How much you should spend on groceries

Aside from housing, the cost of groceries can be one of the largest monthly expenses you have. After the pandemic, we began to see grocery prices rise significantly due to increased production costs for food producers, supply chain delays, severe drought in certain parts of the world and even a war in Ukraine.

Rising food costs make it more important than ever to know how much you're spending on groceries each month and decide if adjustments should be made. Once you know where you stand, there are some practical ways to save money that you can take advantage of the next time you visit the grocery store.

Here is what will be covered in this article: 

• Suggested grocery spending per month
• Tips for designing your grocery budget
• How to spend less on food and groceries
• How to be strategic with rewards credit cards

Suggested grocery spending per month

The Food Plan from the USDA (PDF) (October 2023) offers guidelines on how much families should spend on groceries. The recommendations consider the cost of a nutritious diet for a range of families. It considers incomes, genders, ages and family sizes. You may find you spend more or less depending on your location or dietary preferences. These numbers offer a good starting point for a grocery budget:

For a family of four (including two children under age 11) in 2023, your spending on groceries should be around $975 a month.

You can also look at your recommended grocery spending based on a percentage of your income. Try and aim to spend no more than 15% of your take home pay on food and groceries.

Tips for designing a grocery budget

As many of us have experienced, it can be tough to be disciplined at the grocery store. One way to tackle the challenge is to create a grocery budget. Budgets help you stick to a spending cap, be more disciplined with your shopping list, and use your dollars wisely. If you walk into the store knowing you can only spend a certain amount, it sets the tone for a more disciplined shopping trip.

Here are some tips for designing a grocery budget:

• Know what you buy in a typical month. Over the course of an average month, take note of what you're buying each week. What are your necessities? What are your indulgences? Does any food go to waste at the end of the week? Write everything down and note how much you spend each week.
• Purge the non-essentials from your list. After you have a good understanding of what you currently buy, decide what can be eliminated. Maybe it's alcohol, snacks or certain perishables that you never seem to get through.
• Decide on your monthly spend cap. Once you have a better idea of what you're currently spending and what you can eliminate, you can decide on a reasonable spending cap. Instead of just buying whatever you want, choose a dollar amount based on your income, your location, the number of people in your household and your overall savings goal.
• Practice makes perfect. If you don't stick perfectly to your budget the first few times you go to the store, that's OK! Over time, you'll discover ways to refine your list. You may even find that it gets easier to pass by the things you used to splurge on.

Ultimately, the amount you spend on food is up to you. But if you want to save in this category, consider setting a dollar amount and sticking to it.

How to spend less on food and groceries

Here are some simple ways to save when you shop.

Meal plan

For a lot of us, the best-laid plans all go out the window when we're hungry. It's easy to find yourself eating out at lunch again, wheeling a grocery cart full of impulse buys or tossing out spoiled food you didn't get around to eating. One way to avoid the grocery bill creep is to make a meal plan in advance.

Do this by deciding what meals you want to prepare for the week, then make a shopping list. This list will keep you focused and less likely to buy a duplicate of something.

Get creative

Two or three times a week, get creative with what you define as dinner. Make scrambled eggs and pancakes one night, pick a vegetarian meal and skip the expensive meat, or whip up a simple BLT sandwich. Dinner doesn't have to be complicated or pricey. It's a fun challenge to see what you can make with just a few inexpensive ingredients.

Pack your lunch

There's no doubt that packing your lunch is less expensive than eating out each day. This takes extra planning and preparation, but once you get in the habit, it could lead to significant savings. Not only do you spend less at restaurants, there may be less waste of the groceries you bought.

Use store loyalty programs

Most grocery stores have a free store rewards program that offers bonuses, discounts and even gas points as incentives for your loyalty to their store. These member-only discounts are automatically deducted at checkout which means you don't have to clip coupons.

While you're shopping, take note of items with a store discount and choose those over regular priced items. You can also access these discounts when you order groceries online or through the store's app.

Cook in bulk

Save time and money by cooking meals in bulk and freezing them. Write down all your family's favorite meals and spend a day making several batches of them at a time. Not only do you maximize the ingredients across multiple recipes (therefore maximizing your dollars), you spend less time wondering what to make for dinner each night.

Look at the price per unit

The item that has the lowest price isn't always the best value when you calculate it's price per unit. Paying attention to unit pricing is a great way to determine the best deal. It allows you to compare two of the same food item packaged in different sizes.

This helps you understand exactly what you're getting for your money and which size or version of the item is the best deal.

How to be strategic with rewards credit cards

A popular way to maximize the dollars you spend at the grocery store is by using a rewards credit card. These cards offer cash back, points or miles on qualified purchase you make. This means that in a high spend category such as groceries, your dollars are working harder and smarter for you throughout the year.

Some credit cards offer a welcome bonus and a low annual fee. Let's say your family spends about $5,000 a year on groceries. If your card earns 5% cash back on grocery store purchases, that would total up to $250! Remember to consider other costs associated with your credit card though, such as an annual fee.

Types of rewards cards

There are a variety of rewards cards and you'll want to choose one that maximizes your most used spend categories, as well as your preferred way to redeem. There are several major types of rewards cards:

Cash back

Earn a percentage of cash back on each purchase you make with the card.

Points

Earn a fixed amount of points per dollar spent. Redemption options differ by card issuer so be sure to read the terms and conditions.

Miles

Earn miles for every dollar you spend redeemable with a specific airline. Typically additional rewards are offered on travel-related purchases.

No matter which rewards card you use, you will likely get more value on your purchases than you would just using cash or a non-rewards credit card. Be strategic in deciding which card you swipe at the grocery store.

Bottom line

Adopting a few new habits is all it takes to start seeing some savings at the grocery store. Knowing your spending, designing a budget and using a rewards credit card to your advantage can all help you reach your savings goals. When you spend less at the grocery store, you free up dollars to pay down debt, invest in the future or even skip the cooking and go out to eat once in a while.