Some fixed expenses may be easier than others to trim down. How you approach saving money can vary, based on whether you’re trying to cut your fixed or variable expenses. If you could use some more breathing room in your budget, finding ways to save each month can help. Tips for Saving Money on Fixed and Variable Expenses Instead, you may budget for those kinds of variable expenses using sinking funds-money that you set aside for this purpose. The amount you spend each time may vary, but you’re not paying for those expenses monthly. For example, you may take vacations or trips two to three times a year. Some variable expenses may not be recurring. But some of the most common variable expenses you may pay include: What’s included in a budget under variable expenses will vary from one person to another. In other words, these represent the “wants” in your budget. On the other hand, a discretionary expense means anything you budget money for or spend money on that you don’t necessarily need. For instance, if you get sick, then a doctor visit may be a necessity that you need to cover. Variable expenses can include essential expenses as well as discretionary spending. This is something you can easily do with a budgeting app, however, which can minimize the odds of variable expenses sideswiping your spending plan. If you’re not tracking variable expenses regularly, it could be very easy to under- or overestimate how much of your budget you should allocate to them. But the amount you pay in any given month could be different from previous payments or ones you’ll make in the future.īudgeting for variable expenses can be more challenging, as you may not be able to pinpoint exactly how much they’ll add up to from one month to another. A variable expense may recur from month to month. Variable expenses are the opposite of fixed expenses. These kinds of payments can be the same each month for the entire period of time in which you’re obligated to pay them. Other less common fixed expenses may include child support payments, alimony, back tax payments you’re making through an installment plan or payments made to satisfy a judgment from a lawsuit. If you do that consistently and include it as a line item in your budget, you may technically consider it to be a fixed expense if you don’t deviate from your savings habit. For instance, you may put $100 into your emergency fund every payday. Saving can also be considered a fixed expense if you’re budgeting for it regularly. If you pay for a gym membership or streaming services, for example, those costs might stay the same month to month. While they may not be necessary for basic needs, certain recurring subscriptions could also be included as fixed expenses in your budget. But these costs can fluctuate from month to month, depending on your usage and the rates your provider charges. Water, gas and electric bills technically fit under the umbrella of basic living expenses. Health, disability or life insurance premiums.Renter’s insurance or homeowner’s insurance.Some of the most common fixed expense samples include: Examples of Fixed Expensesįixed expenses can include essential expenses, such as those needed to maintain a basic standard of living each month. If you budget by paycheck or schedule automatic bill payments, having bills due at roughly the same time can help with avoiding late payments and the fees that go along with them. Again, the advantage here is that planning out your budget may be easier to do with recurring bill payments. That can make using certain budgeting methods, such as zero-based budgeting or the 50/20/30 budget, easier.Īside from being roughly the same amount each month, fixed expenses may also be paid on or around the same date each month. Since these expenses are more or less constant, budgeting becomes more predictable. Having one or more fixed expenses in your budget is a good thing from a planning perspective. You can simply carry over those amounts from last month’s budget. When you sit down to make your monthly budget, you don’t have to guess how much you’ll pay toward fixed expenses. We recommend using LivePlan as the easiest way to create automatic financials for your own business plan.A fixed expense just means an expense in your budget that you can expect to stay the same, or close to it, over time. Selling, General & Administrative Expenses Industry profile ratios based on the Standard Industrial Classification (SIC) code 5812, Eating Places, are shown for comparison. The following table highlights the projected balance sheet for three years.īusiness ratios for the years of this plan are shown below. Long-term Liabilities Principal Repayment
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