Money Listens

Next to our home and cars, food is the biggest bite out of our budgets.  Since we’re always going to the grocery store, we’re always complaining about how much food costs.  Just how much is reasonable to spend on food anyway?  When in doubt, the IRS has the answer.  Yes, that Internal Revenue Service.

If you’re delinquent on your taxes and want to work out a payment plan, the IRS will allow you amounts to spend on various necessary items, then the rest you pay back to them. The IRS allows a family of 4 to spend $752 per month on food and another $74 on household supplies, which are laundry and cleaning products and paper goods. This is a whopping $826 per month.  This is for all food, including eating out.  (We hope if you’re  behind in your taxes that you hold down the restaurant visits).

Are the IRS numbers in line with what Americans really spend?  Fortunately for us, the U.S. Bureau of Labor Statistics stays on top of this stuff.  The “average” family income in 2006 was $43,799, after taxes.  For a family of 4 people, $552 per month was spent on at home food and household supplies.  This included laundry and cleaning products, but not pet food, shampoo or drugs.   If you have 2 dogs and 2 teenage girls and include dog food and “health and beauty aids” in your grocery budget, this number can go way up.  Believe me, I know.

Low income families, the bottom 20%, with $9,969 yearly income spent $331 per month for 4 people. That’s somewhere in the neighborhood of 20% of income on food.

The top 20%, with the highest income of $141,738 spent $1,097 per month.  Think raspberries in January and wild halibut.  Or imagine doing all your grocery shopping at Whole Foods.

The bottom line?  American families spend between $331 and $1,097 for food and household supplies.  The national average is 9.9% of income.

Your costs could vary.  A lot.

So, how much should we spend?  You have to decide that on your own.  If you’re into organic and natural foods you’re going to spend more.  If you buy a lot of convenience foods or have teenage boys, you’re going to spend much more.  If you shop around the store’s perimeter and buy mainly fresh fruits and vegetables in season and what’s on sale, you’ll be about average.  Or not.

See the statistics for yourself at these websites:

http://www.irs.gov/businesses/small/article/0,,id=104627,00.html

http://www.irs.gov/businesses/small/article/0,,id=104627,00.html

http://www.bls.gov/cex/2006/Standard/quintile.pdf

This entry (Permalink) was posted on Tuesday, July 15th, 2008 at 5:00 am and is filed under Food and Stuff That Tastes Good. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response , or trackback from your own site.