Electricity 1: How much does a meal cost at home?

Recently, we had to undergo a budget cut in our monthly expenses. Our household has two people, my wife and I. April and May had been horrible with many unavoidable and unforeseen expenses. We decided to look a bit into the details on where we could save money and compensate for the high expenditures. One immediate and obvious expense was eating outside. On an average we saw that we have been giving out 100€ traceable and 250€ untraceable money for eating out at restaurants or visiting cafes and bars. We decided on two things right away, one was to try to make as many expenses traceable as possible and second was to cut down on eating outside.

Easier said than done, I was hesitating to change my habit and was not convinced enough. My job came in handy. My current job teaches me to tackle world of numbers. Numbers can be intriguing and can even be haunting. It’s very easy to fall for the trap and get into an endless loop of nothingness. Such a world, the more obsessed you will become, almost looks like Neo’s vision in Matrix, but really does not bring you anything but a dizzy head. My job simply tries to put a hand in this garbage and derive something meaningful. The more we befriend the numbers and simplify the content, the more they will help us to our advantage. Therefore, I decided to convert our decision making into numbers, to see if I can derive some conviction from there. Does it make sense to replace a meal from outside to a meal at home?

Funny enough, I guess this is the beginning of adulthood. All these attempts simply mark that. How many times my mom or grandma would have shouted at us kids saying “Don’t burn the money to ashes, little demon”? (Kaasa Kariaakathada!! Saniyan!!). Finally the time has come and here I am, scratching my head on how much money could be saved from the ashes. Even before getting into the details, I could see two alarming things on eating pattern comparing my mom and grandma to mine. One was that they hardly ate outside. May be once in a month, they would unavoidably eat outside, but a planned outing was usually once in three months. This was probably the behaviour of their whole generation. In a two person household, with three meals a day, one person would have 90 meals a month or two people would have 180 meals a month. They ate all the 180 meals at home. On the contrary, if I could guess mine, I would have hardly eaten half of that at home.

Blame it on the aggressive marketing from the restaurants, celebrity endorsements to food chains, evolution of fast food, slowly the habit has grown in me, and may be with you too, that we stopped to see it as a social push and even accepted eating outside as a norm.  In my parents’ home couple of decades before, if guests would come home, offering them food from outside was seen as disrespectful. It conveyed that you did not take time for them in making them feel special i.e. the respect was not offered. For today’s standards, ignore offering home prepared food to guests, it is not surprising that if we meet our guests directly at a restaurant than inviting them home. Later we fight over the bill.  With someone else making the effort, respect has got translated to just paying.

It’s true that the contemporary relationships aren’t that formal anymore and thereby such expectations are very much relaxed too.  Combining this attitude with the opening up of the market, the acceptance of restaurant eating culture seems like the logical outcome. It will be hard debate on what came first: did the attitude change first, leading to a new market or the other way round. Let’s not get into the topic, but I think the rebelliousness of this generation is just natural. That one phase of generations (ours) could go haywire with their spending, when the previous phase of generations was very conservative. I at least tagged my mom and grandma as misers. I did not want to have the same tag. Soon the next-gen phase of rebels might go conservative not being able to tolerate the over-spending of their parents.

Now trying to tackle all this issue in numbers, my rebelliousness needed some data to begin with. We have an induction stove at home. Although it came together with the home i.e. we didn’t incur the costs, but we need the equipment cost for the calculation. It’s 1000€ and we would use it for 3 years. We use it for approx. 7 hours a week, or 364 hours a year. Electricity cost is 0.27€ per kWh. The device has a Watt rating of 2500W. You can find this number on the device itself or check the product manual. You can also Google the device Wattage too. Finally, we needed all the supermarket bills to calculate the material costs. My wife and I put together all the bills and found out that we spend approx. 200€ a month for Groceries and drinks. In the beginning of this article, we discussed that we have 90 meals a month at home. This would translate to 1080 meals a year.

Now we have all the data to begin with. If you want to proceed with me, to calculate your meal cost at your home, now is the time for you to take a pen and paper. Collect the above data for your home setting too. Depending on where you live and how many people are in the household, the meal cost can vary drastically. Also pointing to the exact cost of each meal can lead to complex calculations. My goal is to simplify the scenario and give you rough idea on how much does a meal cost.

I have three unanswered questions, which I want to address with the calculations. First is that for two people, is 200€ per month supermarket bill high or conservative? Secondly, am I saving money if eat at home? Third is that by all these actions that my wife and I could take, how much could we impact on our monthly budget. Relaxing the monthly budget is the final driving necessity.

Let’s tackle all the questions. Are you ready? Do you have all your data? I will list them again below, so that you can crosscheck your checklist

PowerPoint Slide Show - [Presentation1]

There are three factors to consider for calculating the cost of a meal. Cooking devices are usually very reliable that we hardly incur any maintenance or repair costs. If so, please add on top too. I will ignore this in the calculations.

