6.3 Expenditure


Now that you have worked out what money you have coming in it is time to start thinking about your outgoings.

Expenses are the flow of cash out of the budget. To work on the expenses for cash flow going out participants will need to keep a record of their spending. There are three main types of expenses:

Fixed expenses are items such as rent/mortgage, car payment, and other regular installment payments that basically stay the same each month and for which you are committed for a period of time. Your obligation for a fixed expense is made when you enter a contract or commitment. An example is a lease to rent an apartment or a mortgage to buy a home.

Flexible expenses are the expenses that change from month to month such as food, clothing, and utilities. You have a bit more control over some of these items. Each purchase involves choice and decisions that determine the cost for the month.

Occasional expenses are the costs that only come periodically. Semiannual car insurance and an annual homeowner’s insurance premium are examples. Holiday gifts, and a holiday are other occasional categories to include in your planning.

Combinations may occur. For example, the basic cost of phone service can be fixed, but the extra charges are flexible based on what you use beyond your basic plan (for example, land-line long distance; mobile phone minutes, text, and data).

Download and complete the Expenditure Worksheet to get a better idea of what you spend your income on.

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