Variable Expense

Variable expense summary:

• Variable expenses can (and typically do) change from month to month. 

• It’s easier to budget for variable expenses by considering average spending. 

• Some variable expenses are easier to control than others.

Variable expense definition and meaning

Variable expenses are costs that can change monthly based on consumption, inflation, or other external conditions. 

Your monthly budget contains two types of expenses: Fixed and variable. Fixed expenses remain the same each month. A great example is rent. For the length of your lease, your rent costs the exact same amount every month. The precise amount you’ll pay for variable expenses can be more challenging to predict. For example, you’re not likely to spend the exact same amount of money two or more months in a row. Still, it's important to factor variable expenses into your monthly budget. 

Here’s an example of what variable expenses might look like in your budget.

Key concept: Variable expenses are costs that change from month to month. 

More about variable expense

Groceries are an excellent example of a variable expense. You may have a rough idea of how much you'll spend on this week's shopping trip, but you won't know the exact cost until you're at the checkout stand. 

That unpredictability is what you’re trying to stabilize when you make your budget. Even if you don't know the exact amount you'll spend, knowing the ballpark will help you.

Variable expense: a comprehensive breakdown

Everyone's monthly budget is different, and yours may not look like this one. But this table should give you an idea of how large a role variable expenses can play in your own budget. 

Let's say you're saving for a vacation and your goal is to stash $300 a month in a vacation fund. If your monthly budget has multiple variable expenses, underestimating your spending in several categories could sink your savings plan. 

It may be better to err on the side of caution by overestimating. For example, if you typically budget $80 a week for groceries, knock it up to $90, just to be safe. If you overestimated, tuck the difference in savings. 

If you're looking for ways to keep your budget on track, these tips may help:

• Track previous spending. Go  through the last few months of bill payments to get a sense of what you should realistically expect to pay for a variable expense. For example, if the price of gasoline near you has increased month-over-month, it may increase again next month. 

• Look for discounts. Download a mobile app that allows you to compare prices in your area and/or provides you with coupons. Good examples of apps that could help you save money are ShopSavvy, Flipp, RetailMeNot, and CouponCabin.* 

• Build in fluctuations. When you have a low-spending month, set that money aside to use when a variable expense comes in higher than expected. 

Use a free budgeting app to help you track and fine-tune your spending.

*Any mention of brand names and/or commercial products/services herein is solely for informational purposes. This article is not authorized, sponsored, or otherwise approved by the mentioned brands. Achieve is neither affiliated with nor endorses the use of these brands or their products/services. Any trademarks used are the property of their registered owners.