Is Eating Out Eating a Hole In Your Wallet?!
It is totally understandable in today’s society to spend money eating out. It is so much easier to eat out than to cook. In order to cook, you have to go grocery shopping, then prepare it, and then clean up after. Not only is it easier to eat out, but it’s also exponentially faster. Who wants to waste time cooking when you can go somewhere and have food delivered to you so fast it’s almost like magic? And let’s not even get me started on the wonders of fast food. Plus, eating out is sooo much fun! I don’t know about you, but eating out and grabbing a couple drinks with my favorite people is my favorite past time. So it’s no wonder that more and more people are opting out of cooking for eating out on a regular basis. Plus, with the option of getting virtually anything delivered, why would anyone want to cook at home anymore? That is why eating out is becoming the norm.
With eating out being so easy, fast, and fun it’s no wonder that from 2015 to 2016, for the first time in history, Americans spent more money at bars and restaurants than on groceries. Maurie Backman from Fox Business reports that the exact numbers are $54.857 billion on bars and restaurants and $52.503 billion on groceries. So essentially, what you save in convenience you lose in cash. Yes, everyone has to eat, so you have to spend money on food. But where you buy your food and how it’s prepared makes a huge difference. According to the Bureau of Labor Statistics, the average American spends about $3,008 a year eating out. Most food establishments charge a 300% markup on the items they serve. That means we are throwing away about $2,000 a year on eating out. That money could be used on a plethora of other things, like savings, getting out of debt, investing, etc. Not to mention the money we are losing out on in interest over time if we did use that money to invest.
Side Note: These stats are based on the average American throughout all age groups. The average young adult spends waaaay more than that. I will use myself as an example. When I first created my budget I thought that I only spent about $200 a month eating out. WRONG! When I say wrong, I mean... ridiculously off base here people. When I went through my bank statement and added up any expense that was eating or drinking out for that month, turns out that the $200 I thought I spent was more like $500; more than double my original guess. That’s ridiculous! Now I budget for $200 a month and I stay on track. And $200 a month is still $2,400 a year. But hey, I’m trying here! One step at a time right? Lol.
OK, now that we have established the problem, let’s brainstorm some solutions.
There are a couple ways to combat the eating out epidemic:
Cook at home more. When you plan out your meals and get excited about cooking you can start to save on eating out with very little effort. I know I say this all the time, and I will say it again, cook at home and invite your friends over instead of eating out. In my house, we do taco Tuesday every week, and everyone looks forward to it. You can even take turns cooking, so it doesn’t seem like so much of a chore. Get creative! Brainstorm new recipes with your family and friends and get everyone excited about cooking.
Think outside of the box! Just because you are on a budget does not mean you can’t go out to eat and drink. You just have to do some “innovative thinking”. You could do some good ol’ fashion couponing. I know it sounds cheesy and cheap, but a lot of people actually partake in couponing, including myself. Lol. There are many places to find coupons. Simply go to coupons.com or google the restaurant you plan on going to. Many restaurants have printable store coupons or coupons that you can download straight to your phone. Also, many restaurants have some sort of rewards club that you can sign up for that will send you coupons and free stuff. I also highly recommend Groupon. You can find all kinds of deals on there, that stretch even beyond food and drinks. Finally, take advantage of deals. Most bars have a happy hour. You can stretch your weekly budget out further by attending a couple happy hours instead of one expensive dinner. For example, my job, Miller’s Ale House, offers a late night happy hour with $5 appetizers and pitchers of beer as cheap at $8. My second home, Flanigan’s, gives you a free ten piece wings with the purchase of a late night pitcher of beer. In both of these real-life examples you can get full and tipsy on just about $13 by getting creative with happy hour deals. You could also find where to eat and drink on a budget in your local area. For instance, some places have free tacos on Tuesdays during certain hours. I know a lot of places in my area ladies drink free on certain days at certain times. Hell, when I was in college and on a super budget I had a different place every night of the week that I knew ladies drank for free. When you use tactics like this you can make your budgeted amount go a loooong way.
Budget for it and stick to it. Just like I had to do when I made my budget for the first time, what you think you spend and what you actually spend are usually not even close. So look at your bank statements to see what you actually spend on eating and drinking out. If you seldom eat out then nothing you see on your statements will be news to you. However, if you eat out even just a couple times a week you may be unpleasantly surprised like I was. Sometimes you only pick up some Wendy’s or some Taco Bell, super cheap right? Wrong! Enough small purchases can really add up. Also, small purchases in moderation are usually offset by larger ones. If you only pick up cheap fast food once or twice a week but also dine out at more expensive restaurants then you might still be spending too much. Just make sure that once you have budgeted for eating and drinking out that you only spend that allotted amount every month.
Pay yourself first. If all of this seems too complicated for you, then this is the simplest way to stay on track. Budget all of your other money elsewhere and what is left over is for you do with as you please. For instance if your budget leaves you with a surplus of $500 every month, instead of being tempted by that $500 balance in your checking account, only leave the amount you plan on spending on eating out (Plus your cushion of course. I do not like to let my checking account dip below $500 because you never know what expenses may pop up.) So if your budget for eating out is $200 a month, then put the extra $300 from your surplus, towards something else. For instance, you could use it to pay down a credit card faster, or transfer it to your high yield savings account, or your Roth IRA or 401K, or you could even invest that money instead to see exponential growth. The point is, you can only spend what is in your account, so if you remove the temptation then you are forced to stay on track.
Money Tip: Until you are already used to sticking to your budgeted amount I suggest only paying for food and drinks with cash or a debit card. A lot of people get themselves into debt by putting those expenses on credit cards and not paying them off every month because… duh, it’s not in your budget to spend that much money on eating out. Once you have mastered the art of eating and drinking within your means, then you can use credit cards responsibly.
Now that we know how we can save money on eating and drinking out, how much money should we allot for that in our budget?
I am not going to say any dollar amount specifically, because everyone’s budget is different depending on their income. However, the U.S. Department of Agriculture suggests that we spend no more than 11% of our income on food, 6% on groceries and 5% on eating out. So if you make $3,000 a month you can spend $180 on groceries and $150 on eating out. If the %6 amount you’ve allotted for groceries is not enough to meet your nutritional needs then you should cut back on eating out and use that money to fund your groceries. Regardless of how much you currently spend, try to get your eating out expenses to something reasonable; and once you get to something reasonable you can always cut back more to have a larger surplus at the end of each month.
Long story short, for those of us that overspend on eating out (like me) there is hope. Simply assess your current situation, cut back where you can, settle on a reasonable goal, and meet that goal consistently. The tactic that you use to meet your goal is irrelevant, whatever works best for you, as long as you get there. After a while, sticking to your budgeted amount for eating and drinking out will become second nature to you. Once you gain control of your finances then you can really start making your money work for you.