Personal Finance – Page 9 – Financial Memos

In 2015 our family finally started to get serious about our finances; we had to get into financial shape! Boy, our money side of life was in a mess. So everything came up for review of what we were spending money on ... and groceries didn't evade the "budget committee's" gaze. The amount we were spending here was not good, well it wasn't purposeful. And so we had to look at how to save money on our groceries shopping. According to Business Insider, American households spend from $316 to $516 per month on groceries. Without getting to the details of changing household sizes, cost of living differences etc., that is a lot of money for the average household. Based on the 2018 average household income of $61,937, groceries can be around 10% of gross income. So after taxes, mortgage/rent, the power bill, insurance, etc., groceries consume a large part of take-home pay. Below are the top ten ways we used and still use to this day to help us maintain a measured spend on our groceries. Like we have mentioned in other articles on personal finance, it is the little things done often that will often get us into a financial mess .... but when reversed, it will get us out of one too. 1. Grocery List We maintain a grocery list in two ways. First, as we notice things are running low (or out), they will get placed on the list for the next shop. As we have progressed in our financial literacy and discipline, this has just become a weekly habit that has paid off probably in the saving of thousands of dollars. How? It stops the impulse buy, helps to keep to the weekly shop (do popping into the shops because you forgot something) and feeds, pun intended, into the monthly budget process. By shopping for our groceries online, the next item in our top 10, there is an ongoing record of the shop each week, and as most of us are creatures of habit, the grocery list doesn't change that much from week to week. And has actually made the process a lot quicker than before. So it has saved time ... and saved money. 2. Online Ordering Another action that has also saved us a lot of time and money. Online grocery shopping really helps to discipline food spending. It minimises impulse spending, helps to keep to the weekly grocery list, and we know exactly what that weekly shop will cost. We then know what, on average, the weekly shop should cost us from the monthly budget. If we are a bit over or a bit under, we know we will have a bit less or a bit more for next weeks spend. The time saving on paying someone else to select the items, pack them and bring them to our door is considerable. And nowadays that my dear wife is not as well, it has been such a big help as I have cared for her at home and not had to worry about trying to fit in a trip to the supermarket for food. Normally the night before the delivery is due, I will sit down with the shopping list and update the delivery with what is needed. Take out anything not required and add anything needed. Online also enables me to see any specials that might be offered and see whether these are worthwhile. For example, we have taken advantage of offers on mouth wash, cereal, potato chips, toilet paper, etc. (I'm sure there have been others, but they don't spring to mind as I'm writing this). Of course, these "specials" aren't good if one ends up spending more overall. And that is where the monthly budget process comes. If during a month I've spent up on some specials on things I know we use through the year, then the following grocery budgets need to reflect this. 3. Keep out of the Supermarket Even before we started shopping online and doing the grocery list, my wife and I decided to shop for groceries just once a week to see how much money would save us. When we began the financial shake-up back in 2015, I noticed from the bank (and credit card statements) how often we were both "just popping into" the supermarket for a few things. And how much that was adding up! After implementing these simple behaviour changes, and that is all these top ten tips are, I noticed a change in our spending straight away - with little difference in what we were cooking and eating. And if anything, less food waste. A study back in 2019 found in the UK, where we live, on average, families were throwing away approximately £355 ($500) of food a year. 4. Monthly Budget We have previously written about the importance of a personal budget or plan when it comes to your money. Most of us don't do them. For me, it was probably about the control the future me wanted to impose on the current me. I wouldn't say I liked it one little bit. Not that I would have admitted it at the time - but that is probably the truth. For many, I suspect it is the same. In talking about money to many friends and family and asking about this point (when appropriate), the most comment answer is "I don't know what will come up and so can't plan". Or something like that. And to make a monthly budget process worse ... it has three parts! Make a plan for next months spending. So knowing what you have spend before and look at what is coming up. As much as probably most of us don't want to admit, our lives