Like HowStuffWorks on Facebook!

How Fixed Expenses Work


Identifying Fixed Expenses
Moving into a smaller home may help you save on your biggest fixed expenses: mortgage, house insurance, and real estate taxes.
Moving into a smaller home may help you save on your biggest fixed expenses: mortgage, house insurance, and real estate taxes.
Justin Sullivan/Getty Images

So, you've started your budget sheet. You know how much money you make every month. Now it's time to outline your expenses. In the area for fixed expenses, you'll need to list all expenses you have that are the same every month. For example, if your car payment is $350, you can list that amount as a fixed expense. Here are some other fixed expenses:

Of course, remember that some expenses that qualify as fixed for most people may be non-fixed, or variable, for you. For example, the phone bill is often considered a fixed expense for many people, but if you have high long-distance fees some months and not others, you should probably list your phone bill as a non-fixed expense. Cell phone expenses work the same way; some people always pay the same amount, and can list it as a fixed expense. Others go way over their allotted minutes, and cannot be sure what the bill will be from one month to the next.

You may have a long string of fixed expenses, or you may have only a few. Either way, if you're on a fixed budget, you need to keep track of all your fixed expenses.

One mistake many people make is to set bills on automatic withdrawal, and then forget to write them down in their checkbooks. This can lead to overdraft charges on your checking account, not to mention the headaches and paperwork involved in correcting such mistakes. If you include that payment in your budget plan, you'll be more likely to remember it, and you'll be controlling your spending with that payment in mind. That's why having a managed budget helps keep your checkbook in the black, and your mind at ease.

To make sure your budget stays on track, update it regularly, and use your checkbook register to help you list all of your expenses. Looking back through your register can help you find fixed expenses you might otherwise overlook, such as the child care or cable bill.

For other tips on how to make it easier to manage fixed expenses, even with a tight budget, read the next page.

­


More to Explore