Glossary
Fixed expense
A fixed expense is a recurring cost of roughly the same amount each period: rent, a loan instalment, insurance, a subscription. It is predictable, which makes it easy to plan and easy to forget.
Fixed expenses are the natural candidates for planned payments. Record one as a recurring rule and it appears in the upcoming list before the money leaves.
Reviewing them once or twice a year finds more savings than optimising daily spending does, because a single cancelled subscription compounds over every remaining month.
Related terms
- Discretionary spendingDiscretionary spending is money spent on things you chose rather than things you were committed to. It is the part of a budget that can change next month without renegotiating anything.Read
- Sinking fundA sinking fund is money saved gradually for a known future expense, such as an annual insurance premium or a replacement laptop, so the payment does not arrive as a shock.Read
- Cash flowCash flow is the money that came in minus the money that went out over a period. Positive cash flow means you finished the period with more than you started; negative means you drew down savings.Read
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