Improving financial wellness takes some effort. Keeping your bills organized can help get a better understanding of where you are spending money. Do you know where all your money goes each month? Are the majority of your expenses fixed or variable? When occasional expenses come around, is your budget ready?

According to the Economic Well-Being of U.S. Households in 2023 survey, around 37% of adults are not prepared to cover a hypothetical $400 expense with cash or its equivalent. Only 48% of participants responded that they spent less than their income in the previous month, which means a majority of participants spent equal to or more than their income in the last month. 

• Take a look at where your money is going each month and see if you can find out how much of your expenses are fixed each month and how much varies. 
• Try to make a plan for all of your expected expenses, whether fixed, variable, or occasional. 
• Make a plan to spend less than your income each month, while preparing for the months that may have more bills or higher bills than other months. 

Preventative care (financial planning) can sometimes be the best medicine for both your health and your financial wellness. 

Fixed Expenses

Some likely fixed expenses may be your housing, whether you have a mortgage to pay or you are paying monthly rent. Typically, loans are on payment schedules that allow for the same payment each month, which could be a car payment or a student loan bill. While the cost of insurance may be a fixed amount, the billing may not be every month. Another example of a fixed expense that may not be billed monthly is property taxes, so you need to plan to be able to pay when the bill comes due. 

Variable Expenses

Variable expenses are the costs that may not be the same each month. Some variable expenses may be your utility bills that are determined based on usage, whether that is electric, gas, or water. Cell phone plans may be fixed if they are unlimited or variable if you pay by usage amounts. Groceries may vary depending on what types of meals you have planned. While the amount you spend on groceries may vary depending on what you buy to eat, it is expected that you will be spending money on food each month. 

Occasional Expenses

Some expenses are occasional and are a little more challenging to predict. You may have some seasonal expenses, such as the occasional summer expenses discussed in a blog article on Seasonal summer spending. Other occasional expenses may be oil changes or other car services that happen periodically. With these occasional expenses, it is good to plan for these expenses each month even though they arise every few months. 

Budgeting with Fixed and Variable Expenses

When planning your spending, fixed expenses are much easier to predict, while variable expenses may take some guesswork. Some variable expenses are easier to control than others. Water usage may be variable although similar each month, gas and electricity may vary more depending on the season. Occasional expenses may be hard to predict, but need to be part of your regular plan to stay ready when bills are due. 

Staying with a spending plan can be challenging. Knowing that some costs vary and some bills are not due every month can help to plan ahead to make sure you have enough to pay for all your necessary expenses. If you are not sure where to start, get your bills and expenses organized as a first step to making a plan. Financial fitness can take time, but financial planning may be the preventative care you need to improve financial wellness.