What are considered "fixed expenses" in budgeting?

Fixed expenses in budgeting refer to recurring costs that remain unchanged over time. These are obligations that do not vary with your level of activity or usage, meaning you’ll incur the same amount each period, regardless of your circumstances. Examples include rent or mortgage payments, insurance premiums, property taxes, and subscription services.

Understanding fixed expenses is crucial for creating a realistic budget, as they form the baseline of your financial commitments. Once fixed expenses are accounted for, it becomes easier to plan for variable expenses that may fluctuate month to month, ensuring you have a comprehensive view of your financial situation. Recognizing which expenses are fixed allows individuals to predict their cash flow more accurately and make informed financial decisions.