What to eat… it’s a common dilemma. You’re hungry and in a rush when the temptation of visiting a fast-food drive-thru strikes you. Maybe it’s been a long week and you’d rather take your family out to eat or treat someone special to a fine dining experience. Whatever variation of this dilemma, you might be surprised by the habit-forming nature of your choices and the ensuing financial consequences.
This isn’t to say you can’t indulge, life is short after all. However, it’s worth noting that in this past decade Americans have begun spending more on food eaten outside the home (restaurants, cafeterias, etc.) than they spend for at home consumption. (USDA) While the Covid-19 pandemic has temporarily reversed this trend, it likely hasn’t stopped the shift towards restaurants and away from the dinner table in a lasting way. Our dependence continues to grow on restaurants and lessen on ourselves for the preparation of our food.
Our collective budget for food has slowly shifted to a budget for service and ambiance. While there is nothing necessarily wrong with this, consumers must be careful not to lose sight of financial benchmarks.
As general advice, most financial advisors suggest that no more than 15% of take-home pay be spent on food. So, if after taxes a family earns $100,000 per year, rule of thumb suggests they should not spend more than $15,000 on food. Of course, an actual recommendation for your specific needs could vary. If a family particularly enjoys dining out it may make sense to include some of these expenses under their budget's entertainment section.
When purchasing from a grocery store, we pay for food to be produced, delivered, and stored. When purchasing from a restaurant we pay for those costs as well as preparation and service. As a rule of thumb, the cost of food paid by a restaurant (with exceptions such as beverages and fresh seafood) generally ranges from 28% - 32% of the total cost of a meal for the consumer. (RestaurantOwner) This meaning your food, on average, costs about 1/3 the price of your order. On top of that, the consumer is responsible for covering the tip as well which adds an additional 15-30% to an order.
Understand the true cost and the method of payment.
Make no mistake, Americans use US Dollars to pay for food, but in addition to our money we also use our time, daily budgeted allotment of calories, and our level of satisfaction as currency. Balance keeps you healthy, keeps money in your pocket, and helps you make the most of your day. Our plans should help us remain balanced.
When going to a drive-thru, it could be said that our caloric budget takes a greater hit than our financial budget. Though, they can save us time and money in comparison to a dine-in restaurant. Our level of satisfaction created will vary but is likely to underperform in comparison to dine in restaurants.
Meal prepping or cooking at home is overall the most balanced method. It gives us the greatest control over our time, money, calories, and satisfaction. We prepare the food on our time, without paying for preparation or service, with control over the nutritional value and flavor of the recipe. If we frequent fast food restaurants, we value our time and money. If we frequent dine in restaurants, we value service and satisfaction. If we frequently cook ourselves, we value control.
The question is, what level of value do you place on your time, money, health, and the satisfaction you receive from what you eat? As you watch how your money is spent, keep these values in mind. The way you spend money often serves as a reflection of your values.
Changing for the better
1. Create or update your budget
2. Go on a diet / count your calories
3. Plan the week’s meals ahead of time
4. Practice your cooking skills and have fun with it
Ultimately, deciding on one or all of these solutions represents a shift in your values and that’s what spending money is all about. It isn’t about scrimping to save, it’s about a manifestation of values in the way that earnings are spent. When money is viewed like that, creating an emergency savings account or contributing the proper amount to your retirement accounts seems simple. Inspired to use money as an extension of your values? Is your retirement plan getting the attention it deserves? Let's talk about it. Clarity and the sound prioritization of obligations that clarity grants you is priceless.
Michael G.Romanello is a registered representative of and offers Securities through Independence Capital Company Inc. Member FINRA/SIPC.
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