Three Major Types of Expenses
The next step in setting up a budget is to list your monthly expenses. There are three major types of expenses we all pay: fixed, variable, and periodic. Do you know the difference?
A “fixed expense” is a cost that does not change from time period to time period, or changes only very slightly. Which of these is a fixed expense?
- Your grocery bill
- Home repairs
- Your mortgage or rent
The correct answer is “C.” Car payments, real estate taxes, and life insurance premiums are also fixed expenses.