Some of those are fun (like vacations), one-offs (like a new rug), and the regular buys (like groceries). If a budget was only about our fixed expenses, we wouldn’t have to do too much, would we? But unless you’re one of the most disciplined people in the world with a routine that doesn’t change, you will have other costs pop up. If you don’t, it’s easy to lose track of changing costs and dwindle your bank account faster than you can say, “Let’s go shopping.” And honestly, they’re the reason it’s so important to come back to your budget (and track expenses) every single month before the month begins. Variable costs are a bit harder to budget for. But they could also be things like a trip to visit your sister, dinner with a friend, gas for your car, an oil change, or even that weekly coffee shop habit you were hoping we wouldn’t bring up. Variables in your budget could be your utilities (water, electric or gas) that change based on how much you use them. Variable expenses are things you pay for each month that don’t have a set amount. Now, you just have to remember to budget the new amount for next month! (That can happen if your insurance has an annual renewal, for example, or if your rent goes up.) If that happens, you’ll need to adjust your line item and make up the difference somewhere else in your budget. Make sure those fixed costs don’t end up changing when it comes time to pay the bill. EveryDollar will automatically copy it over for the next month.Īnd don’t forget: The key to successful budgeting is tracking your expenses. For your fixed expenses, all you have to do is make a line item with the name (like Rent) and amount ($1,200). Want to try it out? Download EveryDollar and set up your own zero-based budget. Each one of those bills gets its own line in your budget. Part of that zero-based budget includes those fixed costs that happen month after month. That doesn’t mean you have zero in your bank account-it just means you’ve accounted for every single dollar of your paycheck and told it where to go. It’s when your income minus your expenses equals zero. A zero-based budget sounds a little scary, but stick with us. Let’s talk about fixed expenses from a zero-based budgeting perspective. (And all the free spirits out there say, “Amen!”) Around here, we love fixed costs because they make budgeting that much easier. So, when you’re creating your monthly budget, these expenses are probably going to stay the same (as long as you haven’t moved across the country or bought a house). We’re talking about your mortgage or rent payments, gym membership, life insurance, medical insurance or even streaming service costs (Netflix, Disney+ or Hulu). We’re going to walk you through everything you need to know about managing your money with fixed expenses and variable expenses (and what the heck they have to do with budgeting).įixed expenses are the items in your budget that stay the same month after month. Believe it or not, you already know what fixed and variable expenses are-even if you didn’t know what they’re called. And trust us, it’s definitely not as intimidating (or boring) as it sounds. Budgeting isn’t just for personal finance nerds or accountants. While those money terms sound like you just bought a one-way ticket to snooze fest, stick with us. Separating your budget into fixed expenses, savings expenses, and variable costs will help you organize your bank accounts and manage your money properly.No matter what your financial situation is, doing a regular budget and keeping track of your fixed and variable expenses will help you create the life you want to live.ĭid we just say fixed and variable expenses? Yep. How Will Fixed, Savings and Variable Costs Help Me Learn How To Budget My Money Properly? Sometimes expenses will fit into more than one category and if that happens, you can choose where you feel the cost belongs in your budget. Should I be saving for this item in advance? (Savings).Do I buy it from a store? Can I control how much I spend on this? (Variable).Does this expense occur often, regularly and not change? (Fixed).If you find an extra expense in your budget and you’re not sure if you should put it under the fixed, savings, or variable costs, simply ask yourself these questions: It lets you know what "normal" expenses would be for your financial situation, and once you're done, it can review your budget and look for dozens of ways to help you improve it or save money.Įxtra Expenses – Are They Fixed, Savings, or Variable Costs? As another way to help making budgeting simpler and more fun, we've created a personal budget template that guides you through the budgeting process.
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