Expenses- Tips on Gaining Control
September 30th, 2022
There’s nothing like back-to-school time to remind me of the challenges of real-life budgeting! In the budgeting world, we generally categorize expenses as “fixed” and “variable”.
What are they?
Fixed expenses remain the same each month like rent, mortgage, or a car payment.
Variable expenses fluctuate each month like gas, groceries and eating out.
Variable expenses are usually the ones that throw off our budget. A good way to stabilize variable expenses is by averaging.
For something like groceries this might look like this:
- September Groceries: $489
- October Groceries: $472
- November Groceries: $520
In this case, we can take an average of approximately $500 monthly. Review every month afterward, was there money left over? Should the amount be tweaked higher or lower, or is it just right?
We can create new line items in our budget and use this averaging strategy for all types of variable expenses. I recently added a gift category to my monthly budget, a client of mine has a specific line item for donations.
Consider the annual cost of the following:
- Back to school supplies and clothes
- Sports or activity fees/tuition
- Tithing or other donations and planned giving
How can we average them over a 12-month period? You know the answer to this- by making a monthly budget! By doing so, we can compare month by month expenses, giving us a much better idea of our spending habits. We can take the yearly cost and then divide by 12 to give us a monthly amount to be allotted for each expense category.
Have questions? We’re here to help, feel free to contact us for more information, happy budgeting!