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  • Naomi Harris

How to Budget: The 3 Types of Expenses for Day-to-Day Living

A budget is the first step to improving your long-term financial health. By creating your own personalised budget you can see where your money is going, and where you can cut back and direct those funds to savings or investments.

Once you have identified how much disposable income you have, the next step is to allocate that money to three different expense categories.

This guide will take you through the three types of expenses that you'll need to budget for. Scroll to the bottom for a quick visual overview of fixed, variable and irregular costs.

Also don't forget to take a look at all the posts in our Budgeting series.

1) Fixed Costs

The fixed costs are the essential costs which consistently come out of your account every month. These are things like mortgage or rent payments, phone bills, insurance payments, etc. The great things about fixed costs is that they are usually the same cost every month, which means it is easier to set money aside for these expenses.

Although, if your fixed costs are taking up a large proportion of your budget, then you can find ways to reduce this cost. For example, speak to your phone provider and see whether you can negotiate a cheaper contract or find a better priced one elsewhere.

2) Variable Costs

These are costs which may or may not happen every month and vary every month in price. For example, expenditures like petrol or food or clothing. As these expenditures are variable, it can be harder to budget for them.

One way to manage these costs is to set a clear budget for each item (e.g. £30 a week on food) and stick within that limit. This means you can budget these expenses even if the cost is variable.

3) Irregular Costs

These are costs that happen infrequently, but still should be budgeted for. Irregular costs cover expenses such as dentists appointments, medical and vet bill, hairdressing appointments, etc. Despite the irregularity of the cost, there tends to be a general timeframe to the cost reoccurring. This helps you plan ahead and make room in your budget for these payments.

It is important to note that irregular costs are different to unexpected spends, like your car breaking down or a job loss, these expenses should be covered by your emergency fund (which we covered in another post - Importance of an Emergency Fund).

By establishing your Fixed, Variable and Irregular costs, and how much money should be allocated to cover their expenses, you can begin your budgeting journey correctly.

3 types of budgeting expenses

With the ImageNPay app you can ensure you stick within these budgeting categories with our digital prepaid card. Load your virtual prepaid card with your monthly limit for your variable or irregular costs and use it to help you maintain your budget. With our standard virtual prepaid card you can load up to £120 a month, or upgrade to ImageNPay+ for £3.99 a month to load more.

Download for FREE on iOS in the UK.

Next week, we will be discussing how to incorporate these expenses into a budgeting plan by covering three budgeting methods.


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