![]() ![]() Examples of flexible expenses include buying new clothes for yourself or going out to eat with friends on the weekend. ![]() This includes things like groceries, entertainment, and clothing. What Is a Flexible Expense?įlexible expenses are costs that vary from month to month. Let’s take a look at what makes a flexible expense different from a periodic expense. Knowing which types of expenses fall into each category can help you budget and plan ahead more effectively. One of the most important concepts to understand is the difference between flexible expenses and periodic expenses. There is a spot in your workbook (get your workbook when you sign up for the challenge) where you can list the categories that you’ll be using in your budget.Managing your personal finances can be confusing. To help with organization, divide your categories into categories, either like I did above (variable expenses, fixed monthly expenses, and periodic expenses) or in a different way, depending on your personal situation. Think hard to come up with all of your periodic expenses.ĭefine categories for your budget. Some of these expenses may be fixed monthly or variable expenses in your individual case. Once again, this isn’t an exhaustive list of possible periodic expenses. Periodic expenses sometimes sneak up on us because they occur so infrequently that we don’t have them on our radar. They could be expenses that come up annually or at some other interval. Since we are creating a monthly budget, periodic expenses are ones that come less often than monthly. Some may not apply to you (or they may be periodic or variable rather than fixed monthly expenses) and there are likely other fixed monthly expenses that are not on this list. Here are some examples of fixed monthly expenses. You also know the dates that these expenses will be due or will be automatically taken out of your checking account. You know exactly how much those costs will be. Avoid catch-all categories like “shopping” and “miscellaneous” or use them very sparingly.įixed expenses are the expenses that don’t change from month to month. If a new expense comes up that doesn’t fit well in your established categories you can add a new category (if it’s an expense that will likely recur) or make it fit into an established category (if it was an odd one-time expense). Make your own rules about what expenses belong in what category. Here are some typical categories that you can adapt to your own situation. You’ll find a happy medium that works for you. On the other hand, lumping all of your online purchases into a “shopping” category isn’t going to give you enough information to make meaningful changes. For example, splitting your grocery purchases up by food group is probably overkill for general budgeting purposes. The more detail you have, the clearer the picture of where your money is going, but the more work you’ll have splitting up those receipts from Target and Wal-mart. You can use as much or as little detail as you like. We are focusing on variable expenses in our expense tracking report to get a real picture of how we spend our money. Most of them don’t go away completely, but the amount we spend is never the same each month. Variable expenses are the expenses that change from month-to-month. Today we will build on those variable expenses and add fixed expenses and periodic expenses. If you put some thought into tracking your expenses like we talked about last week, then you’ve probably already nailed down some good categories for your variable expenses. Budget categories need to be personalized to fit your family’s unique financial situation. Today we’ll start with setting up budget categories. However, putting together a budget all at once can be intimidating, so we’ll do this one step a time. We still look forward with excitement to our end-of-the-month budgeting date. It was exhilarating when we settled on our current process and knew we had something that would really help us manage our finances intentionally, instead of watching them as they went by. If “budget” is a bad word in your vocabulary, it’s time to fix that!Ī budget doesn’t have to be depressing and restrictive– it can be exciting and freeing! We actually love our budget! You knew this was coming sooner or later. ![]()
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