![]() The best way to do this is to remember that needs are the things you can’t live without, while wants are things you enjoy but aren’t necessary to your daily life.įor example, many fixed costs are “needs,” like rent and insurance. Overall, a large part of budgeting is determining the difference between wants and needs. Variable expenses are less consistent, making them harder to plan for in advance. When it comes to budgeting for fixed and variable expenses, fixed expenses tend to be easier to plan for, since they are typically due at set times. Utilities (electricity, water, and gas).Personal care (haircuts, massages, etc.). ![]() These expenses are more difficult to plan for, as they can vary depending on several factors, such as unforeseen events and discretionary spending. Variable expenses are those that change in cost and occurrence. Subscriptions and memberships (streaming services, meal kits, fitness memberships, etc.).Insurance premiums (auto, home, renters, health, dental, life, etc.).These costs can occur at any interval, but they’re typically monthly or yearly payments. They’re the costs you can plan for and are likely already factored into your regular budget. What is a fixed expense?įixed expenses, like a mortgage or rent payment, cost the same amount on a routine basis. If you have a good handle on where your money is going every month, it can help you master your budget and plan for the future. Creating a budget is essential to saving for your life goals, and an important part of establishing one includes knowing the difference between your fixed and variable expenses.įixed expenses are costs that typically remain the same in price and frequency, while variable expenses are costs that can change regularly.
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