You might struggle to afford your fixed expenses, but they won’t surprise you. You’ll see they take up a large percentage of your budget. When you’re setting up your budget, your fixed expenses will be the first entries you make. You often have limited control and a legal obligation to pay your fixed expenses.įixed expenses are consistent and usually paid monthly. Fixed expenses will probably take up the largest percentage of your budget since rent, insurance, and car payments are fixed expenses. What is a Fixed Expense?įor household budgeting, fixed expenses are predictable costs with amounts and due dates that don’t change. Understanding these different types of expenses is important to creating a budget and managing your personal finances effectively. Variable expenses are often discretionary and can often be changed or eliminated by behavior. annually) and occur in predictable amounts. Periodic expenses are less frequent (e.g. Fixed expenses are recurring expenses that don’t change and are usually paid monthly. The three types of expenses in a budget are fixed, periodic, and variable. What Are the 3 Types of Expenses in a Budget? What Are the 3 Types of Expenses in a Budget?.
If you’re creating your first budget, there are three types of expenses you should understand: fixed, periodic, and variable. I decided I needed to get on a budget to get my finances under control. That all changed when I realized that the purpose of a budget was not to torture or bore myself. My wallet was always empty at the end of the month. I had a vague notion of what my expenses were, but I always spent more than I thought I would. When a bill came in, I was never 100% sure I had the money for it.
Once in a while, I’d go too far, to where paying rent on time became a matter of being late on some other bill. I would wind up struggling financially and not having enough cash to put gas in my car after paying rent. I would get paid, go have drinks with the guys, play a round of golf, and buy new sneakers or something else I didn’t really need. I didn’t know there were 3 types of expenses in a budget and I didn’t care. When I was just starting out, I would spend first and ask questions later. I never understood the importance of budgeting. I spent years living paycheck to paycheck. Share on Twitter Share on Facebook Share on Pinterest
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