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This post has been updated and republished with newly added food spending data and smarter budgeting tips for Millennials and Gen Z in 2025.
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Smart Money 101: How Millennials & Gen Z Can Slash Food Costs and Save Big
Stop Wasting Money on Food! 5 Proven Hacks to Cut Costs and Save Big
Stop Money from Leaking in a High-Inflation Era
"Saving on food expenses is like earning money." – Warren Buffett
According to CNBC, dining-out costs in the U.S. increased by 7.1% in 2024 compared to the previous year, with fast food prices rising even more sharply. Additionally, USDA (United States Department of Agriculture) reports that the average American household spends $900–$1,200 per month on food, making up 14–20% of total household expenses.
Stop Money from Leaking in a High-Inflation Era
"Saving on food expenses is like earning money." – Warren Buffett
For Millennials and Gen Z, the situation is even more concerning. Forbes states that more than 60% of these generations spend over 30% of their monthly income on eating out and food deliveries. I was once in that same position—ordering takeout every night after work and spending weekends brunching with friends, only to be shocked when I saw my credit card statement: “Did I really spend this much on food?”
That’s when I decided to take control of my food budget. After trial and error, I found five highly effective ways to reduce food costs, and today, I’m sharing them with you.
1. Set Separate Budgets for Dining Out, Delivery, and Groceries
One of the most effective ways to cut food expenses is by allocating separate budgets for different types of spending. I only gained control of my finances when I set strict limits.
How to Budget for Food
Dining-out budget: Under $100 per month
Food delivery budget: No more than twice a month
Grocery budget: Set on a weekly basis
Once I set these limits, my bank balance became noticeably more stable.
2. Track Your Engel’s Coefficient
I recommend keeping your total food and dining expenses within 10% of your monthly income. For a more detailed explanation of this strategy, refer to my previous article: The Three-Account System: The Game-Changing Budget Hack Every 20-30 Something Needs.
Engel’s Coefficient measures the percentage of income spent on food. Understanding how much of your earnings go toward food is the first step toward making meaningful changes.
Recommended Engel’s Coefficient
Income below $3,000/month → Keep food expenses under 25% ($750 max)
Income between $3,000–$6,000/month → Keep food expenses under 20% ($1,200 max)
Income above $6,000/month → Keep food expenses under 15% ($1,800 max)
I personally recommend keeping food and dining expenses within 10% of your monthly income for optimal financial health. For a deeper dive into this strategy, check out my previous article: '#24-The Three-Account System: The Game-Changing Budget Hack Every 20-30 Something Needs.'
When I first attempted to cut my expenses, I tracked every food-related purchase for a month. I was shocked by how much I was spending. Bankrate reports that over 50% of Millennials and Gen Z say food expenses are the hardest to cut.
How to Calculate Your Engel’s Coefficient
Track all food-related expenses (dining out, delivery, groceries) for one month.
Divide food expenses by your total monthly income.
If you exceed the recommended percentage, create a plan to reduce unnecessary spending.
This process will clearly show you where your money is leaking.
3. Reduce Food Delivery and Cook More at Home
According to Statista, food delivery app usage in the U.S. increased by 20% in 2024. I used to rely on takeout every night, but after realizing that a single meal—including delivery fees and tips—easily cost $20–$30, I knew I had to make a change.
Practical Tips to Reduce Delivery Costs
Limit takeout orders to 1–2 times per week.
Use simple and quick recipes to cook at home.
Plan meals on a weekly basis to streamline grocery shopping.
After making these adjustments, I saved at least $300 per month.
4. Shop for Groceries Strategically
Business Insider reports that Americans make 20–30% of their grocery purchases impulsively. I used to be guilty of this too—if I saw a sale, I felt compelled to buy more than I needed. Now, I follow a smarter approach.
Smart Grocery Shopping Habits
Never shop hungry → Everything looks more tempting when you’re hungry.
Make a shopping list → Avoid buying unnecessary items.
Prioritize necessity over discounts → Don't be tricked by “Buy 1, Get 1 Free” deals unless you truly need them.
Shop at farmers’ markets → Get fresh, affordable produce while supporting local businesses.
5. Check Your Fridge and Reduce Food Waste
On average, Americans waste $1,300 worth of food per year, according to NBC News. Studies show that 40% of consumers throw out food because they forget what’s in their fridge. I was no exception—until I started checking my fridge regularly.
How to Reduce Food Waste
Check your fridge weekly → Plan meals based on ingredients you already have.
Buy only what you need → Don’t fall for bulk discounts unless necessary.
Use up frozen items first → Avoid forgetting about food that sits in the freezer for months.
By following these simple habits, I shop less frequently and rely less on takeout.
Conclusion: Build Sustainable Spending Habits
Cutting food costs isn’t just about saving money—it’s about gaining financial freedom. By reducing restaurant spending, managing grocery habits, and planning meals wisely, cutting food expenses becomes effortless. The first month might feel inconvenient, but stick with it, and you’ll see noticeable results.
Changing your spending habits is the foundation of long-term financial security. If you reinvest your savings into savings accounts or investments, you’re setting yourself up for future success.
What strategies have helped you save on food costs? Share your experiences and tips in the comments!
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