Fixed and Variable Expenses

Front

What are fixed expenses?

Back

Fixed expenses are costs that do not change in amount and are incurred regularly, such as rent, insurance, and loan payments.

Front

What are variable expenses?

Back

Variable expenses are costs that can fluctuate in amount and frequency, such as groceries, entertainment, and utility bills.

Front

Give an example of a fixed expense.

Back

An example of a fixed expense is a monthly car payment.

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Give an example of a variable expense.

Back

An example of a variable expense is buying movie tickets.

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How does a fixed expense differ from a variable expense?

Back

A fixed expense remains constant over time, while a variable expense can change based on usage or consumption.

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What is the impact of fixed expenses on budgeting?

Back

Fixed expenses provide predictability in budgeting, as they are consistent and can be planned for each month.

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What is the impact of variable expenses on budgeting?

Back

Variable expenses can make budgeting more challenging, as they can vary significantly from month to month.

Front

List three common fixed expenses.

Back

Common fixed expenses include rent or mortgage payments, car payments, and insurance premiums.

Front

List three common variable expenses.

Back

Common variable expenses include groceries, dining out, and entertainment.

Front

Why is it important to differentiate between fixed and variable expenses?

Back

Differentiating between fixed and variable expenses helps individuals manage their finances effectively and make informed budgeting decisions.