Stop Worrying About Variable Expenses

Even if your budget is an informal one, it is best to have one. Your budget does not have to be set in stone. In fact, the more flexible it is, the better it can be. After all, what good are these if you have to start all over again just for making the smallest structural changes?

When it comes to costs, there are two kinds of costs: fixed costs and variable costs. Fixed costs are those which remain the same each and every month. It includes things like membership packages, utility bills, service payments, investments and others. These are comparatively easier to handle because you know you’ll need to pay these at the end of each month, and can budget for them.

Variable expenses are harder to tackle because these differ from month to month. For instance, one month your expenses are manageable, but the next month it gets harder because you give away an expensive wedding gift. You can’t really plan for variable expenses, but saving up for them helps. 

In this article, we are going to give you 5 tips for managing your variable expenses.

1. Get the most enjoyment from your money: You have to pay your rent each month. That’s a fixed expense and there’s nothing you can do about that. But how about going to Starbucks each morning before work? Now, if it makes you feel good do continue. After all, we earn money to feel good, right? However, there can be other things which are more out of habit than for pleasure.
   
   For instance, if you have a habit of eating unhealthy burgers at lunch, that sacrifices health and money. Instead, why not bring healthy food from home? Likewise, evaluate everything you are spending on. This’ll help in reducing variable expenses.

2. Pause before you buy: We tend to buy on a whim more than you think. For instance, we see a cool ad of the latest computer, and even when you have a laptop already, you rush to buy the new model. Instead of doing that, what if you take a deliberate pause. Seriously, take a pause and think about your decision. Is it rational? Is the thing you want to buy really important? Is it a want or a need? Can you do without it? How can you save money on the purchase?

3. Plan for your seasonal expenses: There are certain seasons when you spend more, like Christmas and other festival months. Well, you do know you’ll be spending more on these months, but how much more, that you do not know. The best thing you can do at times like these is to keep aside a fund planned exactly for these times. For instance, make a yearly fund for splurging on Christmas so you won’t have to struggle to get funds later on.

4. Make spending leaner: You want to spend on certain things, for instance a watch. But do you really need that cool looking smart-watch? Probably not! That’s one way to look at things. Here’s another way of seeing things: Let’s say that you are looking for a watch but love that smart watch at the store. Before you buy, you take a step back to think and say “It’s nice, but not worth the price.” Let’s say that your daily salary is Rs 1000 and you spend Rs. 2000 on a shopping splurge. That’s 2 day’s worth of salary. See purchases from these perspectives, and you’ll be less likely to spend wildly.

5. Track expenses: 2 out of 10 people track their expenses. Make sure you are not part of the majority on this one! One way to curb excess spending is to track your expenses. Over time, we tend to lose track of how much we are spending, and how frequently. Maybe you are buying things you don’t need, or lose value really fast. You don’t need any fancy apps. Just write down your variable expenses down in a notebook for a few months. 

All of these take time, remember, slow and steady wins the race.