Variable expenses show what amount of money was spent on a person’s needs and change week-over-week, month-over-month. Fixed expenses stay the same almost all the time and are usually paid on the same date. As these expenses differ from each other, it is essential to know how while planning one’s budget.
Explanation:
Variable expenses, also called variable costs, are expenses that show how much money was spent on products, gasoline, restaurants, etc. These expenses may differ a lot every week, month, year. For example, one’s variable costs will be much bigger in December as he or she buys a lot of presents, food for the celebration, decorations for the house.
Variable expenses may not occur regularly, and they are the first that people try to cut down when they need to save money. The way to count all variable costs per month, for example, is to make a list of all one’s activities and spendings during the last thirty days, but not to count such things as rent, etc.
The spendings one needs to count are for cafes and restaurants, for theatres, cinemas, for transportation, for presents, food from supermarkets. In other words, everything that costs a different amount of money from month to month. Then one needs to sum it all up, and that will be the variable expenses.
Fixed expenses are always the same and are usually paid at the same time of a week, a month, or a year. These expenses cannot be easily changed or cut down, that is why they are called fixed. They are easy to count while planning a budget because they always stay the same. The fixed expenses examples are familiar to almost everyone, especially to adult people. Rent and mortgage payments, any insurance, car payments, internet bills, and taxes – all of these payments are fixed.