are not normally that different from month-to-month.Follow the plan. Yip, actually know what is in the plan and then follow it for the month. This doesn't mean things don't change. They do. But with a plan you can now decide what changes are needed and know the financial impact this will have.Review and repeat. Month-in-month-out the process needs to be followed. You need to give the review process enough time to become a habit, and refine it along the way. The studies on how long something takes to become a habit vary so much. But do this process for a year and should stick for a life time. 5. Meal Planning As part of sitting down with the groceries list and ordering online, we set out a weekly meal plan. We don't always stick with it. But it provides a pretty good measure of what food we need for the week. We know what dishes we like and what goes into them - and this doesn't change many weeks to week. The breakfasts and lunches are certainly much easier to set out as they don't change a lot. 6. Not When You are Hungry This one applies whether you are buying online or visiting the supermarket. Buying food when you are hungry will always lead you to buy more than you probably need. It can also lead you to buy more convenience foods as you are want something quick and easy to meet that hunger need. 7. Watch for the Specials When we sit down for online ordering, this is when we look for specials on the website. Supermarkets aren't shy about pushing these - and we are always happy to take advantage of these specials to help save money on the weekly groceries. They spend a lot of money on promotion and loss leaders to extract more money from your wallet. And without a plan, they normally will succeed. But if you have a budget in hand, you know where savings can be made and banked! Not by you spending more on specials and then being no better off. In the finance niche, this is referred to as buying on a non-demand basis; i.e. you can buy as specials arise, keep these supplies in stock, and know that you are buying on a per item less and saving overall. This is built on two assumptions, of course: as discussed, you then don't go spending more else where and therefore saving nothing in the end; andyou don't use the "specials" purchased either through buying too much before say expiry date or never getting round to using the product. This is a double waste in terms of the money spent and the extra going into landfill or recycling. 8. Spare Meal Preparation We do need more freezer space to make more use of this, but certainly, when it comes to dividing meat packs into smaller portions for cooking later, we use this approach - rather than whole meals themselves. But the best bang for the buck is those who can put aside whole meals for later. This means little is wasted, and there is much less temptation for convenience foods or, worse for your budget .... takeaways! 9. Generic Brands The variety available from the supermarket labels is impressive and often of similar quality to the more popular "label" products. We have found buying generic brands has been an effective tool in our drive to save money on groceries. This isn't always the case, of course. For example, we have a particular breakfast both my wife and I like. However, the supermarket brought out their own "similar" products, and so we tried that. Nope. Although it was a lot cheaper (which the budget committee loved), it was much lower quality. And this is where you can then start to make some judgement calls. I know that saving a dollar or two on breakfast cereal will not make a measurable difference in your personal wealth. It will mathematically make a difference - but you won't notice it. In our case, the reduction in quality wasn't worth the cost savings, so we went back to the more expensive "label" product. Instead, we did when the "label" product went on special at our supermarket, we bought up large and stockpiled it. This was instead of adding to the weekly shop. The savings again are difficult to measure - but done over a long period of time, and regularly, this WILL make a difference. 10. Remember the Freezer And last but not least is the freezer. We mean using the freezer as part of meal planning, supermarket specials and spare meal preparation; in effect, it supports your efforts in the above nine top tips in how you can save money on groceries. You might be like us and limited in how much freezer space you have (or have none at all). But if you can, things we have done to improve the freezer usage are: keep the freezer well defrosted - it can build up over time;when our old fridge "gave up the ghost" and was beyond economic repair, we purchased a new one (on special of course) with a freezer unit under the fridge compartment; anda review of the weekly meal plan includes keeping a good eye on what is actually in the freezer and not letting things spoil by sitting there, hiding at the back, and going out of date. Conclusion And that is our top ten tips on how to save money on your weekly groceries shop. We hope one or two of our suggestions might be of use to you. If you have good ideas, please drop a comment below such others may benefit too.