Once you've started listing your non-fixed expenses, you may be surprised at all the places you've been spending money. We often don't realize exactly how much goes through our hands until we start to carefully monitor our spending. Here are some of the most common non-fixed expenses:
The inability to determine when any of these expenses may pop up, and how much they'll cost you each time, makes it easy to understand why non-fixed expenses are also called variable expenses. For example, a Friday night trip to the movies for a family of four can cost upward of $50, but it may cost hundreds to fix the car bumper from the fender-bender in the theater parking lot. Both are non-fixed expenses, and neither is an amount that you can predict for every month. You just have to know that there'll be expenses each month, and work with your budget so that you are prepared for them.
The best way to determine how much money you usually spend on non-fixed expenses is to keep a diary of your spending for a month. See where you put your money, and decide what you could do without. Some expenses are one-time events: A friend gets married and wants your daughter to be the flower girl, so you're out $85 for a dress she'll wear once. But there are also expenses that you'll regularly see in the diary, such as the scratch-off lottery tickets or the daily smoothies. Monitoring your spending this way helps alert you to the expenses that add up quickly and really don't significantly improve your life.
Our needs and our wants often get mixed up, and it seems nearly impossible to think of getting by without many of the things we take for granted. But it's possible to live without some of the extras. And it can make a huge difference in your budget.
Not every non-fixed expense is frivolous. You can't just cut out all the bills that show up throughout the month. But if you seriously want to balance or improve your budget, you can analyze your spending and find ways to cut back.
On the next page, we'll learn how to manage these non-fixed expenses and work toward a balanced budget.