The food budget is the most challenging of all the allowances in your monthly household budget. That’s because food is an emotional element of our existence.
However, starting the month without a food budget is akin to walking under the rain without an umbrella: it can be exciting but could make you sick.
Today, I want to discuss how you can determine your food budget and, more importantly, why having a food budget is vital to the wealth-building process. Let’s begin.
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What’s in a budget? Our circumstances determine most of our monthly budget requirements. For example, most of us can’t control our monthly mortgage, electricity, phone, and water bills; these costs are baked into our lives.
However, there are two allotments that stand out as being flexible from month to month: food and entertainment.
I started focusing on my food budget about five years ago when I got serious about tracking my finances. I determined that food is the allotment that expands quietly and quickly.
Let’s look into a typical household that brings in $10,000 per month. Let’s say the mortgage ($3,000), utilities ($1,000), cars ($1,000), debt ($1,000), and savings ($1,000) total $7,000.
Since this household doesn’t have a food budget, food is free to expand between $0 to $3,000. That’s why limiting your food spending and saving the remaining difference is essential.
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Ask someone about their food budget. Ask someone about their food budget if you want to see how serious they are about their finances.
I recently asked my brother, who lives in New York City, what his food budget is, and he didn’t have an answer. For him, buying food is an emotional decision that changes every day.
My family of four has a food budget of $800 per month. We live in Pensacola, Florida, which is the South. Your food costs may be higher in bigger cities, but you can also make more money.
My wife controls the food budget. On the first of the month, I transfer her $800 to her Cash app from my retirement paycheck.
My wife shops at a combination of places like Walmart, Aldi, and Grocery Outlet—with the occasional stop at Publix.
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My wife prepares most of the meals for the family. In other words, she cooks. Her ability to cook has been a boon for our bottom line.
From time to time, she stocks up on some prepared meals so that me and the two boys can survive without her cooking magic.
The moral of the story is that my wife is a force multiplier when it comes to food budgeting and preparation. You will have to find your own sources of power in this area.
Your budget your way. The best part of budgeting is putting your stamp on your vision. No one can tell you how your budget looks and acts.
For example, you can include restaurants in your monthly food budget, or you can have an entire standalone budget for eating out.
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You can create a weekly food budget, say $300. Or you can separate your food budgets into one for each member of the family.
No one can determine how your budget functions; however, the key is that it is functional. Don’t create a budget you overrun within the first ten days of the month.
Getting started with a food budget. If you are new to the food budgeting world, it may take some time to grasp what’s to come.
The key is to start with a high enough number that you can succeed. A good number is 10% of your household income.
As you start, you have to be realistic with yourself. When you purchase something, you must understand if it is “optional” or “upgraded.”
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What this means is that you understand that you are purchasing higher-priced items versus other store brands. Nothing is wrong with this, but you must know your purchase is a choice.
You must identify these moments because you may need to cut spending once your budget takes shape.
I love purchasing expensive brands of laundry soap, detergent softener, paper towels, and toilet paper. I have too many bad memories of using cheap stuff during my Marine Corps career. It is important to me to use expensive name brands in these areas.
On a side note, you must also decide if you want to include household goods like toilet paper and dishwashing liquid in your food budget. We keep ours separate.
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The magic of budgeting. As your food budget takes shape, you will start to notice much more money in your pockets. It should be a stark contrast to your previous lifestyle.
But what do you do with the extra money? Now is the time to start getting rich. You will want to start investing in dividends.
Let’s say you free up $500 monthly after starting your food budget. That is money you can use to invest in dividend stocks like Verizon (VZ) and AT&T (T).
Why is it important to invest? These stocks will pay you to hold them. You can then use the dividends to purchase more niche food products.
Let’s look at two dividends I received on the first of this month from Verizon (VZ) and AT&T (T). I received $30.83 from Verizon and $33.54 from AT&T.
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I can use this money to purchase anything I want on this Earth—under $65, of course. The idea is that dividends will eventually supplement your basic food allowance, allowing you to purchase fancier items.
Yes, it will take some time to understand the concept of dividend investing, but you will love it. The feeling you get when you receive a dividend is unparalleled in the financial world.
How to get rich. There are only two ways to get rich: decrease expenses and increase income. By creating a food budget and diving investing, you are tapping into both techniques.
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Going to the grocery store without a plan is a fool’s errand. The major corporations want you to walk the aisles with an unlimited pocketbook.
As you start to build your budget, you must ask yourself some important questions. Where do I shop? Can I find this product cheaper at Walmart versus Publix? What items are on sale today? What do we have as far as leftovers?
We would truly love to shop at Publix each time. However, our budget doesn’t allow us to shop there. Yes, we make over $2,200 per month in dividends, but spending money just to say we should at Publix would be frivolous.
Conclusion. You must ask yourself the deep questions. Many people are vehemently against shopping at Walmart versus Target. That’s well and dandy, but how much money have these shoppers saved?
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My wife and I are quickly approaching $400,000 in the bank. Keeping a tight budget works wonders for wealth building.
I would wager a guess that we have much more money in the bank than people our age who shop at Publix. We choose to keep saving and investing. Plus, I personally love Walmart and own Walmart (WMT) stock.
Creating a food budget is a major step in the wealth-building process. I know people who spend $2,000 to $3,000 monthly on food without noticing it.
You never know; I could also spend that much money once I become rich. In the meantime, I will stick to the $800 food budget and keep saving and investing. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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