Distinguishing Fixed and Variable Expenses

The video tutorial explains the concept of personal financial literacy, focusing on distinguishing between fixed and variable expenses. Fixed expenses, such as rent and mortgage, remain constant each month, while variable expenses, like electricity and groceries, fluctuate based on usage. The video provides examples of each type of expense and discusses how some variable expenses can be managed to become fixed through methods like average bill paying.

What is the main focus of personal financial literacy discussed in the video?

• Budgeting for vacations

• Investing in the stock market

• Distinguishing between fixed and variable expenses

• Saving money effectively

What type of expense does rent fall under?

• One-time expense

• Intermittent expense

• Fixed expense

• Variable expense

Which of the following is typically a fixed expense?

• Electric bill

• Dining out

• Groceries

• Car payment

What is a characteristic of fixed expenses?

• They increase annually

• They vary each month

• They remain constant each month

• They are unpredictable

What makes an expense variable?

• It is the same amount every month

• It changes based on usage or purchase amount

• It is a one-time payment

• It is paid annually

What is an example of a variable expense?

• Mortgage

• Netflix subscription

• Groceries

• Cell phone plan

Which expense can fluctuate based on daily changes?

• Gasoline prices

• Internet bill

• Rent

• Car loan payment

Why might someone's electric bill be higher in the summer?

• Less usage of electricity

• Increased use of air conditioning

• Fixed billing cycle changes

• Higher rates charged by companies

How can an electric bill be made into a fixed expense?

• By paying it annually

• By switching providers

• Through average bill pay

• By using less electricity

What is a benefit of average bill pay for electric bills?

• Reduces electricity usage

• Makes the bill amount variable

• Increases the bill amount in winter

• Turns a variable expense into a fixed one