Variable Expense Examples | BankruptcyHQ
Variable costs are expenses that can fluctuate over time. Variable expenses, also known as variable costs, can fluctuate depending on how you use products and services. Increased car use will increase variable fuel costs and maintenance. Your variable expenses for food could also increase if guests stay over for a long time.
Variable expenses are different from fixed expenses like your rent or mortgage, which remain constant throughout your loan term. Variable expenses are different from fixed expenses. They can fluctuate significantly in a week, month, or year.
Variable expenses are not considered to be “variable” simply because they can fluctuate or are discretionary. Variable expenses, such as your grocery bill, can vary from month to month. However, it is not considered discretionary or unnecessary because it is an expense that you cannot avoid.
Example of Household Variable Costs
The following are some typical household variable expenses:
- Cost of the yard and house maintenance, such as painting or lawn care
- General expenses like clothing, groceries, car maintenance, and so on
- Resources expenses like fuel, electricity, and gas
- Additional expenses, such as entertainment and dining out
Many of your budget items may be variable rather than fixed expenses, making budgeting a bit more difficult.
It is essential to keep track of your spending to plan and know where your money is going.
Budgeting with the envelope method can help you adjust for fluctuating costs. It encourages you to keep each category below a dollar amount but allows you to roll over any money not used for the next month. You can also have cash in an emergency fund, or savings account that you can access when you have variable expenses.
Finance Software for Variable Expenses
You can set different amounts for different expenses in personal financial software. If you don’t have budget categories, you can budget for the average.
Find the annual cost and divide it by 12 to get your monthly amount. It’s a good idea not to spend more on variable expenses than you have budgeted. This will allow you to be prepared for months when variable expenses are higher than your budget.
It is also essential to track and budget for other expenses such as discretionary costs, which fluctuate similarly to variable expenses and fixed expenditures that are constant from month to month.
Reduce Variable Expenses
It is harder to reduce discretionary spending than trimming variable expenses. You can reduce your discretionary spending by deciding not to purchase a more costly pair of shoes. This is a decision you can make once, and it is easier than deciding how to reduce your grocery bill.
Financial software can be a great tool to help manage your budget. You can track your variable expenses and set your budget goals. This will allow you to see which areas have increased. This will allow you to make strategic decisions about allocating your money and where to cut costs. You’ll be prepared to handle higher costs when they appear out of nowhere.
Variable Expenses for Business
Variable expenses can also occur in your personal finances. Variable costs are an expense that is subject to change due to product changes or, in certain cases, weather conditions.
Small businesses should budget for variable expenses and save money to cover unexpected expenses, as with personal finances. Even volatile expenses don’t need to stop your business plan.