What is a Fixed Expense?

This post just got a raise! Updated: August 8th, 2025

Ah, fixed expenses. They’re like old friends. They’re reliable, predictable—you can always count on them to be there. Expensive friends, a lot of the time. Friends you’re not necessarily happy to see. Friends you wouldn’t miss if they suddenly disappeared.

Friends that you don’t even really like, if we’re being honest, so maybe friends is the wrong word here? Regardless, fixed expenses are one of the easiest aspects of managing a budget. Sometimes just knowing what to expect is a big win.

Eliminate some of the uncertainty that comes with living a busy life by creating a monthly budget that includes both fixed and variable expenses so that you can get an honest,  big-picture perspective of your finances.

What is a Fixed Expense?

A fixed expense stays the same from month to month—the amount due and the frequency of your payment don’t typically change. Examples of fixed costs include your mortgage or monthly rent payments, car payment, loan payments, subscription services, cell phone bill, gym membership, regular childcare expenses, and some utility bills like a landline phone, cable, or internet.

When most people start budgeting, they sit down and make a list of their fixed expenses, add all of that up, subtract that number from their monthly income, and assume that’s the amount they have left over.

Differences between fixed and variable expenses

And then the villains of every budget—variable and non-monthly expenses—insist on reminding you of their existence. Fixed and variable costs differ because variable and non-monthly expenses vary depending on the month, even though some occur in regular intervals. That surprise car repair bill, an emergency vet appointment, the water bill, personal care like hair appointments, and monthly or yearly payments like insurance premiums or property taxes—these are all examples of variable expenses and they add up  in a way that’s often hard to estimate.

All of those variable costs really make you appreciate the reliability of fixed expenses. Kind of.

How to Budget for Fixed Expenses

At YNAB, we have an easy-to-follow five-question method for planning your spending that simplifies spending decisions and makes it easier to reduce costs and save money to meet your financial goals while covering your fixed expenses and variable costs.

The YNAB Method is based on giving every dollar a job. It helps you do more of what you want with the money you have, and it begins by asking yourself five simple questions:

Reality: What does this money need to do before I’m paid again?

Reality is about clarity. Fixed expenses have a way of anchoring us in what we must cover, like rent or a car payment. Look at the fixed expenses due between now and your next paycheck and actively set money aside to pay them. Then prepare for your discretionary and variable expenses too, cause you're probably going to need to eat between now and your next paycheck. 

Asking this question turns those "musts" into intentional decisions. Instead of just assuming that money goes to your mortgage, you actively choose to send it there. That simple shift—from assumption to intention—is the start of spendfulness.

Stability: What larger, less frequent spending do I need to prepare for?

Fixed expenses are easy to spot, but fixed non-monthly expenses can sneak up on you: that yearly Amazon Prime membership, insurance premiums, or once-a-year software subscriptions. These aren’t surprises; they’re just forgotten.

And this goes beyond those fixed non-monthly expenses. Variable expenses can be even harder to deal with. The holidays? They happen every year. Your water heater? It's going to break some day. But you don't know when and you don't know how much it will cost.

But there's a solution. Stop letting this tsunami of predictable-yet-somehow-unexpected expenses sink you. Instead, plan ahead for a lazy river financial life by estimating the potential cost and starting to set aside small, manageable sums on a regular basis so that you can pay in full (without panicking) when the time comes.

Resilience: What can I set aside for next month’s spending?

Fixed expenses will keep showing up. That’s, like, their whole thing. And resilience means getting ahead of them. When you can cover next month’s fixed expenses (and, eventually, all your expenses) with money you already have, you’re no longer at the mercy of your next paycheck.

That kind of buffer is what makes unexpected costs feel a lot less urgent. It adds some breathing room in the earn-spend cycle and allows your money to hang out in your savings account with a cool job-to-be-done like “Build an in-ground pool” or “Buy one of those nugget ice machines.”

Creation: What goals, large or small, do I want to prioritize?

Even when your income is steady and your fixed expenses are set, you still have choices. Do you want to save for a vacation? Pay off your car loan faster? Add some money to a "Buy a really nice toaster" category? Creation reminds you that after the must-haves, you get to build the life you want!

Flexibility: What changes do I need to make, if any?

Repeat after me: there's no such thing as a normal month. Sure, some are more normal than others but if you wait for a “normal” month to get a handle on budgeting, you'll be waiting for a long time. You can't count on always spending the same amount on each budget category as much as you would like to.

Your budget should be made out of Play-Doh, not chiseled in marble—if something in your life changes, just reshape it a little. Move money from one category to another without guilt or shame. You can end up with a similar total amount spent, even if there are key differences in the categories you spend it in. The bottom line is that it's your money and you can spend it however you want.

By asking these five questions, you give every dollar a job and you’ll start to bring more intention to your fixed expenses and every other way you spend money. And that’s how spending—even on the stuff you have to pay—can start to feel like something you get to do.

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