What are the three types of expenses your monthly budget should include?
What are the three types of expenses your monthly budget should include?
Fixed expenses, savings expenses, and variable costs are the three categories that make up your budget, and are vitally important when learning to manage your money properly. When you’ve committed to living on a budget, you must know how to put your plan into action.
What would be a variable expense?
Variable expenses are defined as such because the amount you spend may vary each month. Although variable costs are quite often discretionary expenses, some may be necessities. Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Grocery shopping is also a variable expense.
Is a cell phone a fixed or variable expense?
Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. Car insurance, home insurance and life insurance are also fixed payments, along with your monthly electric and water bills.
What are examples of a fixed expense?
Common examples of fixed costs include rental lease or mortgage payments, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities.
Is entertainment a fixed expense?
Variable expenses include such things as groceries, gas for your vehicle, utilities, entertainment expenses, and clothing. By keeping track of these expenses over time, you can get a better idea of how much you’re spending each month and plan accordingly.
What is an example of a flexible expense?
Flexible expenses are any non-essential cost that can be changed, reduced, or eliminated to help balance your budget. Flexible expense examples include groceries, dining out, entertainment, and even utilities.
What is an example of a periodic expense?
Periodic expenses are costs that occur on an irregular basis rather than monthly. Here are some examples of periodic monthly expenses you may have: Tuition and fees. Books for classes.
What kind of expense is a rent payment?
(Rent that has been paid in advance is shown on the balance sheet in the current asset account Prepaid Rent.) Depending upon the use of the space, Rent Expense could appear on the income statement as part of administrative expenses or selling expenses.
What is commonly considered a flexible expense?
Electricity. A common flexible expense associated with apartment renting. Security. A deposite refers to money held to cover possible damage in an apartment. Building insurance.
Is Rent a flexible expense?
What are Flexible Expenses? Fixed expenses and flexible expenses should be part of every budget. Yet some people only include their fixed expenses — rent or mortgage payment, car payment and cable TV bill, in other words, costs that typically remain the same from month-to-month — when preparing a budget.
Do flexible expenses stay the same?
5. Flexible expenses stay about the same each month.
What does the budgeting process start with?
It begins by deciding upon the financial goals according to which the budget will be made. Other important activities in the budgeting process include things such as forecasting, monitoring, controlling and evaluating the financial goals. Budgeting process is very crucial for any business entity.
What are the steps in budgeting process?
Six steps to budgeting
- Assess your financial resources. The first step is to calculate how much money you have coming in each month.
- Determine your expenses. Next you need to determine how you spend your money by reviewing your financial records.
- Set goals.
- Create a plan.
- Pay yourself first.
- Track your progress.
What are the stages of budgeting process?
A budget cycle is the life of a budget from creation or preparation, to evaluation. Most small businesses don’t use the term “budget cycle” but they use the process and go through each of its four phases — preparation, approval, execution and evaluation.
What are the four stages of the budget process?
The budget cycle consists of four phases: (1) prepara- tion and submission, (2) approval, (3) execution, and (4) audit and evaluation. The preparation and submission phase is the most difficult to describe because it has been subjected to the most reform efforts.
What are the steps involved in zero based budgeting?
The 5 steps of zero-based budgeting
- Start. Begin at ground zero.
- Evaluate. Evaluate every cost area.
- Justify. Account for all components of the budget.
- Streamline. Determine what activities should be performed and how.
- Execute. Roll out comprehensive planning and execution processes.
What is budget follow up?
Follow-up Budget follow-up and data feedback are part of the control aspect of budgetary control. Since the budgets are dealing with projections and estimates for future operating results and financial positions, managers must continuously check their budgets and correct them if necessary.
What are the budgeting process in local government?
These steps include administrative preparation, legislative approval, financial implementation, and annual year-end accounting and financial reporting, which is usually performed by an independent outside auditor.
What are the three types of government budgets?
A budget can be of three types:
- Balanced budget: when government receipts are equal to the government expenditure.
- Deficit budget: when government expenditure exceeds government receipts. A deficit can be of 3 types: revenue, fiscal and primary deficit.
- Surplus: when government receipts exceed expenditure.
What are budget principles?
Definition. Budgetary principles represent values and rules that need to be considered and/or accomplished when preparing, executing, and analyzing the budget of a government or a public sector entity.
What is planning and budgeting process?
Planning and Budgeting is an analytical application that helps you set top-down targets and generate a bottom-up budget, which is at the foundation of your organization’s operations. Use Planning and Budgeting to: Develop planning targets. Access and analyze historical and current data.
What is the role of budgeting in planning?
Budgets are necessary to highlight the financial implications of plans, to define the resources required to achieve these plans and to provide a means of measuring, viewing and controlling the obtained results, in comparison with the plans.