Definition
Costs that change month to month, like groceries, gas, dining out, and utilities, in contrast to fixed expenses such as rent and insurance. They are where budgets actually flex, for better and worse.
Why it matters
Fixed costs are decided once; variable costs are decided daily, which makes them both the hardest part of a budget to predict and the fastest place to cut in a tight month.
Example
A household's fixed costs run a steady $2,600, while groceries, gas, and dining swing between $1,100 and $1,800. They budget the $1,400 average, keep a small buffer for the high months, and when a car repair hits, the variable categories are where they claw back $300.
Put it into practice
Related terms
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