Variable expenses definition4/24/2023 Many of your variable expenses may end up being fairly predictable. How to Change Your Financial Habits to Save on Variable and Fixed Expenses Cutting back on variable expenses requires more day-to-day willpower than cutting back on fixed expenses. Or maybe you need to decide between buying new clothes or seeing that new movie. You may have to choose between making dinner and getting take-out. Variable expenses may be harder to shrink than fixed expenses because they can affect your lifestyle. For example, you might spend more on electricity in July than you do in December because of air conditioning. Your utility bills may also be variable expenses because they may change from month to month. Grocery shopping is also a variable expense. Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Do you buy conventional or organic produce? Do you get Starbucks or make coffee at home? Not all variable expenses are discretionary expenses, however.Īlthough variable costs are quite often discretionary expenses, some may be necessities. One way of describing variable expenses is that they represent your daily spending decisions. The best part? You only have to make that money-saving decision once to see the reward. However, that $85 per month will turn into $1,020 in one year. The little bit you save on your fixed expenses can add up fast.įor example, if you spend $1,100 instead of $1,185 per month on rent, the quality of your apartment and neighborhood may not change much. This is a great alternative to being frugal with your other spending decisions, such as buying new clothes or ordering takeout. So when you lower your fixed expenses, you lower the percentage of your budget that’s devoted to them. That’s because fixed expenses tend to take up the largest percentage of your budget. When you lower your fixed expenses, you automatically save more money each month or pay period. For example, consider a cheaper gym membership or a different streaming service. Additionally, shop around for alternative car insurance, health insurance, life insurance and homeowners or renters insurance plans to save more money. If you’re signed up for a monthly service that you rarely use, there may be an alternative plan with a lower price. Some fixed expenses may be discretionary, like a gym membership or streaming service subscription.Īlthough these bills are consistent each month, you may still be able to lower their costs. Typically, these expenses can’t be easily changed. On the plus side, they’re easy to budget for because they generally stay the same and are paid on a regular basis. Typical fixed expenses include car payments, mortgage or rent payments, insurance premiums and real estate taxes.
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