Turn Up Your Savings by Turning on Your Stove

Daily Reckoning
Nilus Mattive

This post Turn Up Your Savings by Turning on Your Stove appeared first on Daily Reckoning.

A loaf of bread in 1913 cost just over 5 cents. Eggs would set you back 37 cents a dozen. And a gallon of milk 35 cents.

Grocery prices today are a bit different…

A dozen eggs will run you $2-$3. A loaf of bread costs on average $2.35. And a gallon of milk is around $3.50.

While the average price of food has climbed over the past 100 years, Americans are actually spending far less on groceries than we used to as a portion of our total income.

Where the average American household spends 10.5% of their income on food today, in 1900 most households spent nearly half their annual budget on dinner.

What’s Changed?

Two factors: inflation and prosperity.

During most of the 20th century, inflation tended to impact food less than most other consumer spending categories. At the same time, incomes rose across the board, and Americans could afford better meals.

Today the average U.S. household spends a large chunk of its food budget on groceries ($4,363), but we also spend almost half as much on eating out ($3,365). How much you spend on food also depends on where you live.

City dwellers spend more on everything, but as a percentage of income less on groceries and more on eating out. If you live in the country, groceries are typically cheaper and you eat out less.

But these numbers are skewed by income. City slickers might spend more on food, but less as a proportion of income because they tend to make more money. Whereas rural residents make less but spend approximately 40% less on housing.

You’ve probably been told that if you want to save money, you should eat out less. The question I have is eating out cheaper than cooking at home?

At first glance, cooking doesn’t seem like a budget-friendly move. You have to buy groceries, kitchen supplies, and set aside time and effort. How much do really save?

Three Meals a Day

Let’s imagine you ate out three meals per day. You buy a $10 breakfast, $15 lunch, and $25 dinner, $50 per day.

At home, you could have prepared something similar for maybe $15 in ingredients. But you also have to take into account the time you spent cooking and preparing the meals.

Cooking three meals per day is probably an hour and a half of your time. If you make $20 per hour, that’s $30 in time, not including “hidden costs,” like shopping for ingredients, cleaning up afterwards, hydro, water, gas etc. You’re probably spending $50 on feeding yourself at home in this scenario.

Then why does eating out typically cost more? There are a number of factors but it boils down to a few things: portion size, hidden costs, and frequency.

What isn’t shared in our above …read more

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