Question

Discuss the difference between fixed expenses and variable expenses as they relate to a budget

Answer 1

Fixed expenses are expenses that stay the same for a person or a business. An example of a fixed expense is rent/mortgage. This expense doesn't change if you are only using the building for 2 weeks or the entire month, it's a set rate. A variable expense is an expense that changes like an electric bill, it varies based on the month and usage. When you budget, you can easily budget for your fixed expenses but you need to allow some room in your budget for expenses that change.

Answer 2

Fixed expences are expences that don't change month-to-month, whereas variable expences are things that are needing to budgeted for every month, but may vary a bit and are therefor usually estimated on a budget.

Explanation:

For example, rent would be a fixed expense because you know it will be X amount due on the same day every month. Food, on the other hand, would be a variable expense because it likely won't be the same amount month-to-month.