Food is the 3rd biggest expenses in the American budget and one with a wide spectrum of saving possibilities.
Live off ramen and bologna sandwiches, and your food budget could be 75% lower than the average American family.
Shop with your eyes and buy all the nice shiny packages and you could cost yourself a million smackeroos.
Saving on food expenses is one of the toughest psychologically. No single shopping decision moves the needle like the car or house you buy, so what you save in a single isolated shopping trip may seem meaningless.
Buying a single generic jar of pickles certainly will not give you investable money you can retire on. Nor will a family size box of cereal or generic branded yogurt.
In fact, if you exclusively buy sales, bulk, and/or generic brand groceries like the FI family, a single shopping trip receipt probably wont look that much different to you than your normal grocery bill. It may even be higher initially as you stock up bulk purchases.
But stay the course. There could be a million dollar pot of gold waiting for you at the end of the rainbow, and its early retirement money, not that name brand box of Lucky Charms.
It’s going to be weekly a battle at the supermarket if you are going to create this pot of gold with your shopping habits, but the battle is worth your effort.
You can and should save gobs of money at the supermarket, and investing those savings could make you a millionaire in 30 years. You can even buy your precious Doritos when you need a treat (I am a self-confessed Doritos addict). All things in moderation, and there is not a worthwhile generic equivalent for every item you want or need at the store. But there is for most.
Over time, focusing on buying generic/sales/bulk everywhere you can will generate savings that really rack up. Over the course of 15 years, my expanding family saved well over $100K in grocery cost alone, and we ate the some porkchop sandwiches, the same delicious and salty potato chips, and the same green bean casserole as every other American.
How did we do it? Read on!
What you can save on Groceries
Statistics on the average grocery bill are murky as dishwater. For the sake of comparison, a family of 4’s estimated monthly budget is $967, or around $11K a year. The FI family’s is ~$550 (or less), clocking in at $6600. That’s nearly a $5,000 difference. How is ours so much less?
The savings are 100% through conscious buying decisions – always buying generic, on sale, and in bulk, every trip, every week. Its as simple as that.
A few other tips can make this easier or more accessible.
The first is choice of supermarket. Shopping at discount stores like Aldi or Kroger will provide more opportunities to get your main groceries off brand. At Target, its impossible.
A second tip is to utilize a deep freeze to stockpile sales of perishables and to buy freezer bags, Tupperware, and other food saver accessories that will help ensure your sound purchases last and don’t end up in the compost heap.
If instead you shop at more expensive grocery stores, buy name brand, buy conveniently packaged single serve products (like Lean Cuisines), and shop with your eyes instead of your wits . . . you will undoubtedly outspend the FI family almost 2 to 1, and you’ll still come back home to put the same basic foods on the shelf.
Consider a loaf of name brand plain white bread right now goes for anywhere from $3 to $4, and Aldi sells the same white bread for $0.89, which is 75% less. Multiply that by most of your groceries over 15 years, and you will see how easily shopping decisions can translate to either tremendous savings or tremendously high expenses.
Avoiding this fate and lost investment opportunity does not take any special skill, website deal hunting, coupons, or even sacrifice. Aside from making a shopping list (maybe half the time at best if I am honest), I simply shop mostly at discount stores and buy what is on sale, generic, and in bulk without fail.
I didn’t religiously track my expenses for these 15 years (aside from checking credit card statements 2x a year, and more recently using Personal Capital). Yet my family managed to save this much by making sound decisions every shopping trip.
Had I spent like most American families, I would have given up $149K in invested savings over 15 years. If I don’t save another dollar on groceries today forward, and I hold this money for another 15 years in the Total Stock Market, it would grow from $149K to a whopping $624K!
Now I ask you: If I offered you a box of Honey Comb, JIF peanut butter, and Prairie Farms milk . . . or a check for $624K you couldn’t cash for 30 years, which would you pick? Your morning PB toast or bowl of cereal is going to taste the same in either scenario, but your wallet will be a lot fatter in only one!
Dining Out
The average American family dines out too much, and it costs. How much?
Estimates vary. Many studies suggest 6 times a week per person at an average meal cost of $11.00. For a family of 4, that’s over $13K a year!
I think that figure is high, so to ensure my comparative analysis is not skewed in anyway, I will instead use a low ball estimate to compare my family budget to.
On the low end, let’s say the average family has 6 meals out a month (including lunches and dinners), at a cost of $50 a visit ($3600/yr). Most families of 4 with two working parents likely spend higher, especially when you add in extras, like deserts, cocktails, etc, which I’ll get into in a moment.
My family on the other hand dines out an average of 2 x month (maybe more some months if there is a birthday), and though our average is under $50 a pop usually, I’ve left it there for easy comparison ($1200/yr). That’s still a difference of $2400 a year between the FI family and the average American.
Now let’s discuss just 2 extras that my family religiously cuts: restaurants drinks and appetizers. I’ve conservatively estimated that the average American family buys appetizers (9.99 a pop) and restaurant drinks (2.99 a pop for that iced tea) at least 2 x month. That’s another $768 a year my family avoids.
This modest approach allows my family the luxury of a regular meal out, but it saves my family at least $3167 a year. We have saved at least $94K over 15 years (invested). If we never saved another dollar on dining out and kept that money invested, it would grow to an incredible $394K in another 15 years.
I’ll take $394K in retirement investment over a $2.99 Peach Iced Tea that tastes like garbage any day. How about you?
Conclusion
As you can see, food is a top 3 major expense, and one that can be greatly inflated or greatly reduced depending on personal choices you make every day.
Saving money here can shave years, even decades, off your working life. As described above, expense cutting on dining out and groceries over 30 years actually can make you a millionaire.
There is nothing sexy about the packaging on a loaf of bread or a jug of milk. Half the time you order an appetizer, its $10 for 5 little crab balls that are dry as hell and 98% cornmeal. Its not much of a sacrifice to cut these items from your budget. It will even help you retire early.
What about you? Care to share any of your tricks and tips to easily cut back on your food budget with limited sacrifice? Leave a comment down below.