There are 3 types of Expenses we will discuss in the following video and are a critical part of understanding how to better budget your monthly income.
When we talk about budgeting, we like to look at the different expenses within our budget in three different categories. Let’s take a look at each expense one at a time.
The first type of expense is called a Fixed Expense. This type of expense happens every month and is always the same amount. Often, these are our most important priority monthly expenses. Additionally, it’s easier to budget a fixed expense because of its regularity.
The second type of expense is called a Variable Expense. This type of expense happens every month but changes in amount. Variable expenses are often more challenging to budget because of their fluctuating nature.
The third type of expense is called a Periodic Expense. This is an expense that doesn’t happen on a regular basis and occurs more randomly. These expenses can also be difficult to budget unless you are actively setting money aside on a regular basis to pay for them when they do occur.