On this episode of Financially Naked: Stories from The Financial Gym, our hosts are Catriona Williams and Gina Funaro, two Certified Trainers at The Financial Gym. One of the jobs of a Financial Trainer is breaking down financial topics into plain language that people at all skill levels can understand. We call this ‘Gymsplaining!’ Today, Gina and Catriona are here to Gymsplain the difference between fixed and variable expenses. When building a budget, understanding your expenses is a big part of the process! Join Gina and Catriona as they break down the definitions, discuss common misconceptions, and provide tips for categorizing tricky expenses.

Podcast Notes

Fixed Expenses

Quick Definition: Bills and other expenses that occur regularly you can plan for.
Some examples include rent or mortgage, utilities, and the internet bill.
If the amount varies each month, like for utilities, you can use the average or the higher end of the bill when you’re planning.
Fixed expenses include subscriptions, which may not be a necessity but are regular expenses.

Variable Expenses

Quick definition: Expenses that don’t have a set due date or may change from month to month.
Examples include groceries, gas, and other discretionary spending. Once you figure out the necessities and take care of the different goals, what’s left is how you calculate what’s left for variable expenses.
You have direct control over these expenses and they don’t have set payment dates.

Periodical Expenses

Quick definition: Expenses that you can plan for but happen less frequently.
Examples include insurance payments, certain medical visits, or summer camps.
Sinking funds are a fantastic tool to plan for these expenses and make them part of your budget.

Tracking & Budgeting Tools

One great way to keep things simple is to have two separate checking accounts, one for fixed expenses and one for variable expenses. This system can also be applied to credit cards, but only if you can pay your cards off in full.
Cash budgeting is another great way to increase mindfulness around planning and spending.
The best tracking tool is one you will stick with. You can use an automatic tracker, keep a spreadsheet, or pen and paper! If you simplify your accounts, any tracking method you choose becomes simpler.

If you want to work with a Certified Financial Trainer to help navigate your finances, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com.