Savings expenses may happen occasionally throughout the year, but not regularly (gifts or vacations, for example). Variable expenses are things you have more control over, such as groceries, travel, dining out, shopping, and charitable donations. In general, your budget should be divided into three categories of expenses: fixed, discretionary, and savings.įixed expenses are things you can’t avoid paying, such as rent or a mortgage, utilities, and loans. You can make a budget for a specific time frame (monthly or annual are the most common). Take how much you expect to earn next month and use the expenditure percentages from step three to estimate what you can spend. You can now set up next month’s budget.For instance, maybe your typical $500 grocery bill jumps to $700 in November and December, or you pay your homeowners insurance premium at the beginning of each year. Estimate how much you’ll spend in different categories each month over the next year.Use last year’s pay stubs as a reference point and adjust as needed (perhaps you recently got a raise or finalized a new business deal). ![]() Estimate how much you’ll earn each month over the next year.Variable/discretionary ordinary living expenses (such as food, clothing, household expenses, medical payments, and other items for which your monthly spending tends to fluctuate).Fixed costs (such as housing payments, utility bills, charitable contributions, insurance premiums, and loan payments). ![]()
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