The fixed discretionary expense category is generally the smallest in the expense grid. F/D expenses make up the smallest of the four squares in your grid because it contains only a small number of items, for the simple reason that not many things fit into this category. Think about it – which of your tertiary categories that you have a choice about don’t vary? Mostly subscriptions and memberships fit here. This generally does include such things as magazine and newspaper subscriptions, gym memberships, Netflix accounts, and so on. Anything requiring a recurring payment that you can live without fits into this category; take a good close look at your secondary and tertiary categories to see what goes here.
Ideal Distribution
The dollar amount found in this category generally stays fairly static. Try to keep this amount small – 10% or less of your monthly expenditures. My personal amount usually stands at around from 7-8% of my monthly output (depending as always on my variable expenses).
Use of the Category Information
The F/D category is the not terribly difficult to improve, but because it is usually such a small percentage of your total expenses, it may be hard to recognize gains made in this area. Generally everyone will have a few tertiary categories that fit in the F/D primary category, and they are usually things that can be reduced without too much effort. Some, however, may be more difficult due to terms of obligation. It is worth taking a look to see which of your F/D expenses can be easily reduced!
Now let’s take a look at your fixed discretionary costs. Just how much do you need them? Read the following ideas, and consider everything you have placed into this primary category. You will see why this category is about mid-range on flexibility – it can take some time and effort to change these, but generally they are worth the effort.
Gym Membership: How often do you actually go? There are hundreds of things that you can do for free that have the same effect. Run a few laps around the block – better for you than a treadmill! Do some situps, pushups, or jumping jacks. If there is equipment you just can’t live without (free weights?), consider using the money you save on your membership and buy a cheap set on Craigslist or at a discount sports store. Many communities also have free gyms available to their residents, so look into this!
Netflix Account: This one can be tough to get away from, and if the circumstances are right I recommend keeping it! Netflix provides a service that more than pays for itself if you use it correctly, but stick with one of the cheaper tiers. You don’t need three movies at one time, especially when their turnaround times are so good – the most I’ve ever had to wait is two days (excluding holiday weekends) for a new movie to come in after I send one back. If you get their one-at-a-time unlimited plan (currently priced at $8.99 per month) even using two discs a month saves money over renting a video, plus they have lots of their content available in streaming online form. If you currently rent a movie a week from the local store, consider the switch. However, if you rarely use your account, ditch it. An extra $10 per month in a savings account adds up to a whole lot of money over time!
Magazine Subscriptions: I find these fairly easy to get rid of or not to even start. Do you really need the latest issue of “Manly Man Magazine” or “City Girl Monthly” delivered to your mailbox? Why? Many people end up not even reading these magazines or at most flip through them for a minute or two. Cancel these memberships and save yourself a ton of money every year! I had a friend who saved over $60 per month on this category alone.
Newspaper Subscriptions: These are a double-edged sword. Some people like to get their morning news to have something to read on public transit. Newspapers can also save you money, particularly on Saturdays or Sundays, when the coupons and sales circulars are distributed. Think about what you do with your papers – do they end up in a heap on the ground, put straight into the trash, or simply left lying around until they get discarded? If so, consider cancelling this subscription as well. Most papers have all of their content available for free online now anyway! I recently stopped my $8.50 per week charge to the newspaper company but still buy the Sunday edition ($1.50). From this I can usually get at least $20-30 in coupons, so it more than pays for itself, and I’m saving almost $30 per month in subscription costs!
While there are other possible tertiary categories that fit into this block, these are the ones I find to be the most common. If you think of others, please don’t hesitate to let me know! Next up, have a look at Variable Necessary (V/N) expenses.
Fixed Necessary, Fixed Discretionary, Variable Necessary, Variable Discretionary
Tags: discretionary, expense log, fixed, setting goals, The Expense Grid, tools, tracking
