When dealing with budgets, there are two main types of expenses that one incurs. Those expense types are fixed and variable. What is the difference between the two, you might ask?
A fixed expense is an expense that is constant and does not change. Each month you will pay the same amount. For example, your mortgage/rent payment is a fixed expense. Let's say your mortgage is $900/month. You will pay $900 a month no matter how much income you make or how well you control your other expenses. You will always pay this $900/month until your mortgage is paid off or your until rent leases terminates. Here is a list of some other fixed expenses you might see in your budget:
1. Homeowners Association Fee
2. Home/Rental/Car Insurance
3. Student Loans
4. Car Payment
5. Life Insurance
6. Cable/Phone/Internet Bill
A variable expense is an expense that is not constant or one that varies/changes on a monthly basis. These are the expenses that you can manage/control on a monthly basis. If you are seeing you are paying too much on electricity, try to turn off the lights more often or if your out-to-eat expenses are too high, discipline yourself and making going out-to-eat a big deal and a special outing. An example of a variable expense would be your water bill. The amount you pay each month for your water depends on how much water you use throughout the month. If you use 50 gallons of water one month and 70 gallons of water another month, the amount you pay to the water company will be dependent upon the gallons used. Here is a list of some other variable expenses you might see in you budget:
1. Groceries
2. Electrical Bill
3. Utility Gas Bill
4. Amount you buy for clothes
5. Entertainment
6. Out-to-Eat
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