![]() ![]() You can also transform the unpredictability of a variable expense into the reliability of a fixed expense. Be sure to set up an emergency savings fund that you can put money into every month, so you won’t be caught off-guard in an already stressful situation. In life, it’s inevitable that you’ll need to pay for these categories-no matter how good your insurance is. Similarly, healthcare and medication costs can come quickly and shoot up in price, especially in case of an emergency. You might go months without needing to perform extensive home and car maintenance, but something unpredictable might happen, such as a storm or an accident, affecting how much you’ll be able to spend for these categories. Variable expenses can include costs that may fluctuate drastically. How to plan for drastic variable expenses While these are necessary standard-of-living costs, fixed expenses can also include your interests, such as gym or museum memberships. Fixed expenses, on the other hand, are regular costs that remain the same: each month, you pay the same amount for rent or mortgage, car payments, and insurance. How do variable expenses differ from fixed expenses?Īs described above, variable expenses can change due to a variety of factors. ![]() A helpful financial hint is to start saving in the off-season so you can still enjoy what you love. Maybe you love skiing! You’re certainly going to budget less toward this sport in the summer than when lift tickets go on sale. Lastly, if you have active sports and hobbies, these variable expenses may require different amounts of investment per month. Once Oscar season rolls around, be sure to budget the uptick in this variable expense in your monthly budget planning. If you’re a movie buff, the amount you might spend every month on tickets might vary. It can include broad categories such as groceries, entertainment, and travel. For example, your electric bill may be more expensive in the summer when the air conditioner is on all day, but cheaper in the fall when AC isn’t needed.ĭisposable income is not the same as a variable expense: this is money left over after you have paid for necessities. Yet their rates may be different based on how much you use, what’s in demand, and even by season. Gas and electricity bills, phone and data usage, and others like these are billed every month. By planning ahead for both types of expenses, you will be able to stay on top of your budgeting goals and avoid any unexpected costs down the line.Make better decisions backed by data and insights Learn More Flexible expenses are those that vary from month to month while periodic expenses are those that occur regularly but not necessarily every month. ![]() Understanding the difference between flexible and periodic expenses is an essential part of managing your finances wisely. It’s important to plan ahead for these types of payments because they can come up unexpectedly if you aren’t prepared for them. These payments usually happen at least once per year but may occur more frequently depending on the type of service you use or your specific state laws. Examples include insurance premiums, taxes, and car registration fees. Periodic expenses are costs that occur regularly but not necessarily every month. These types of expenses often depend on your lifestyle, so it can be difficult to predict them accurately in your budget. Examples of flexible expenses include buying new clothes for yourself or going out to eat with friends on the weekend. This includes things like groceries, entertainment, and clothing. What Is a Flexible Expense?įlexible expenses are costs that vary from month to month. Let’s take a look at what makes a flexible expense different from a periodic expense. Knowing which types of expenses fall into each category can help you budget and plan ahead more effectively. One of the most important concepts to understand is the difference between flexible expenses and periodic expenses. Managing your personal finances can be confusing. ![]()
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