Identifying Expenses: Fixed, Flexible, or Occasional? (2024)

FAQs

Identifying Expenses: Fixed, Flexible, or Occasional? ›

Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).

Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).

Occasional expenses come up a few times throughout the year, but not every month. Some may recur seasonally — such as gift-giving or new school supplies. Unexpected expenses happen to most people. This could involve a sudden health emergency, a veterinarian visit that wasn't planned, or replacing a broken appliance.

A normal budget breaks down expenses into three categories: Fixed, Variable, and Periodic.

Flexible expense examples include a vacation and a meal out. Both are flexible expenses because they are nonessential expenses.

A few examples of flexible expenses include what you pay for monthly groceries, clothing, and transportation, as the total cost of all of these things will most likely vary.

Some expenses like property taxes, insurance premiums, car registrations and birthdays come up only once or twice a year. Others are seasonal, such as school clothes in the fall and holiday gifts in December.

What Are Fixed Expenses? Typical fixed expenses include car payments, mortgage or rent payments, insurance premiums and real estate taxes. 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.

Occasional or unexpected expenses are sometimes expenses that you cannot plan for, for example a visit to the doctor, or repairs to your car if it breaks down. Some occasional expenses can be planned for, for example, annual car services.

Is a cell phone bill a fixed expense? ›

Cell phone and internet bills: These are usually fixed bills that are based on what service level you choose, rather than how much of the service you use within a month.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments. Some kinds of taxes, like business licenses, are also fixed costs. Since you have to pay fixed costs regardless of how much you sell, you should be careful about adding fixed costs to your small business.

An inflexible cost is an expense that does not change within a relevant range. For an individual, inflexible costs include car payments, mortgages, fixed loan payments, and installment plan payments on credit cards. For a company, inflexible costs include rent, insurance, leases, and salaries.

Fixed costs on a budget are costs that never change. Varying costs are costs that can change. An example of a flexible budget would be a business whose rent is always the same (a fixed cost) but whose inventory costs fluctuate (a varying cost) based on sales.

Flexible expenses include things like entertainment, toys, hobby supplies, alcohol, tobacco and any new unnecessary items like clothing or shoes. Flexible expenses are the items that are easiest to decrease or eliminate from your spending. Any small everyday purchases fall under the flexible expense category.

What is the Difference Between Fixed Budget and Flexible Budget? A fixed budget is like a set spending plan – it stays the same no matter what. A flexible budget, on the other hand, adjusts to your income and expenses, like a roadmap that can change course.

Change in Frequency

A fixed exchange rate is one that is set by the monetary authorities and does not change frequently. A flexible exchange rate, on the other hand, is one that is set by the market and changes frequently.

Fixed costs are expenses that remain the same no matter how much a company produces, such as rent, property tax, insurance, and depreciation. Variable costs are any expenses that change based on how much a company produces and sells, such as labor, utility expenses, commissions, and raw materials.