Though variable expenses are inconsistent, it’s still possible to budget for them. For variable costs, things get a bit more complicated. 1Īs a rule of thumb, here’s how to budget for fixed and variable expenses.īecause a number of essentials are fixed expenses, it’s generally recommended that you prioritize and budget for those costs first. (Of course, some variable costs are needs, too, such as groceries, medical care, and utilities).Īccording to the 50/30/20 budget rule, 50% of your income should be allocated to “needs” and 30% should go toward your “wants.” The remaining 20% is dedicated to savings and investments. Meanwhile, some variable costs - like eating out and buying new clothes - may fall under the “wants” category. The best way to do this is to remember that needs are the things you can’t live without, while wants are things you enjoy but aren’t necessary to your daily life.įor example, many fixed costs are “needs,” like rent and insurance. Overall, a large part of budgeting is determining the difference between wants and needs. Variable expenses are less consistent, making them harder to plan for in advance. When it comes to budgeting for fixed and variable expenses, fixed expenses tend to be easier to plan for, since they are typically due at set times.
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