The variable expense column often holds the bulk of your expenses, especially for those new to budgeting and finances. V/N and V/D expenses compete over which makes up the second largest of four squares in your grid because both include a large number of everyday expenses. Think about your V/N square – how many of your necessary expenses vary from month to month? Your grocery bill, your electric bill, the amount you spend on clothing, car repairs… All of these expenses are Variable Necessary expenses. Any expenses that you have to make but which change in amount by month fit into the V/N area.
Ideal Distribution
The dollar amount found in this category is highly flexible, and I have found that people with good financial health try to increase it. Use tips you find throughout this website to make this your second largest category – at least 30% of your expenses. My personal amount usually comes in at right around or just above that percentage of my monthly output.
Use of the Category Information
Many things can be reduced within the variable necessities category. Clothes, electric bill, and so on all have ways that you can reduce your expenses, but this category has one odd quirk: the V/N category is the only category I recommend a consistently increased expense in. This may seem a little odd – why would you want to increase your spending in any category? But consider – the V/N primary category includes your grocery budget. The easiest category to reduce your expenses in is the V/D square, and eating out less means you will be eating in more, at a much cheaper price! Increasing your grocery bill will reduce your overall payments and expenses.
Now let’s take a look at your variable necessary costs. How can you reduce them? Read the following options, and consider everything you have placed into this primary category. You will see why this category is, like the F/D square, about midrange on flexibility – it can take some preparation, thought, and effort to change, but not nearly as much as F/N and generally the savings are worth the effort.
Grocery Bill: An odd quirk of the grid is that this should be increased. Eat out less and learn how to cook a few simple meals if you don’t already know. The average meal at a restaurant seems to range between $8 and $15; it is easy to prepare a meal for several people for that price. Be sure to cut coupons and watch for sales on items you are likely to buy! Meats in particular are worth paying attention to – you can save several dollars per week just by tailoring what you buy to what is on sale. Combine coupons with a bonus or rewards card that most grocery stores offer these days and you can save a huge amount: last week I managed over 28% in savings on one of my grocery bills.
Clothing: Can you make your own? I know several people that are handy enough with a sewing machine to make clothing at least as good as that which can be bought in the store. If not, at least learn to use needle and thread – a single quick hem job can save you twenty bucks at a tailor shop. Repair what you can, and try to circulate clothes so that they don’t get worn out too quickly. Change out of expensive work clothes when you get home. There are a lot of little things you can do to reduce expenses on clothing and similar items – office supplies, toiletries, cleaning supplies, and many other items in this category can be bought at discount.
Car Repairs and Maintenance: There unfortunately isn’t a whole lot you can do about this one. Keeping your car well maintained, changing your oil and filters (learn how to do this yourself if possible!), and driving carefully will all work wonders and reduce the amount you spend on this, but sometimes fate intervenes. You may have to dip into your savings fund, but in our society it is virtually impossible to function without a vehicle, so car repairs are necessary and unavoidable.
Utility Bills: There is such an incredible array of ways to reduce these that I can only begin to touch on them here. Digital and step-back thermostats, proper use of lights, wearing heavier clothing when it is cold, and dozens of other methods will all reduce your electric and natural gas bills. A few simple steps can save you 10 or even 15 percent on the electric bill! Doing a little research and thinking smart can save you hundreds of dollars per year on these expenses.
There are many other possible tertiary categories that fit into this block, so be sure to check and think about the ones you select. If you think of others, please don’t hesitate to let me know! Next up, we’ll have a look at Variable Discretionary (V/D) expenses, where the most positive change can be quickly and easily implemented.
Fixed Necessary, Fixed Discretionary, Variable Necessary, Variable Discretionary
Tags: expense log, necessary, The Expense Grid, tools, tracking, variable
