our budget we have set what we feel is a reasonable target for spending for a family of four on both groceries, and occasionally eating out, but we routinely go over our budget in this area. Some months we do OK, and other months we completely blow past our budgeted amount. This in turn either lowers our savings rate, or makes us have to cut in other places. This is definitely a weak area in our spending and one we should be able to better control.
Some of our excessive costs on food can be attributed to the desire to have healthy food such as fresh fruit available in our house, especially for our kids, and the fact that those same kids can create a very compressed and stressful schedule which leads to purchasing takeaway and prepared meals just to save time and stress. This is essentially our version of throwing money at something to just take care of it. For some this might be completely ok, but we really want to get better in this area. I am also amazed at the amount of food that a three year old and a six year old can consume, and when our kids want more fruit or vegetables, they are going to get it!
Currently we are spending between $1250 -$1,800 a month in our grocery category and another $200 – $300 eating out (or take out) for a family of four. Just looking at our grocery spending we are above the liberal spending plan according to the USDA Cost of Food Reports and we live in a somewhat low cost of living area, especially when it comes to food. Regardless, considering our goals, I think our spending is too high when trying to achieve and then maintain financial independence. We are not looking to cut down drastically to a rice and beans only diet (that is just not us and we are fortunate for it), but we need to find a better balance. This has led us to make this category a strong area of focus for our FI project over the last couple of months, and we have discovered some interesting things along the way.
After taking a careful look at the spending in our grocery category, the first problem I have identified is the way that we are tracking grocery spending. Since my spouse usually does a majority of the grocery shopping (by design and choice) I simply take the receipt from the grocery store and enter it into the grocery category of our spreadsheet. The problem with this is that I am not really taking a good look at what is being purchased, and not all of the spending at the grocery store is actually spent on what would normally be considered groceries or food. For example, we have cats and we buy litter and supplies for them at the grocery store, and these items can add up. I really should be putting this in a different category if nothing else so that I know what the actual costs of our pets are compared to what we actually spend on food. I know for some this might not make a big difference, but I want to look at all data on a granular level to make better informed decisions, and understand what can be cut and what can’t (like spending on our pets). Other items purchased from the grocery store sometimes include household items such as cleaning supplies, toiletries, medications, and even gifts. Ultimately the goal is to reduce spending, but without knowing the true category where the money is being spent, it makes it hard to try to reduce or find alternatives that might be cheaper from another source. After a careful and detailed look at this over the last month, maybe our food spending is not that high, but we simply have other items are adding up to inflate that number. I will say that we may need to think about the stores we go to as well that leads to some things creeping in and being purchased that are not on our lists… looking at you Target…
The second problem is we simply need to do better planning. When I see items we purchase ultimately going to waste without being used, it can be a bit frustrating. Sometimes it is simply an item that made its way to the back of the pantry or the refrigerator and went unnoticed until it expired or went bad. Another issue with our current system is that it often results in multiple trips to the grocery store per week as we decide, sometimes at the last minute, what to eat. We also need to develop a better way to track the items we have in our pantry. We have tried to address this by moving to a system where we plan out all of our meals for the week ahead of time, and purchase the items needed for those meals while at the same time looking to purchase things that can be used in multiple times. We have had mixed success with this so far, so honestly it is a work in progress.
Finally, we do have some some factors that contribute to increased food costs that are a little bit harder to resolve. My wife is a vegetarian and I am not which at times means we make two different versions of the same meal, one with meat and one without. I can, of course, eat meals that do not contain meat, and I often do, but there are other times I want to eat meat (or to not eat the vegetarian meat substitute) as part of my meal. We also try to avoid eating processed foods and most of our meals are made from scratch. In some areas this can save money, but in others it makes it more expensive. We typically don’t bother with coupons since the majority of coupons are for the types of foods and products that we do not eat (highly processed).
Honestly, I feel like I am mostly rambling on this topic while I review our budget and spending this month while preparing our monthly project update. I just think it is important to point out that we still have a lot of things that we just are not that good at even when we are hyper-focused on our finances, and our food spending, and lack of control in this area illustrates that.