If you want to stay within your budget, you must know what monthly expenses you have. Keeping track of your expenses is crucial. Tracking your monthly expenses can help you make a better budget.
In order to make sense of your budget, you must first identify your expenses. Expenses that break your budget are the biggest threat to your financial dreams. There are four types of expenses that make budgeting difficult. I will show you how to fight them so that your budget keeps you on track towards your financial goals.
Why Budgeting Is Important?
The importance of budgeting in personal finance cannot be ignored. Your family’s financial stability can only be ensured by following a budget.
Having a budget allows you to plan how you will spend your money so that you will always have enough to meet your needs. A budget is imperative so you can keep track of your expenses, control your spending, and save money.
A budget also ensures you make smarter monetary decisions, have a plan for unforeseen emergencies, and stay on track to reach your long-term financial goals.
Sticking to a budget is one of the ways that most of us believe will help us manage our finances. By creating a realistic budget, you’ll avoid overspending and keep yourself on track for a debt-free life.

Advantages Of Budgeting
Understanding the benefits of budgeting is essential if you want to manage your money like a pro. Here are some of the top advantages of budgeting.
- It helps you have control over your money.
- Budgeting helps in differentiating between needs and wants.
- A budget helps you have an overview of your income vs expenses.
- It sets limits for your expenses.
- Helps you save more than you could ever believe.
- Budgeting helps you set goals and guide you to achieve them with practical measures.
- A good budget lets you set free of financial stress
- It helps you live a debt-free life
Budget Your Money With These 4 Types of Expenses
Once you have understood your expenses, it is easier for you to set a workable budget to achieve financial success. Getting your budgeting right is not really an easy job. You need to take different types of expenses into account. Neglecting a tiny expense can lead to a mismanaged budget for you.
If you track your expenses, you might be surprised at how much you are spending on different types of expenses that can be reduced without any effort.
When it comes to managing your money properly, the three main categories of fixed or recurring expenses, variable expenses, and periodic or flexible expenses make up a budget. It’s vital to know how to implement your budget plan when you’ve made a decision to stick to it.
Recurring Expenses And Fixed Expenses
A fixed expense or a recurring expense is one that does not change within your budget. While they may change from time to time, this should not happen that often. A fixed expense is paid in a predetermined amount at regular intervals.
These expenses are routine or recurring expenses that occur on a certain day each month, for a certain amount, and on a certain date. They are easy to monitor because you always know when and how much to pay. Their amount usually remains the same.
As part of your personal budget, you should forecast fixed expenses, since they do not vary from month to month or from time to time.
Some examples of fixed expenses are insurance premiums, property tax, mortgage or rent payments, car payments, childcare costs, tuition fees, gym memberships, cell phone, utility bills, internet and cable bills, and other loan payments.
Phone and utility bills can vary a bit but they usually remain in the same range, hence, it falls under the fixed expenses category of personal budgeting.
Flexible Expenses And Periodic Expenses
Occasionally but regularly we all encounter expenses that can be surprising. Flexible, periodic, or intermittent expenses are different than fixed ones. In contrast to monthly expenses, periodic expenses occur irregularly.
You know they will be coming but not as regular as monthly expenses. You may have some bills to be paid every quarter or every year, sometimes I may forget these expenses as they are not regularly added to my monthly expenses.
But, we can’t really forget these expenses as they are not the tiny ones. Paying quarterly, half-yearly or annual, these expenses are huge for sure. Some examples of flexible or periodic expenses are car registration, car insurance, health insurance, birthday party expenses, holiday expenses, vacation, kids’ summer camp, back-to-school supplies, etc.
It is natural to forget these expenses, or sometimes we are not prepared for these expected surprise expenses. Instead of getting worried about the last-minute management of periodic expenses, you can plan them in advance. It will make your monthly and annual budgeting easier.

Budgeting for periodic expenses – how to include them?
Periodic expenses are less frequent than monthly fixed and variable expenses, which come up every month. Periodic expenses might fall due once or twice a year. Or possibly they might not have a regular schedule. Hence, it becomes the most important part of your budget, be it monthly or annual.
- Analyze your periodic expenses for last year.
- Make a list of each and every periodic expense
- Categorize all these expenses
- Write down the exact expenses you have had in each category
- Keep a similar amount ready for each category for the current year
- Use cash envelopes and categorize each periodic expense and keep yourself ready for upcoming periodic expenses
- You can prefer having the categorized cash envelopes for the quarterly or annual frequency
- Divide these categorized expenses by twelve months and add the amount to the monthly budget plan. This way, you will not feel overwhelmed with a huge expense at once.
When you plan these flexible expenses with the right budgeting system, you really don’t have to get stressed over sudden surprise expenses at once. It is also a good and workable idea to set aside a fixed amount every month for annual events like birthdays, holidays, or family vacations.
The idea behind breaking these periodic expenses into the twelve months plan is to have less burden of big financial events in your life. If you typically spend $1200 every holiday season, a monthly savings of $100 is much more manageable than trying to come up with the entire sum in one month’s budget.
Variable Expenses
Expenses that change over time are variable expenses or variable costs. It is hard to predict how much you will spend because these costs can fluctuate from week to week, month to month, or year to year.
The cost of variable expenses fluctuates over time, as opposed to fixed expenses like your mortgage or rent. Variable expenses fluctuate more dramatically over time than fixed expenses.
Some examples of variable expenses are gas, groceries, credit card bills, electric bills, eating out, clothing, pet expenses, entertainment, home repair or renovation, hobbies, etc.
How to budget for variable expenses?
Variable expenses may not always be regular. For instance, you may go for a vacation only once or twice a year so you are not including that amount in your monthly expenses. What can you do if the costs do not remain the same?
Variable expenses constantly change, so they can be difficult to manage. Budgeting will be easier once you determine what is essential versus what isn’t. Budgeting variable expenses can help you manage them with ease.
- Compile a list of upcoming major expenses to be paid
- If you spend a specific amount on groceries, note it down
- Similarly, note down all the categories that you spend on variably
- Add the maximum expense amount to each category
- When you go out for grocery shopping or to watch movies, keep the maximum amount in mind and spend accordingly
- You can skip some of the purchases if they are not really your needs
- Skipping on dining out once in a while is healthy for you and your variable budget
- Likewise, you can differentiate between needs and wants and can avoid everything that is not necessary for you
- Putting a maximum spending bar in front of each category of the variable expense will let you make the most out of your budget

Emergency Expenses OR Whammies
None of us wants to have those scary emergency expenses. We just try to avoid the thought of encountering such things. But emergency expenses are real. This is the 4th surprise expense that most of us are not prepared for.
How to Deal with Unplanned Expenses? Building an emergency fund is necessary when you want to be prepared for any unexpected expenses in near future.
How to budget for emergency expenses?
- Make a practical budget
- Stop spending money on the things that are not your needs but wants
- Avoid impulsive buying
- Look for side hustles to make more money
- Live a frugal life to get the maximum out of your budget
Final Thoughts On Budget Your Money With These 4 Types of Expenses
You should not only make a budget but also strive to live within it. The fluctuating costs of bills and other expenses can wreck anyone’s budget. The importance of tracking your expenses cannot be overstated. You can make a more accurate budget if you keep track of your expenses.
Don’t let any type of expenses break your dream plans. Budgeting is the key to achieving all that. These four types of expenses can make budgeting difficult. But when you implement some of the best budgeting strategies, you are sorted.