Ok, here's why I take protein powder: Protein is a Good Thing. (with apologies to Martha Stewart.

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Most people don't get enough protein in their diets, especially when they're trying to lose weight. Protein is what helps you build and maintain muscle ... and when people start cutting calories, the first things to go are usually protein and fat - the wrong things to be cutting out.
The other good thing about protein is that it takes your body longer to process protein, so you don't have insulin spikes that cause you to feel crazy hungry. Protein and fats give you a full, sated feeling that help you to resist cravings.
The United States recommended daily allowance (RDA) of protein for the average adult is something like .8 grams per kilo of weight, which is really (IMO, and based on all of my research and on my personal experience) not enough. Most reputable weight loss and and strength building sites will tell you to aim for 1 gram of protein per 1 lb of bodyweight.
For a lot of people that's hard to get through diet alone, unless they're very committed to a well planned and precise diet. That's where some kind of protein powder comes into play. Whey protein is especially good because it's a natural protein derived from milk products, but without the lactose that causes problems for some people.
I take whey protein 1x and sometimes 2x per day to get to my goal, which is 130 grams of protein per day.
One of the best times to eat protein - whether in food form or as a supplement - is immediately after working out (within an hour). When you stress your muscles, they draw on the protein in your bloodstream to heal themselves ... and by adding protein to your body at that time, you give muscle recovery a boost.
But ideally you should be consuming some kind of protein at every meal/snack. For me this means I usually have a high protein breakfast that consists of Greek yogurt and fruit. If I know I'm going to lift weights that day, I might add some protein powder to my yogurt.
I have more protein with my snack, more again with my lunch, another afternoon snack with protein, and then after my workout I drink a slug of protein powder in water. Then for dinner I have chicken or fish or something like that with a big pile of veggies.
You don't NEED protein powder ... and it should never be your sole source of protein ... but it can be a help in getting that little extra boost to make your goal, if you're trying to add more protein to your diet.
Hope that helps some!
