The Working Backwards Series: How Much Food Can I Afford In My Budget?


The Working Backwards Series?

The Working Backwards Series takes a look at budgeting in each spending category from the standpoint of “how much can I afford given our income, lifestyle and choices?” In this case,  we are talking about a family of four living in Austin, Texas, working toward living in financial freedom, and making $74,000 a year (the average household income in Austin).

What are we trying to accomplish? We want to show what a balanced, sustainable budget looks like, and one way to do that is to “back into” the dollar amount for each budget category given life choices: Raising two children in a two income home.

While we understand we can spend more in categories that mean a lot to us, and each family is different, we want to set expectations that the discipline of a balanced budget, (spending and saving less than we make), requires conscious decisions, sacrifices and tradeoffs to meet our long term goals and desires that include financial freedom.

To see more from the Working Backwards Series, read this previous Working Backward Series post:  Working Backwards SeriesHow Much Auto Can I Afford? 

Topic For This Post: Food


Let’s get right to it: How much food for our family of four can we afford in our budget? And by food we mean both groceries as well as eating out. While some people want to live “large” and eat out at every opportunity, some others find eating out frivolous and minimize it, only to eat at home. In either case, it is worth the effort for each person or family to think through their food spending or risk the issue of significantly overspending.

Let’s start with a couple assumptions. Let’s assume you have an Emergency Fund already in place and that you are saving 15% of your net spendable budget (NSB, total income minus taxes and charitable donations). Let’s also assume you are living on a balanced budget (spending less than you earn) and earn about $74,000 a year. In this scenario, most families can afford up to about 15% of their NSB to go towards groceries and eating out. 

What Does That Look Like – The Math


A $74,000/year household income equates to roughly $54,750/year after taxes and charitable donations, or $4,563/month. At 14% of our budget going to groceries and eating out, that’s roughly $639/month for food or, $7,666/year. That is $160 per person per month, not very much when you figure that’s 3 meals a day  and snacks for the entire family!  Let’s take a look at our budget  to see if we can meet our balanced budget objective:

Budget (% of Net Spendable Budget by category)

Housing (All Expenses)           30%

Autos                                              14%

Food                                                 12%

Insurance                                         4%

Medical                                             2%

Debt Service                                     5%

Savings/Investments                   15%

Entertainment                                5%

Clothing/Shoes                               5%

Vacation                                            8%

Total:                                           100% of Net Spendable Budget (NSB)

Wait a minute, we allocated 14% of our NSB for food, yet the math above only shows 12%, what gives? For this budget exercise, we took a portion of the Entertainment budget (2%) to add to the food budget of 12% to total the 14%. We did this to recognize that eating out is a popular form of entertainment. So from a budgeting standpoint, we can make a balanced budget with 14% of Net Spendable Budget going toward food and dining out, without jeopardizing important budget items like housing, autos or savings.

What Does This Mean For Our Budgets?


What does this look like? Simple math shows us that this budget breaks down to $136/week in groceries and $24/week for eating out. Yikes! You can’t go out to eat with the family of four for $24/week! If you said that you would be right!

The point is that a balanced budget for a family of four on an average household income and with many essential budget categories like housing, auto, children’s needs, etc, does not have much room for groceries and eating out. Plain and simple. While most of American families can make their food budget when they make their own food at home, most of us struggle, or go over budget when they factor in the costs of eating out. In Austin, eating out is so common it is almost considered a right instead of a privilege. And while most of us want to do it regularly , most of us can’t afford it. Ouch. But true. Yet most of us are trying to do just that. And I believe that is one of the major reasons we have more than 75% of households in America living paycheck to paycheck with no savings for emergencies, retirement, college (for the kids) or any money for dreams like vacations or special events (think weddings or cars).


What’s The Solution


There are really only a handful of acceptable actions to keep us within our food budget: 1) Eat at home, prepare your own food and shop frugally  2) Eat out infrequently or very cheaply: tacos anyone? 3) Save up money and go out to eat at a little nicer place to eat once a month.  4) If your budget still needs stretching, shop groceries at big box stores or discount stores to find a better value. But you must be careful because bulk purchases can get expensive, so you must show discipline in limiting your purchases.

Final Word


Living in financial freedom does not allow for large food and eating out spending that drains our bank accounts and ruins our budgets. At least not for a family of four. We found here today that a family of four can only handle about $639/month for food each month.


While many times we go to the credit card to stretch our spending, going into debt for food is not the answer. Fight to be credit card debt free. Use cash or a debit card. Some have the discipline to use their credit card and immediately pay it off, essentially making it like a debit card. Work hard to be patient and only spend money that you have instead of using the credit card company’s money. The temporary enjoyment of buying food or eating out with credit is short lived compared to the lengthy process of paying off the debt. If you must use your credit card and develop a balance in your account. Strive to pay it off quickly so that the exception (credit card debt) does not become the rule. Financial freedom is not easy, but it is worth it. Eat well and live financially free!

Need help with your budget? Here’s a GREAT resource. Click the link and SAVE!

The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness

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