Managing expenses is an important part of managing personal finances. To make it easier to prepare and allocate a budget, you need to know that although there are various expenses, they can actually be categorized into 3 main types.
3 Main Types/Categories of Expenses
1. Fixed expenses
Fixed expenses are the easiest to budget for. Because they are fixed, they are easy to predict. They are generally fixed in both amount and interval.
What are examples of fixed expenses? Internet bills and cable TV subscriptions. You make payments every month and the billing amount is usually the same from month to month, unless you upgrade or slightly change the subscription plan you choose.
You can also include retirement savings and emergency savings as part of fixed expenses. For routine and consistent saving, you can set aside the same amount of money every month.
For fixed expenses, the budgeting will be very easy. You can follow the previous month's budget.
2. Periodic expenses
Periodic expenses are similar to fixed expenses. However, periodic expenses are usually less frequent and the amount can vary.
Do you like giving gifts to family and friends on their birthdays? Buying gifts is an example of periodic expenses. You might give a more expensive gift to a best friend than to a coworker. So, the amount will vary.
For periodic expenses, you also need a budget. In order not to be surprised that you suddenly have to spend a decent amount of money on a best friend's birthday, you can allocate a budget for periodic expenses. You can do this by setting aside money every month.
3. Variable expenses
As the name suggests, variable expenses can fluctuate a lot. Your electricity bill, for example, can increase dramatically the following month if you do a lot of activities that require electricity in that month.
Gasoline purchases can also be categorized as a variable expense. The previous month you drove a lot to go sightseeing around the city as well as to the office, but in the current month you only use the car to go to the office. Automatically, last month’s spending on gasoline was much higher than the current month.
Although dynamic, variable expenses are the easiest for you to control. If you want to save on gas, you can choose to ride a bicycle or use cheaper public transportation.
Easily Manage Categories of Expenses with the Jago application
Have you been managing your expenses? To make it easy and practical, you can use the Jago application.
Through the Saving Pocket and Spending Pocket features, separating needs is really quick. 1 Pocket can be for 1 need. You can easily move the budget from the Main Pocket to each created Pocket. There is also the Plan Ahead feature for scheduled and automatic payments. There are still many other features to try, and you can do it right away, Jagoans. This way, you can have more manageable expenses, healthier finances and an easier as well as more enjoyable life.
