Raise your hand if you’ve ever tried to stick to a food budget and failed. You’re not alone. That’s because budgets (for food and in general) are often too rigid, says Jennifer Faherty, a certified financial planner and the founder of Financial Wealthbeing. Budgets are great in theory, but they don’t always work in real life or allow for unplanned things to happen, she points out.
We asked Faherty to take a look at three old-fashioned budgeting rules that, really, no longer apply — and how to adjust them to work for modern times.
3 Old Food Budget Rules That No Longer Apply
1. Spend half of your income on necessities, including housing and food.
The 50/30/20 rule is an oft-quoted guide post for people who are new to budgeting. The basic idea is simple: Half of your income should go to needs, 30 percent to wants, and 20 percent to savings. “It’s a great guideline,” says Faherty, but it’s not always realistic. “The cost of living is so high in some places. If the cost of housing and food is 70 percent of your budget, that can feel very discouraging.”
That’s why Faherty uses a more flexible guideline: Aim for saving about 20 percent and 80 percent for everything else. “The real key is the savings part,” she says.
2. Use a cash-only budget for your food.
This rule is sometimes referred to as the envelope method (because you put the cash in envelopes for each budget category). The theory is that you’re more likely to stick to your budget if you’re paying with cash instead of cards. The problem with this rule is that more and more of our food expenses — online groceries, meal kits, and even cashless restaurants — require the use of a credit card.
Instead, try to keep track of what you’re spending a different way. “A lot of the apps now will let you do that,” she says, including You Need a Budget or YNAB, which is what she recommends to her clients. Not an app person? “Even if it’s literally putting that number [how much you have to spend] on a note on your phone and subtracting it as you spend,” it can still be helpful.
3. Eliminate small purchases to help you save big.
Remember that story about how millennials could afford to buy a house if they weren’t eating so much avocado toast? While small purchases can definitely add up (especially if you’re eating $12 avocado toast every single day), Faherty says it’s penny wise and pound foolish to focus on the little things. “If you think about it, a $5 coffee every weekday is $25 a week,” she says. In other words, not that much. “It’s the bigger things that are going to be the game-changers in the long run.”
So what should you do instead? Consider larger expenses that might have more impact than your daily latte habit. Can you decide not to go out eat once a week? That’ll probably save you a lot more than $25.