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What are Fixed, Savings and Variable Costs and Expenses, and How Will They Help Me Learn How to Budget My Money Properly?

By Christi Posner

Fixed expenses, savings expenses, and variable costs are the three categories that make up your budget, and are vitally important when learning to manage your money properly. When you’ve committed to living on a budget, you must know how to put your plan into action.

Once you’ve created your budget and you’re ready to take it off of the paper and play it out, you will need to divide it into three categories. First, learn the difference between fixed, variable, and savings costs, and then grab 3 different coloured highlighters and begin going through your budget, line by line.

Fixed Expenses – Definition, Examples and Lists

Calculating expenses and costs to help you budget money properly.The definition of fixed expenses is “any expense that does not change from period to period," such as mortgage or rent payments, utility bills, and loan payments. The amounts may vary slightly, which may be the case with utilities, but you know they are due on a regular basis. Here is a list of categories to include in your fixed expenses: 

  • Mortgage(s)
  • Rent
  • Property taxes (if paying monthly)
  • Strata fee / condo fee
  • House / tenant insurance
  • Utility bills (cable, cell, electricity, water, etc.)
  • Lease / car loan payment
  • Vehicle insurance (if paying monthly)
  • Life / Disability / Extended health (or other) insurance
  • Bank fees
  • Debt payments for your debt repayment plan

Savings Expenses – How to Save Money and What to Save For

Learning how to save money is as simple as first figuring out what expenses you need to save for, and then simply getting the money out of your hands. There are two types of savings categories that you need to save for, irregular expenses and goal-oriented savings.

Irregular Expenses – How to Budget Your Money Properly

Irregular expenses are costs that come up throughout the year, that you need to budget your money properly for or else you’ll find yourself reaching for a credit card when those expense comes up. You must save for these expenses in advance, and not feel guilty when you spend the money. Consider it “planned spending.” Examples of irregular expenses include:

  • Property taxes (if paying quarterly or annually)
  • House insurance (if paying annually)
  • Vehicle insurance (if paying quarterly or annually)
  • Clothing & shoes (if you shop once or twice per year)
  • Health expenses
  • Vet bills
  • Gifts
  • Vehicle maintenance

Goal-Oriented Savings – Save for Retirement, Education, Down Payment, Trip or Emergencies

If you have a goal of saving for retirement, education, a down payment on a home, a trip or for emergencies (which should absolutely be a goal), make sure you have included these goal-oriented savings in your budget.

Simply figure out how much you need to save, when you need to save it by, and divide by the number of months you have left until that date. This will indicate how much you need to save each month. These types of savings are not meant to be touched until that event happens.

Variable Costs – Definition and Examples

The definition of variable costs can differ, but we like to define them as anything you can buy in a store (for example groceries, gas, or coffee) or expenses that are within your control. You can decide how much and if you will spend on these items. Here is a list of what you can include in your variable expenses category:Couple goes through expenses and costs and learns how to budget.

  • Groceries
  • Personal care items (drugstore)
  • Fuel / public transportation costs
  • Parking
  • Clothing & shoes
  • Daycare
  • Work lunches & snacks
  • Eating out
  • Entertainment
  • Tobacco / alcohol
  • Lottery
  • Babysitting
  • Sports & recreation, other hobbies
  • Hair care / salon services
  • Magazines / newspapers / books
  • Children’s lessons and activities
  Free Excel personal budget template and budgeting calculator spreadsheet and worksheet.
  As another way to help making budgeting simpler and more fun, we've created a personal budget template that guides you through the budgeting process. It lets you know what "normal" expenses would be for your financial situation, and once you're done, it can review your budget and look for dozens of ways to help you improve it or save money.

Extra Expenses – Are They Fixed, Savings, or Variable Costs?

If you find an extra expense in your budget and you’re not sure if you should put it under the fixed, savings, or variable costs, simply ask yourself these questions:

  1. Does this expense occur often, regularly and not change? (Fixed)
  2. Do I buy it from a store? Can I control how much I spend on this? (Variable)
  3. Should I be saving for this item in advance? (Savings)

Sometimes expenses will fit into more than one category and if that happens, you can choose where you feel the cost belongs in your budget.

How Will Fixed, Savings and Variable Costs Help Me Learn How To Budget My Money Properly?

Separating your budget into fixed expenses, savings expenses, and variable costs will help you organize your bank accounts and manage your money properly. If you’re ready to start saving, paying all of your bills on time and spending within your means, then learn the next step, how to set up your bank accounts and put your budget into action! 


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Our family budget has ballooned as our children got older but when we scour though the expenses ther eis nothing standing out. is there a formula that helps with variable expenses such as groceries, restaurant/coffee, and extras like things that need fixing around the house.

Hi Dan, Great question. We offer some general guidelines to help people figure out what reasonable amounts are to spend on various things such as groceries, eating out, and home repairs. You can visit our page here to see these guidelines: . We also have a budget calculator (linked to above) that can automatically apply these guidelines to your situation. While these tools and guidelines are backed tons of thought and experience, they are just general guidelines. If you want some super customized budgeting help, setup an appointment to meet with a non-profit credit counsellor either over the phone or in person. They are trained budgeting experts and their help is usually free. If there is any way to optimize your budget and get the most out of it, an experienced non-profit credit counsellor should be able to help you get there.

Any idea why pet expenses are never shown in monthly expenses models? Half the world has them and they can cost you yet I never see them included!

Excellent question, Marilyn. For people who have pets, they are often a big part of someone's life and need to be included in their budget - especially if the pet expenses are significant. In a blog post like this, we try to keep things on the shorter side and omit a lot of stuff in our effort to keep things simple and easily readable. So we tend to only list top examples that spring mind while writing the article. At the end of the day, everyone needs to personalize their own budget to their own expenses, and we do include pet expenses in all of our downloadable expense tracking or budgeting resources including the budget template above.