A guide to dealing with changing expenses

It is often difficult to feel in control of your budget and finances when many costs seem to be out of your hands. Fixed expenses such as mortgage payments, car payments, and other interests generally tend to remain the same over a period of time, but variable expenses are monthly expenses, which tend to be extremely unpredictable.

What are variable expenses?

Simply put, any expense which is not a periodic, recurring, or fixed expense is a variable or changing expense. Variable expenses are harder to deal with for a variety of reasons, some of them being as follows:

  • Variable expenses are unpredictable in nature: Very often, whenever we have recurring expenses, we budget for such expenses and ensure that we have enough money to cover for them – however, when the expense keeps changing, it becomes harder to track and more complicated to handle. The unpredictable nature of such expenses also makes it hard to budget for them.
  • You cannot foresee them: Even if an expense has not occurred yet, one may have an idea that it is about to occur. For example, if your child’s birthday is coming soon, you may know that you will have to spend a specific amount on the celebrations. However, with variable expenses, it is often extremely difficult to foresee them, making it harder to budget for them effectively.
  • They eat into your savings: When a person does not budget for sudden variable expenses, what usually ends up happening is that they end up having to draw from their savings in order to meet such an expense. However, this is not just problematic but also extremely risky as it is important to ensure that your safety fund remains intact for other emergencies such as medical emergencies, natural disasters, or job related emergencies.

How do I deal with expenses that keep changing?

The obvious question one asks with regards to variable expenses or those which keep changing are how one can effectively deal with them without panicking. Here are some ways in which a person can effectively deal with such expenses:

  • Factor variable expenses into your budget: By setting aside a small portion of money for any unexpected expenses, you are ensuring that your main budget and savings remain out of harm’s way. In the event that you have no variable expenses that month, you can always carry the balance forward to the next month to deal with any unpredictable expenses.
  • Set limits: More often than not, variable expenses are for aspects such as food and entertainment. Set personal limits on how much you are willing to spend per month or per week on such discretionary expenses, and attempt to stick to the limits.
  • Track your overall monthly spending: Another effective way to ensure that you have sufficient funds to deal with variable expenses is by tracking your monthly overall spending. If you have a grasp on how much disposable income is available to you, and you are able to stick to your budget effectively, you will be able to deal with unpredictable expenses better.

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