Monday, March 10, 2008

Economizing on Groceries

One of the ways to measure a society's economic progress is by comparing the percent of income spent on food now with that spent by our ancestors. Our prehistoric ancestors devoted most of their waking hours to seeking food. As society has advanced the time and money spent acquiring food has steadily decreased. When I was in college the it the average household spent about 25% of their income on food. Today that average has decreased considerably.

Despite the fact that the portion of income spent on food is decreasing, most of us spend considerably more for food than is necessary to sustain life. But then most of us seek more from life than just keeping ourselves alive. The fact that we do have the luxury of choosing food on the basis of what we enjoy eating rather than struggling to get what we can in order to keep ourselves going is a tribute to the economic progress which has allowed us to fewer and fewer personal resources to the acquisition to this basic ingredient of life. I can still remember my macro economics professor in graduate school who cited a study which claimed the average person in the 1970s could live on $75 worth of food per year. As we looked on in astonishment, he made a face and said "Of course the diet consists of mostly sauerkraut and beans!"

Given that the portion of our income spent on food is decreasing (and this is especially true for people whose incomes are rising) and that much of what we spend on food is discretionary, the household grocery budget is a place where cuts can often be made when money is tight or we just want more funds for other things. climate

The obvious first place to start is to look at food consumption in the household seeking to first identify and eliminate waste. Next, check for substitutes. If you can't tell the difference between the brand name soda, cereal, etc. and the generic equivalent then buy the generic. However, despite the fact that the taste may be the same, if you get more pleasure from drinking soda from a red Coca Cola can than the brown store brand can then, by all means, continue to purchase the Coca Cola. The goal here is to improve your life style by spending more wisely not build cash by sacrificing and lowering your standard of living. Similarly, if you shop at the local Mom and Pop grocery store but can purchase the same products at a lower cost at the Wal Mart down the street go to the Wal Mart. Again, only make this change if your level of satisfaction remains the same. If you enjoy shopping at the Mom and Pop store then continue shopping there.

However, what if you cannot find waste or substitutes? Savings are still possible by managing your spending on groceries. By making some alterations in the way you shop, you can reduce spending on groceries without changing what you buy or where you buy. The suggestions below apply to both those who are unable to find savings through elimination of waste or by making substitutions as well to to those who have achieved savings through one or both of the above.

Below are six suggestions for achieving savings simply by altering your shopping habits:

1 Make a list before going to the store. This can be very elaborate or very simple. At a minimum you should have a general idea as to what you will be eating during the next week and then check the pantry and refrigerator to see how much you already have. Your list will then contain the items that you need but don't have. The more elaborate method would be to plan each meal and then list what you need to purchase to serve those meals. Once in the store stick to your list and limit or, better still, avoid impulse buying.

2 Don't shop when you are hungry. When you are hungry you have a tendency to purchase what looks good. The end result is you use a good portion of your budget for the week's food on a couple of days worth of meals. In conjunction with this try to do all of your grocery shopping in one trip as this will give you both better control over the amount you spend and limit the number of times you are in a store and subject to the temptation of impulse buying.

3 Set a spending target, then keep track of the price of each item you place in your cart and try to keep the final total close to your target. Again, if you do all of your shopping once a week it will be relatively easy to determine how much spend in an average week on groceries. Once you determine a realistic average try to make that your spending target so as to maintain the average.

4 Take advantage of sales. Most cities have multiple stores and they are very competitive. Check the flyer's you receive in your newspaper or in the mail from each store to see who has the best deals. The time to review these flyer's is when you are making up your shopping list. If practical, divide your shopping between a couple of stores, buying the items on your list from the store with the best price. But, be realistic and don't chase all over town buying an item here and and item there just to save five or ten cents. What you spend on time and gas will be more than what you will save on food.

5 Buy frequently used, non-perishable items in bulk or on sale. Things like paper towels, toilet paper, flour, sugar, etc. often offer significant savings per unit when purchased in larger sizes. So long as you use these items regularly and have room to store them, it makes sense to take advantage of the savings. These items are also often either on sale or have coupons which further reduce your final cost. Warehouse stores, like Costco and Sam's Club, often carry these items in bulk at significant price reductions.

6 Sign up for and use a grocery store savers card. Many stores have done away with paper coupons and offer the same sale discounts when the shopping card is presented. Sure, the store will be tracking what you purchase. But, what is so secret about what you are buying? The store's purpose in collecting this information is to enable them to determine what items their customers prefer the most and stock their shelves accordingly. In some places stores also use the information to send targeted coupon mailings to customers. This not only saves the store money on marketing but saves you, the customer, from having to leaf through a 20-page newspaper insert trying to find the two or three coupons for items that you want.

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