Step Down to Savings - Part I

A few years ago I was speaking with a co-worker who had been recently married. He and his wife were looking forward to starting a family but they had no clue how they could transition from a dual-income, child-free couple to a single income couple with a child and the wife as a SAHM. He said even on their dual income they weren't able to put much away in savings. Even if they had a child and his wife didn't become a SAHM, he said they wouldn't be able to afford daycare.

That is how the concept of "Step Down to Savings" was born.

I asked the co-worker a little bit more about their lifestyle. They didn't have unusual expenses but tended to live in a cycle of charging splurges to credit cards then struggling to pay them off. I also observed the co-worker's dining habits and those of his wife (also a co-worker). From what I could tell, they both ate almost every single meal away from home. He objected to my observation with the rebuttal that sometimes they get food 'to go' or were too tired to go anywhere so they stayed at home and ate leftovers from the 'doggie bags'. He did reveal that they do some grocery shopping (whew!) and considering all the eating out they did, their grocery budget was still about average for two people. I had to wonder what they were buying at the store.

The first step was to figure out exactly how much they were spending on food.

A short discussion revealed that, per person, breakfast was about $4 at the workplace cafeteria. They ate at work because usually they were too rushed to grab something before leaving home. Breakfast during the weekend was a mix of grabbing something simple that was already in the house or going out with friends. I figured if they ate at home on Saturday then went out with friends on Sunday, they still were averaging $4 per person, per meal.

Lunch during the week was almost always going out with co-workers and averaged $7 for him. His wife tended to eat at her desk so lunch was a either something brought from home or bought at the cafeteria. I averaged $4 for her. She also went out to eat, away from work, about once a week. We stayed at the $4 per person, per meal for her and $7 for him on the weekends since they tended to grab a hefty snack while running errands in lieu of a sit down lunch. Just grabbing a fruit smoothie while on the run was easily $4 to $5 for them - EACH. He was tall and very active so he did tend to eat much more than his very petit wife.

Dinner during the week usually meant that they stopped on the way home to allow traffic to die down. This became a sore point to my co-worker as he was sure they weren't spending THAT MUCH on dinner out, but he finally admitted that by the time we added in a side salad (they did eat rather healthy), a drink and the tip, the cost of dinner got up there. I didn't want to put him into shock, so we calculated $10 per person, per meal for dinner. On some evenings, they did tend to cook at home but those meals tended to contain highly processed foods that were quick to prepare or expensive cuts of meat (ie: BBQing steaks). On weekends and some weekdays, they tended to meet up with friends or go to various extra-curricular activities which meant more eating out.

So what do we have?

Breakfast - $4 per person, per meal. Two people ($8 a day). 7 days in a week = $56 a week.
Lunch - $7 per person, per meal. One person, him ($7 a day). 7 days a week = $49 a week.
Lunch - $4 per person, per meal. One person, her ($4 a day). 7 days a week = $28 a week.
Dinner - $10 per person, per meal. Two people ($20 a day). 7 days a week = $140 a week.

Per week = $56 + $49 + $28 + $140 = $273

There are 52 weeks in a year so their annual food cost was approximately (52 x $273): $14,196.

There are 12 months in a year so their monthly food cost was approx ($14,196 / 12): $1183.

I asked him if having an extra $1000 in his budget would help toward allowing his wife to quit her job. His eyes grew wide!