Many finance experts willingly share spending reduction tips. While this may be helpful there happen to be those “Fixed expenses” that you can’t do anything about. What exactly are fixed expenses?

Unfortunately, these are considered “Big bills” to keep it simple. These may or may not include your mortgage or rent, car payments, home insurance, phone bills, student loans or installments, property taxes, childcare, gym memberships, Tuition fees, and more.

What are fixed expenses?

A fixed expense is any expense that does NOT change from month to month. (Fixed meaning SET) These expenses are the most important and are more likely a need instead of a want.  You should take time to properly track these expenses because if not they could take a HUGE chunk of your budget. This is possible if you aren’t carefully tracking, managing, and budgeting when you are spending. 

How does a fixed expense affect your budget?

While these expenses tend to stay the same from month to month they make up the MAJORITY of most people’s budget. Always be mindful of the exact cost of each of these items. The frequency of the payments due, grace periods before late fees, and customer service information.

Pay close attention to the exact dollar amount you spend on these items as a whole each month. This is a key factor in determining how much money will be available for impulse spending within the household budget. 

Paying fixed expenses

Fixed expenses are items within your household budget that must be paid. These expenses are due regardless of how much money you have available. These are often the first on the list for payment before you can spend any more from your budget.

It may seem like a daunting event each month but it allows you the freedom to budget for saving long term. This is because your payment is for a specific dollar amount each month. They provide stability and predictability in your monthly budget, which will be a helpful aspect of your retirement goals. 

Knowing your financial Habits

It is highly important that you know your spending habits in order to aid in reducing fixed expenses. Use budget planners, journals, notepad apps, or spreadsheets to track your spending. Be sure to use this regularly to track these expenses. Each month take note of where you are doing the most monthly, weekly, or daily spending. This will help you decide on areas where you can scale back spending.