Variable expenses (also known as discretionary expenses) refer to expenses that can vary or change depending on the individual’s circumstances or spending habits. Variable expenses are the expenses we have all the control over.
Some examples of variable expenses for individuals include:
Food: This includes the cost of groceries, dining out, and other food-related expenses. These expenses can vary depending on the individual’s dietary choices, and whether they are cooking at home or eating out.
Entertainment: This includes the cost of activities and leisure, such as movies, concerts, gym memberships and vacations.
Shopping: This includes the cost of clothing, electronics, home goods and other personal items.
Personal care: This includes the cost of hair care, beauty products, and other personal grooming expenses.
Transportation: This can include the cost of gas, insurance, and maintenance for a car, as well as public transportation costs or taxi/rideshare fared. The amount spent will depend on how often the person uses their car, how much they drive, and how often they use alternative transportation.
Debt payments: This includes the cost of paying off loans, credit cards, and other debts. The amount of these payments can vary depending on the individual’s balance, interest rates, and the loan terms.
Variable expenses are different from fixed expenses, which remain the same regardless of the individual’s circumstances or spending habits. Variable expenses can vary from person and person, and change depending on the individual’s lifestyle, location, and other factors. It is important for individuals to keep track of these expenses to manage their finances and create a realistic budget.