Preparing a grocery list and sticking to it to avoid temptation and impulse purchases.Buying fruits and vegetables that are in season.Substituting meat with vegetarian protein options. Purchasing generic brands instead of branded products.Here are a few ways you can save money on groceries: Consequently, you can save thousands of dollars on dining out and spending money on restaurant bills by preparing your meals at home. spends around $3,500 on eating out every year. For example, according to a recent study, the average household in the U.S. Nonetheless, you can still control how much you want to spend each month. Foodįood is a variable expense that is essential for our everyday lives. Here are the most prominent everyday flexible expenses examples that most people encounter. If you want to start saving money, you may want to begin by taking a closer look at your spending habits and find opportunities to cut back or cut out certain flexible expenses. As a result, although some flexible expenses may not be necessary, they make life more enjoyable. For example, you can live without eating out at restaurants or subscribing to Netflix. These flexible expenses are things you can do without but they make your life more comfortable. Other flexible expenses are the extras in life that are wants rather than needs. Necessary flexible expenses include utility and grocery bills. Some flexible expenses are essential but can fluctuate in amount. Essentially, they aren’t fixed or the same monthly expenditures like rent and car payments. Flexible Expenses Explainedįlexible or variable expenses are living costs that occur regularly but change in amount. Keep reading to discover the most common flexible expenses and how to manage your finances. Understanding your flexible costs is essential to maintaining a successful budget, avoiding overspending, and reaching your financial goals. Unlike fixed costs, which remain constant throughout the period, flexible expenses allow you more control over your finances. However, the budget used as the baseline for this calculation did not include a scheduled rent increase of $25,000, so a flaw in the budget caused the variance, rather than any improper management actions.A flexible expense is a regularly occurring cost that varies from month to month. Thus, there is an unfavorable budget variance of $20,000. Example of a Budget VarianceĪBC Company had budgeted $400,000 of selling and administrative expenses, and actual expenses are $420,000. The result is actual revenues that may vary substantially from expectations. Those budget variances that are uncontrollable usually originate in the marketplace, when customers do not buy the company's products in the quantities or at the price points anticipated in the budget. Examples of controllable expenses are training and maintenance expenses. Truly controllable expenses are discretionary expenses, which can be eliminated without an immediate adverse impact on profits. Those budget variances that are controllable are usually expenses, though a large portion of expenses may be committed expenses that cannot be altered in the short term. For example, if there is a negative electricity budget variance of $2,000 and a positive telephone expense budget variance of $3,000, the two line items could be combined for reporting purposes into a utilities line item that has a net positive variance of $1,000. Some budget variances can be eliminated through the simple aggregation of line items in the budget. For example, a business may not be able to fill a position for an extended period of time, resulting in a lower compensation expense than expected. There may also be cases in which changes in the amount of expenses incurred will unavoidably be different from the budgeted amount. For example, a decline in the economy may have triggered a slide in customer purchases, resulting not only in a sales decline, but also in expense cuts by management. In other cases, operating conditions since a budget was formulated may be the chief cause of a variance. Causes of a Budget VarianceĪ budget variance is frequently caused by bad assumptions or improper budgeting (such as using politics to derive an unusually easy budget target), so that the baseline against which actual results are measured is not reasonable. In rare cases, the budget variance can also refer to the difference between actual and budgeted assets and liabilities. The budget variance is favorable when the actual revenue is higher than the budget or when the actual expense is less than the budget. These variances usually arise because it is so difficult to predict the future, but may also be due to political issues associated with the formulation of budgeted revenues and expenses. A budget variance is the difference between the budgeted or baseline amount of expense or revenue and the actual amount.
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