Determine Your Fixed and Variable Expenses

Most people have two kinds of expenses: fixed and variable. Fixed expenses are costs that remain the same month after month. These typically include:

Housing, i.e. mortgage or rent

Debt payments




Most expenses are variable, which means that the amount due will change every month, no matter how tightly you budget.

Variable expenses include both necessary and discretionary expenses, such as:



Dining out


Clothes and accessories 

Personal care

Gifts and charitable contributions

You can also create a more general set of categories, such as needs, wants, debt payments and savings. You can be as vague or as specific as you want when deciding which categories to include. For example, some people use a general “food” category while others want to divide expenses between “groceries” and “restaurants.”