Understanding Fixed and Variable Expenses

The video tutorial explains the difference between fixed and variable expenses. Fixed expenses, such as home payments, mortgages, and car payments, remain constant each month. In contrast, variable expenses, like groceries, dining out, and purchasing new items, fluctuate monthly. The tutorial emphasizes that while fixed expenses are predictable, variable expenses can vary significantly.

Which of the following is considered a fixed expense?

• Mortgage payment

• Dining out

• Buying a new TV

• Groceries

What is a characteristic of variable expenses?

• They are paid annually

• They change from month to month

• They are always higher than fixed expenses

• They remain the same each month

Which of the following is NOT a variable expense?

• Purchasing groceries

• Going out to a restaurant

• Rent payment

• Buying a new bike

How often do fixed expenses change?

• Every week

• They never change

• Every month

• Every year

Why are variable expenses considered unpredictable?

• They are only paid once a year

• They occur at the same time each month

• They are always the same amount

• They vary in amount and frequency