Budgeting for food and the cost of eating out

As autumn begins, let’s look at something that most of us really enjoy – food!

Many of us have favorite foods and restaurants that we enjoy, but one thing to consider is the cost. How do we plan a budget for food, and what is the cost of eating out versus preparing a meal at home?

Here are some tips and ideas that can serve as good starting points to help you plan and budget so you can still enjoy your favorite foods and restaurants without going over your budget. It might be easy to justify overspending while shopping by saying that “it is still cheaper than eating out,” and while that might be true, a monthly food budget plays a major role in your financial success. It is an area often overlooked in a normal budget and can have major consequences on finances.

First, let’s look at the costs associated with eating out. There are various types of places to eat, including fast food, fast-casual, casual and fine dining. However, it is important to note that takeout and delivery are also forms of eating out. Each of the options varies in cost.

According to the Bureau of Labor Statistics, the average household cost of eating out is $3,000 per year. That includes single-person households.

What costs are associated with eating out that are not a part of preparing meals at home?

Tipping: While this is not typically added to a bill automatically, it is something that many people do, and increases the cost of a meal.

Markup cost: Typically, the markup is two to three times more than if you make the food at home. That is how restaurants make money on the food and drinks they serve. This number is not the same for all restaurants, but all restaurants have some markup.

Eating out is not a bad thing. It can be done to celebrate a special occasion or event, to socialize or just to get a break from cooking. The important thing is that you are conscious of what you are spending, and you have a set budget for eating out.

Now let’s look at how to establish a grocery budget. Keep in mind this is only for food, not personal-care items or hygiene products such as soap, toothpaste or paper towels.

The general rule of thumb that many people use is $100 per person a month for groceries (for example, a family of five should budget $500 per month). While this is a good starting point, there are two exceptions to this rule in general. First, for a single-person household, consider budgeting $200 per month. Second, for a two-person household, consider $300 per month. This will provide $100 per month per person, as well as an additional $100 per month to stock up on sale items that have a longer shelf life. Depending on your finances, you might want to be below this number or above it. The key is having a realistic and comfortable number in your budget and sticking to it.

When it is time to shop, here are five tips that can be helpful to keep you within your budget:

Look at weekly ads: Peruse them before making a list. That is an easy way to start saving money because it will allow you to buy items on sale.

Create a meal plan: Once you see what items are on sale for the week, create a menu around that so you will have a plan for meal preparation.

Taking note of your food inventory will allow you to avoid buying things you do not need and allow you to use what you already have before it expires. That will allow you to reduce food waste.

Pay in cash: Paying in cash will help you stick to your budget because you have a physical barrier to prevent you from overspending. It will help you know where your money is going, since you are not just swiping a card.

Buy in bulk: When you buy in bulk, the cost per unit is lower than buying one item by itself. You also will be able to build reserves on items that you tend to use more often, allowing you to prepare multiple meals from your bulk purchases.

In the end, the goal of making a grocery budget is not to be restrictive. It can help you become more creative with your meals and allow you to save money at the same time.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. It is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Jacob Barr and not necessarily those of Raymond James. Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial adviser about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors Inc. Ark Financial Advisors is not a registered broker/dealer and is independent of Raymond James Financial Services.

Written by Jacob W. Barr Financial adviser Raymond James Financial Services