How we save on groceries – a data driven approach.

I’m a strong believer in making decisions based on data. Without data, you’re simply guessing. We are big user of all the financial data I’ve gathered over the years. We look for trends and patterns in our spending and areas where we can cut costs. This post is about how we are using data to help us save on groceries.

Using data to cut grocery bills

One of the biggest costs the Smith family has in groceries and food. On average we spend about $2,500 per month on all things edible. Its also the biggest category of spending that we have some ability to actually do something about. We can’t do much about the mortgage (unless we pay it down) and the school fees are fixed. These are what accountants call fixed costs. Hard to change in the short term. Groceries, however, are variable and something we can change with a few simple steps.

Grocery spending data

First, the data and then how will use the data to save on our groceries. We currently spend around $2,500 per month on all food types, including groceries, eating out (mostly Mr Smiths lunches) and alcohol (which I track separately).

Monthly food spending

As you can see from our monthly reports, grocery spending is usually one of the top 5 spending categories we have each month. Its also the one with the most short term flexibility. Our aim is to reduce our food bill towards $2,000 per month WITHOUT compromising on the quality of the food we buy. Sure, we could buy cheaper cuts of meat or stop eating more expensive items like fish, but our health is also important to us. Unfortunately, in this 21st century world, eating healthy foods often costs more than eating junk.

What our spending data can’t tell us, unfortunately, is what we actually spend the money on. We know where we spent it, how much was spent and what date, but whether it was on nappies, fresh veggies or a tin of baked beans is unknown. So, the plan to reduce spending is going to have to be based on a few assumptions about where the money goes. Our aim is to reduce grocery spending to around $2,000 per month, from $2,500.

From a high level analysis, we know that the bulk of our spending is at supermarkets. Below I have aggregated the various types of places we eat out at. Supermarkets are up a lot in January – unsure why. We can also get take out down by taking lunch more often (see tips below).

Also its interesting that our last fine dining night out was over 6 months ago, before cost center #4 was born. Maybe its time for Mr and Mrs Smith to have another nice night out?

Spending by store type

How we’re reducing our grocery bills

After the analysis of our spending, its time to see where we can reduce the spending.

1. Start taking lunch

While it’s the most obvious solution, taking my lunch to work several times a week will help cut down on food costs. Eating out in the CBD is getting expensive. Lunch used to cost $10 to $12 now cost $15+. It all adds up. Its also healthier. While I am blessed to work in a part of town with lots of ‘healthy’ options around, its still never going to be as healthy as putting together your own food from your own ingredients.

2. Buy in BULK

Buying in bulk allows us to take advantage of special deals as and when they arise. Cost centers #3 and #4 use a lot of nappies, so looking for alternatives sources is definitely on the cards. Also, looking for deals on sites such as Catch of the Day is becoming an almost fun past time. Bought a years supply of high quality dishwasher tablets the other day for 80% off. Sounds like a great bargain to me.

3. Join a food co-op

We are looking at joining a food co-op. Healthy eating is very important to us and by joining a food co-op we can get both fresh, locally grown foods, as well as save money. While the initial reaction might be ‘whats the catch?’, there doesn’t seem to be one.

4. Use a discount site

Again, I might be late to the party here, but we have started using Cashrewards for as much shopping as possible. Especially items like groceries. Getting cash back each month is a nice little feeling, even if we have to spend money to make money.

5. Stop the Waste

Finally, we can stop the waste. Australians waster billions on food every year. While we’ve been pretty good at not wasting food, there is always room for improvement. Coupled with “1. taking my lunch”, this should help us drive down costs.

Jim Smith

James Smith is a personal finance expert with over 20 years experience. He believe that money should not be stressful. By using the Stress Free Money pyramid it helps everyone achieve their financial dreams.

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4 Responses

  1. February 19, 2019

    […] have recently begun digging deep into the data on our food spending. Not only has this given us a good insight already into our biggest cost after the mortgage, its […]

  2. March 3, 2019

    […] focusing on our expenses this month and the results have paid off! Our biggest area of focus was our grocery bill, which seemed to have gotten out of control (who the hell spends $2,500 on groceries?). Luckily for […]

  3. March 21, 2019

    […] terms of expenses, after loan repayments our next biggest expense is food and groceries. We are making a concerted effort to reduce spending in this category over the next 12 months. So far, we are tracking ok on this […]

  4. April 5, 2019

    […] been keeping a close eye on our food bills. This month was up compared to February, due to dining out when we were away. Our actual grocery […]

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