Variable expenses are the opposite of fixed expenses. Variable expenses may change regularly and can be influenced by the choices you make every day. Unlike fixed expenses, variable expenses can be less predictable. But, keep in mind that variable expenses can still be necessary since many essentials fall into this category.
Also be aware that budgeting for variable expenses can be more challenging, as you may not be able to know exactly how much they’ll add up to month after month. If you’re not tracking your variable expenses regularly, it could be easy to under or overestimate how much of your budget you should set aside for them.
Why they matter: You can have more control over some of your variable expenses. For example, when buying new clothes, you can choose to buy cheaper items or wait for a sale. Other variable expenses can’t be controlled, such as emergency medical bills. If you’re sick and need to see a doctor, you may need to cover some or all of the costs, depending on your health insurance or whether you have any at all.
Examples of variable expenses
Variable expenses will ultimately vary from one person to another. But some of the most common variable expenses include:
- Gas
- Parking fees
- Groceries
- Dining out
- Clothing
- Personal care expenses
- Health care expenses and medical bills
- Entertainment
- Home and car repairs
It’s important to note that some variable expenses may not be recurring. For example, you may take a vacation 2 to 3 times each year. The amount you spend for each vacation may vary, but you won’t be paying those expenses every month. Instead, you may budget for those kinds of variable expenses using a sinking fund, which is money that you set aside for that specific purpose.
