There are numerous examples of variable expenses. By getting a handle on your spending, you can free up more money to save or invest in other areas of your life. While variable expenses can be challenging to manage, taking the time to track them can pay off in the long run. ![]() This way, if your grocery bill is higher than usual one month, you won’t have to worry about it putting a dent in your other financial goals. You may also want to consider setting aside some money each month to cover unexpected variable expenses. This can help you see where your money is going and give you a better idea of where you can cut back. One way to keep track of your variable expenses is to use a budgeting app or software. However, by tracking your spending and getting a good idea of what your average monthly variable expenses are, you can start to get a handle on your finances. They can be difficult to budget for because you never know exactly how much you’ll need to spend. Variable expenses are those that fluctuate from month to month, such as groceries, gas, and entertainment. We’ll also look at some tips for reducing your variable expenses and creating a budget that works for you. In this blog post, we’ll explore what a variable expense is and why it’s important to know about when budgeting for your personal finances. Unlike fixed expenses, which remain the same each month, variable expenses can fluctuate depending on your spending habits and lifestyle. This could be anything from groceries to entertainment. In extreme circumstances the behaviour of even the most consistent fixed expense is likely to change.If you’ve ever looked into budgeting or personal finance, you’ve likely come across the term ‘variable expenses.’ But what exactly are these? Simply put, a variable expense is an expense that can change from month to month. The behaviour of an expense after a loss has occurred should not play any role in how it is classified. For example, in a manufacturing business which consumes a lot of water and power to operate, the utilities cost is likely variable, but for a convenience store which uses the same amount of heat and light regardless of sales levels, utilities would be a fixed expense. Other expenses can fall into a bit of a grey area and whether they are fixed, or variable will depend on the nature of the business. For example, the largest variable expense in a clothing store would be the cost of the clothing they sell. ![]() The most common example of this is the cost of whatever product it is the business is selling. On the other hand, variable expenses are those which vary directly with sales. Whether a business has sales of $10,000 or $20,000 per month, the amount of rent they pay for the space is likely the same. The easiest example of a fixed expense is rent. Fixed expenses are those costs which do not change within a reasonable range of sales. When we talk about identifying fixed and variable expenses for the purposes of a BI claim, what we are talking about is, how does the expense behave during the normal operation of the business. The issue that often trips people up is thinking in absolutes, such as, how would the expense behave in the event the business is shut-down? But, this is not the way to look at this issue. It may sound like a simple concept at first, but classifying expenses as fixed and variable in the context of a business interruption claim can be tricky.
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