4 Best Ways To Prepare For Periodic Fixed Expenses  [with examples]

By understanding the main expense categories, we can better prepare a spending plan that aligns with our financial goals. 

The Three Types Of Expenses

Fixed Expenses

Fixed expenses are recurring expenses that come in monthly intervals

Examples of fixed expenses are: – Rent or mortgage – Vehicle payments – Internet services bill – Phone bill – Cable bill – Monthly subscriptions – Other annual registrations

Period Fixed Expenses

Periodic fixed expenses are like regular fixed expenses (think mortgage, electricity, etc.), only they do not come every month.  

Examples of periodic fixed expenses are:

– Tuition and school fees – Life insurance premiums – Property taxes – Club dues or association fees – School books – School supplies like stationery

Variable Expenses

Variable expenses, also known as flexible expenses or variable costs, are different amounts each month or every couple of months.  

Examples of variable expenses are: – Utility bills that are not fixed each month – Credit card payments – Unexpected vehicle maintenance costs – Groceries (if not on a fixed budget)

Four Ways To Prepare For Periodic Fixed Expenses

1. Identify Previous Spending Patterns

The easiest way to identify the best way to budget your period expenses is to look over your expenses from the previous year. 

2. Add Your Periodic Fixed Expenses

For the previous year, add up how much you spent on each periodic expense. For instance, if you pay for life insurance once a year, no calculation is needed. 

3. Find The Monthly Average

To prepare for these periodic expenses, take each expense total and divide it by 12 (for each month of the year). Doing this will identify how much you should budget each month for that particular periodic fixed expense. 

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