  • Capital cost (Cost of cooking device)
  • Material cost (All the food bills)
  • Operational cost of the cooking device (Cooking fuel bills)
  1. Capital Cost

This value takes into account of all the money that we have spent for our kitchen equipments. After all, the outcome of all these expenses simply would go into our meal cost. Else, if we don’t want ownership of the devices, we will simply pay this meal cost to a restaurant and get a meal. The capital cost number will show you how the price of your equipment will impact your meal.

I said that we gave 1000€ for our induction stove and that we would want to use it for 3 years. We have a total 1080 meals in year.

Cap.Cost

My Capital Cost = 1000€ / 3 Years * 1080 meals in a year = 0.308€

That means 0.30€ Cents of my Kitchen equipment goes into my every meal

 

  1. Material Cost

This is easy. You just have to track all your supermarket expenses. Include everything: food, snacks and drinks. Some people might want to leave the drinks aside, but for a simplified calculation, I would recommend to include all your expenses. It goes with the thinking that if we go to a restaurant we don’t just eat, we usually order some drinks too. It’s part of the meal. For my wife and I, the monthly expenses came to 200€ and for 90 meals in month.

Mat.cost

My Material cost = 200€/ 90 meals in a month = 2.2€

Wow! That was a big jump from the capital cost: 2.2€ goes into our every meal. How much did you get?

 

  1. Operational Cost

This is the fuel to your stove. If you are using a gas cylinder or some liquid fuel, the calculation is easy. You just need to look at your monthly bill.

Op.Cost 1

If you should have some type of fuel recorded by a meter, like electricity, we have a longer formula.

Op.Cost

My Operational cost = 2500W * 364 hours used in a year * 0.27€ electricity cost / 1000 * 1080 meals in a year = 0.22€

I spend 0.22€ to fuel every meal

Total = 0.30€ (Capital cost) + 2.2€ (Material cost) + 0.22€ (Operational cost) =

My Meal cost = 2.74 €

(Total cost of a meal in Germany: 2 person household and using induction stove)

2.74€! That’s a cost of two hamburgers at Burger king. It looks decent. Is it cheap or costly? There is no cheap meal or costly meal. The definition of cheap or costly depends on what you are willing to give to a meal. For my earnings, 2.74€ looks fine, but I also want to see how much it would cost if I eat like my mom or grandma. Basically they would eat all the meals at home and would not buy anything unnecessary from the supermarket. I will assume that my supermarket bill would go 100€ higher to 300€. For two people it’s 180 meals a month. Without boring you with calculations, I will simply write the final number.

Best Meal cost = 1.92 €

Theoretically I could reduce my meal cost to almost one euro (0.82€) For 2160 meals in a year, currently I spend half at home and the other half outside. 2.74€ per meal for home and 350€ for eating outside (traceable + untraceable expenses)

(1080 meals at home * 2.74€) + (350€ per month for eating outside * 12 months) = 2959€ + 4200€ = 7159€

If I would eat all my meals at home for 1.92€, my total cost would be 1.92€ per meal * 2160 meals in a year = 4147€

Roughly 3000€ (3012€ exactly) is the money we could generate in a year by doing all the actions to save money from working on eating habits. That’s 251€ per month!! Now that’s some money what we could impact on our monthly budget. I’m sure we will not be able to turn to a hermit life like our moms overnight. Habits are difficult to change. Even if we manage to save half of the above, it’s a big success. Good habits being rewarded. That’s a nice incentive to slowly consider changing a habit.

Tips for handling food costs:

For me 2.74€ is my meal cost. What could increase or decrease this cost?

Increasing the cost: Higher equipment cost, equipment with higher wattage, cooking fine long recipes too often, eating less at home, electric exhaust or any support device in your kitchen are some things which will drive your per person meal costs higher. In India, the electricity cost is almost the same as in Germany. Switching to electricity source might significantly increase the capital costs. At the same time, using a gas will need an exhaust and also will not have a cleaner or safer setting as in electric source.

Decreasing the cost: Cheaper equipment, simpler groceries, cooking for more meals at once, eating more meals at home are going to drive your per person meal costs down. Using the cooking equipment for longer than planned time also reduces your meal cost.

Conclusion:

  1. Is 200€ Supermarket bill less or high?

Decent! But crap could be cut out still

  1. How much money would I save if I eat at home?

In Germany, eating a meal outside would cost from 6€ for fast food to 15€ for casual restaurants. Comparing to an approx 3€ meal cost (2.74€), I would be spending 3€ more on fast food and 12€ more for restaurant food. That’s the extra money I spend for my laziness. I would never be able to justify fine dining. On the contrary, if the outside food is same or close the calculated meal cost of 2.74€, it’s a great deal!

  1. How much monthly budget could we impact to compensate for the increase in expenses?

250€ monthly or 3000€ yearly

————–

Congratulations! You have survived this journey. What is your meal cost? How much could you impact on your monthly budget? Share in the comment below. Thanks for reading.

P.S. I tried to calculate my mom’s meal cost in Coimbatore, India. Of course, the material and capital costs are cheap in India. The meal cost came to 30 Rupees or 0.38€!!

——–fin———

To be continued: Electricity 2: Understanding my home: How to reduce my electricity bills?

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