Bet that title resulted in some heads turning. Recently I was asked to look at a personâ€™s financial statements for the month. Basically, at the end of the month he had about $500 of spending money left based on an approximate $2500/month in income. Here was the interesting thing with this I thought. All the key expenses such as the house utilities, insurances and property taxes came up to about $800 to $1000 a month. Then, apparently a whopping $1000/month is budgeted to be spent on groceries. For the record, there are about three mouths to feed.
I was just thinking of it from a percentage point of view and how a minimum of 40% of the monthly budget is spent on food to buy at the grocery store. This is not including when they do say dine out as that comes out of the $500 pool. While of course everyone needs to eat and all, this kind of makes me think how because we classify something as an essential that we sometimes tend to just spend too much.
In an extreme financially savvy situation, I would say the revolve your meals around what is on sale mentality would probably help you to eliminate spending too much on food. Cause usually when you give yourself a budget like this you tend to just spend it all as it is in what you consider a justifiable and necessary category.
A common point that I noticed in this situation too was that they didnâ€™t really become money conscious until the funds dipped below a certain number. Example, if $1000 is the budget, the first week they would buy almost anything and everything that they want. Itâ€™s not until there is say about $200 left until they stop and try to find things that are on sale only.
One way I always like to think about it is that when I go to places like the grocery store I am doing so mostly out of convenience and variety. Example, if I wanted a cup full of berries I can go to the store and pay say $3 or find an area that grows it in the wild and pick it for free. Of course things like meat is a little different due to my lifestyle as I canâ€™t exactly just find say a cow and process it as with that it is way cheaper to just buy it from a store, but again with that it is not really a necessity though.
This almost reminds me of bottled water in some ways. Yes, you do need water to liveâ€¦.but buying bottled water should be treated more as an unnecessary expense Iâ€™d say if you live in places like North America for the most part. I think that mentality would help with budgeting too. For me personally if I ever want an item that I clearly identify as not being a necessity that costs a lot of money I usually say to myself that to do so I must sacrifice something else.
Example, letâ€™s pretend I did buy a bottle of water for $1. To make it up, one day if I need to go somewhere I am going to say walk there to avoid spending money on transportation to make up for that dollar. Or letâ€™s say with food. If there are items that are clearly on sale like say a whole chicken and for some odd reason I wanted to buy this huge lobster instead at full price Iâ€™m not going to just consider that as an essential food expense. In many ways that is over indulging to be more classified as unnecessary.
Of course everything heavily depends on how much you make financially in life as for some maybe a lobster is the equivalent to buying like a chocolate bar and so caviar would be more of the unnecessary for you. But if you are actively trying to save more, rethinking about the things like your food budget and clearly making a system for what is non essential for you based on money can probably save you a lot.