This could end up saving you hundreds of dollars per year. And with so many different options out there, there is no need for you to pay through the nose for it. Reduce Your Cell Phone PlanĬell phone plans can get a little ridiculous. No matter what kind of insurance payments you make each month, from renter’s insurance to car insurance, finding a plan that offers a lower monthly premium can have a seriously positive impact on your fixed expenses. So, every time you retire a debt, and eliminate that monthly payment, you are reducing the total amount you pay toward fixed expenses. Think about it like this, every monthly debt payment you make is a fixed expense. One of the best, and quickest, ways to reduce the total amount you pay toward fixed expenses is to get out of debt. If you want to reduce your fixed expenses, here are a few of the best ways to do so. When you reduce your fixed expenses, you are decreasing your monthly cost of living. That’s why things like shopping for cheaper car insurance, or finding a less expensive cell phone plan can be so beneficial. Unlike reducing or eliminating variable expenses - which only temporarily impacts your budget - whenever you find ways to reduce your fixed expenses, you are making an impact on your financial life for a long time going forward. If you are trying to reduce your monthly financial outflow, then fixed expenses are a great place to start. That way, none of your fixed expenses will fall through the cracks. The easiest way to budget for fixed expenses, is to start each month with a copy of the previous month’s budget. And since they are so predictable, the total amount you pay toward fixed expenses each month will essentially become your spending baseline. Sure, they may vary by a few dollars from one month to the next, but for the most part, they are fairly predictable. For example, expenses like your rent or mortgage, your car insurance, and your internet bill are fixed. What follows is a guide to these 3 types of expenses, and how you can better prepare for them.įixed expenses are the easiest type of expense for which to prepare, because they come in at both a consistent interval and amount. Variable expenses are discretionary and can be modified by your financial behavior.Īnd while we normally spend time talking about specific expenses like your cable bill, your mortgage, and your debt payments, in this article, I want to focus on the broader picture. Periodic expenses also occur in predictable amounts and intervals, but are much less frequent (i.e.
Fixed expenses occur in predictable amounts and are usually paid in monthly intervals. The 3 types of expenses include: fixed, variable and periodic. With that in mind - and before we get too much further - allow me to address the most obvious question: what are the 3 types of expenses?
#Discretionary expenses how to#
Beyond that, if you want to improve your financial situation, you should learn how to budget and prepare for them properly. When it comes to personal finance, there are 3 types of expenses with which you should familiarize yourself.
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