Definition
Costs that stay the same every month and are committed in advance: rent or mortgage, insurance premiums, loan payments, subscriptions. They contrast with variable expenses like groceries and gas, which flex with behavior.
Why it matters
Fixed costs are the budget you chose in the past: they decide how much of each paycheck is already spoken for before the month begins. High fixed costs are why some large incomes still feel tight, and lowering one fixed bill saves money every month without willpower.
Example
A household with $5,000 of monthly take-home pay carries $2,950 of fixed costs: $1,900 rent, $450 car payment, $350 insurance, $250 subscriptions and phone. When a layoff hits, only the remaining $2,050 can shrink quickly, which is why cutting the car payment does more than skipping lattes.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.