Fixed expenses are regular, recurring expenses that you expect to pay each month. These expenses do not change regardless of changes in your income or spending patterns.
Some examples of fixed expenses include:
Rent or mortgage payments: These are typically the largest fixed expenses for individuals or businesses.
Insurance: This includes property and casualty insurance, health insurance, life insurance and so on.
Salaries: This includes the cost of paying employees a fixed amount each month or year.
Taxes: This includes property taxes, sales taxes and income taxes.
Debt payments: This includes payments on loans and leases, such as car loans, mortgage loans and equipment leases.
Utilities: This includes expenses such as electricity, gas, water and internet services.
Subscriptions and memberships: This includes things like gym memberships, streaming services and magazine subscriptions.
As these expenses generally remain the same, they are important for budgeting and forecasting, as the individual can predict and plan for these costs, and adjust their revenue accordingly.
It is important to note that fixed expenses can change in some situations. For example, if you move to a new location, the amount of rent might change. Or, you might decide to change insurance providers. These changes can affect the fixed expenses and make them different than expected.