လက်သီးစုပ်ပီး ကြိတ်ခံတဲ့ကောင်မလေး
Fixed and variable expenses are expenses that are part of every personal budget.
The difference between them is that, while fixed prices do not change their value from one month to another, the variables are always changing according to consumption habits.
That’s why it’s important to know how to control both types of costs to maintain a balanced budget, escape debt and achieve your financial goals.
If you still don’t control your fixed and variable expenses, it’s worth reading this article to the end to take better care of your financial life.
Fixed and variable expenses are different types of costs that should be accounted for in your personal budget.
See the definition of each one:
The two types of expenses make up the total expenses you have month to month, which must be deducted from your income.
Therefore, it is important to separate fixed expenses from variables when you do personal financial planning to organize, save and invest.
After all, a part of your expenses will be totally predictable, in the case of fixed accounts, while the other will have to be calculated based on estimates since the value is variable.
Controlling fixed and variable expenses is essential to maintain a healthy financial life and achieving your goals.
After all, you need to spend less than you earn to be able to save, invest and reach goals that depend on money, such as buying a property, traveling, or taking a course.
However, the lack of financial education results in a lack of control in relation to their own expenses and problems in managing money.
According to the survey results, only 18% of respondents have full knowledge about the flow of income and expenses in the personal budget.
The majority (71%) have only partial knowledge of their finances and another 10% have little or no knowledge. In addition, more than a third of Pakis (36%) admit not knowing the exact amount of fixed bills they will have to pay in the following month.
Regarding variable expenses, the majority (57%) also say they do not know how much they will have to pay in the next month.
These are worrying numbers, as they show that people still have a hard time controlling fixed and variable expenses — a basic task of personal financial organization.
Only with a complete view of monthly expenses is it possible to plan to save and invest money.
Otherwise, the risk is to end up in debt due to the lack of notion about the costs themselves.
To help identify what is fixed and variable expenses, we’ve put together some examples of expenses that fit into these categories.
As we have seen, fixed expenses are those that do not vary from month to month, such as:
Variable expenses can be:
So, it is clear that the type of variable expense depends a lot on your lifestyle.
If you want to better control your fixed and variable expenses, just follow the tips below offered by those who understand personal finance.
To control your expenses, it is easier to start with fixed accounts, since you have greater predictability of values.
So, gather all the expenses that always have the same amount, which can be paid on your credit card or boleto monthly.
The sum of these accounts will give you an idea of what your fixed monthly cost is. To get the right amount, though, you need to estimate variable expenses.
As variable expenses are not always the same amount, it is important to find an average of these expenses in your budget.
To do this, you can add your variable expenses for the last 3 months or 6 months, for example, and find an average. The longer the period analyzed, the more accurate the calculation.
So, if you can calculate the average of variable expenses for 12 months, for example, financial planning will be even more efficient.
Start with expenses that vary less, such as water and electricity bills — if you maintain a stable consumption, you can even put them in fixed expenses.
Then consider essential variable expenses such as food and transportation. Then add up any incidental expenses (leisure, shopping, hobbies, etc.). Finally, just divide the total amount of variable expenses by the analyzed period to arrive at your monthly average.
With the value of fixed expenses and the average of variable expenses, just add the results to arrive at your fixed monthly cost.
With this information in hand, you can analyze whether this amount is compatible with your income, that is, if you can spend less than you earn.
If the budget is at zero to zero, it is a sign that you need to reduce costs to be able to save and invest for the future.
Now that you know your expenses, you need to think of strategies to reduce expenses.
Usually, it is easier to save on variable expenses, with attitudes such as using water and electricity consciously, avoiding impulse purchases, spending less on leisure, etc.
However, you can also reduce costs on fixed expenses by cutting excess subscriptions or negotiating loan installments, for example.
The important thing is to reduce your bills as much as possible so you have more to focus on your financial goals.
It is important to set a limit value for variable expenses in the month to prevent them from making your bills more expensive.
One way to do this is by using budget control methods. For example, the 50-30-20 method determines the following distribution of expenses:
Finally, it is essential to closely monitor all fixed and variable expenses month by month.
That way, you don’t miss any expenses and can make more informed decisions about your money.
