More For Your Money - University of Illinois Extension


Now it is time to look at your expenses. Often people know their income but don’t know how much money they spend and what they spend it on. To know where you spend money, you need to keep track of your expenses for a month.

Fixed Expenses

Each month you pay for some items on specific days and for specific amounts. These expenses are called fixed or regular expenses and include rent or mortgage, utilities, and installment debts. You might think of these expenses as the bills that need to be paid each month. Quite often the amount paid for these will be the same each month.

Fixed expenses cannot be changed easily. Late or missed payments can cause problems such as late fees, eviction, legal action, or having your utilities cut off.

Flexible Expenses

You also have other expenses that are flexible or changing. Flexible expenses may be important, but you have more choice in how much you spend and when you spend it. Some examples are food, clothing, and personal items.

Flexible expenses may vary in amount from month to month. People who keep spending records are often surprised how much they spend on things they don’t really need or want. (See Needs vs. Wants) If you need to make changes in how you spend your money, it is much easier to cut spending in your flexible expenses.

Sometimes, expenses can be both fixed and flexible. An example is savings which is a fixed expense when you save a certain amount each month and flexible when you save an additional amount from money left over after paying bills and other necessary expenses. Another example might be your phone bill. The bill is a fixed expense because it is due every month. It could be a flexible expense because the amount you owe may change depending how much you use it.