Expenses
An expense is the money you spend to get something. It is the cost of something you buy or use. For example, expenses are things like food at the grocery store, bus ride fare, your cell phone, or heat in your apartment.
There are two kinds of expenses. One kind of expense is called fixed, and the other kind is called variable.
Fixed Expenses
Fixed expenses stay the same every time. These might be things you pay by the month, every week, or every other week. Since they are always the same, you can plan how much money you need to have for these.
Fixed Expense Examples
- Rent
- Car payment
- Phone service
- Monthly healthcare insurance premium
Variable Expenses
Variable expenses do not stay the same. They can change based on how much you use or the choices you make. That can make it hard to plan for those things.
Variable Expense Examples
- Utility payments like heating costs more in the winter months because you use more heating
- Other utility payments like water may be different each month based on how much you use
- Groceries and eating out can change each week based on what you buy
- Healthcare co-pay costs when you see a doctor or have a procedure
Other Expenses
There are many other things that you might spend money on. Cell phone or cable TV bills are expenses that you might have. Shopping for clothes, getting a haircut, or going to the movies are other examples.
Taxes on Expenses
When you buy something in a store or online, there will be taxes on that item. This means that the real cost that you pay will be higher than the price on the tag that you see. When you plan for buying things, it is important to remember the real cost will be a little higher.
Tool: List Your Expenses
Use this tool to list out all your expenses.