Every financial review should include fixed and variable expenses. It’s essential to understand the difference between fixed and variable expenses. Fixed expenses, such as rent, mortgage payments, or financing for company vehicles, stay the same.
On the other hand, variable expenses fluctuate based on usage, such as phone bills, utility bills, advertising, etc.
It’s recommended to deduct fixed expenses from your gross income and create a budget for variable expenses to keep costs to a minimum. Since variable expenses are so flexible, having a fixed ceiling on them is important, meaning an amount they absolutely must not exceed. Subtracting this from your monthly gross income will give you a more accurate picture of your net income, allowing you to make better financial decisions.