Every Thursday in 2025, we’ll answer your questions about money and budgeting. If you have a question you’d like answered in a future post, please submit it here.
Today’s question is from Lori regarding variable costs.
“How do I budget for variable expenses and stay on budget?” -Lori
One of the biggest hurdles we often hear from women when it comes to budgeting is: “I don’t know how to budget for variable expenses!” Variable expenses are expenses that don’t fit into your monthly budget, such as gifts, car maintenance, and medical expenses. Costs vary and there is no set cycle for when you need to pay a bill or buy a gift.
we have whole page above us free budgeting worksheets Specialize in variable costs because there can be so many different expenses. Don’t forget any of them. why? Because if you don’t plan ahead for variable expenses, they can appear out of nowhere and throw your budget off track, and it can even feel like it’s impossible to stick to a budget at all. I don’t know.
How to budget for variable expenses
Fortunately, budgeting for variable expenses doesn’t have to feel like herding cats. With a few simple strategies and shifts in perspective, you can not only create a realistic budget, but stick to it, and maybe even have fun in the process.
Step 1: Identify and list variable costs
The first step to budgeting for variable expenses is knowing what they are. Check your spending over the past 6-12 months. Thoroughly go through your bank statements and credit card bills and make a list of expenses that occur regularly, but not monthly.
Common categories include:
- Gifts (birthdays, weddings, holidays)
- Car maintenance (oil change, repairs)
- Medical expenses (copayments, prescriptions)
- Annual subscription or membership
- Home maintenance (repairs, seasonal maintenance)
- clothing
- Activities for kids
- Vacation/Outing with friends
Download your free budgeting worksheet and pass Variable expenses page It helps you consider all the different categories you might be spending money on occasionally or regularly that aren’t fixed costs. Once you have identified your variable expenses, group them into categories. This will give you a clearer picture of where your money tends to go.
Step 2: Calculate the average for each category
Once you have your list, decide how much you want to spend on each category. Because these expenses fluctuate, you won’t have exact numbers, but you can calculate an average based on past expenses.
For example, if you spent $600 on car maintenance in the past year, divide that by 12 months. Since you get $50, your goal should be to set aside $50 each month for car maintenance.
use. Free Budgeting Worksheet Variable Expenses Page Write the required budget/budget for each category. Some categories, such as gifts, prove to be more sporadic and tend to spike during the holiday season. In such cases, break down the total annual cost and spread it evenly over the year.
This is one of the keys to financial success. Even if it’s not a regular item in your budget, you should plan ahead for upcoming expenses. Not only do you need to plan ahead, but you should also set aside money.
Step 3: Set up a sinking fund
After calculating the budget amount for each category, create a sinking fund. A sinking fund is simply a pool of money set aside for specific expenses. Think of it as a mini savings account on a budget.
We believe that even if you’re just building up a sinking fund, it’s already spent money. This is set aside for future expenses and should never be touched.
A sinking fund can be set up in several ways.
- Cash envelope: If you prefer to work with cash, you can create envelopes labeled by category and add money to them each payday. This is suitable for low budget areas such as clothing and gifts. We’ve been doing this for years and it’s worked really well. When I needed to buy clothes or a gift, I just took the envelope to the store and had to spend it (I’m always happy to have money in an envelope, so I didn’t have to spend it all). (I recommend not having one) waiting to be used if the need arises!)
- Separate savings account: Some banks allow you to create multiple savings subaccounts. This is a great way to digitally track various sinking funds.
- Budgeting app: If you like the convenience of apps, there are many tools (like YNAB and every dollar) has built-in functionality for tracking sinking funds. After years of using cash envelopes, I switched to using YouNeedaBudget. We put all the money we have in our bank accounts into our account through this program. When we need to spend money on things like gifts or car maintenance, instead of looking at how much we have in our bank account, we look at how much we have saved in individual categories.
A sinking fund prevents you from saying, “Oh, where is that money going to come from?” When variable costs arise, people panic. Instead, they stash cash and wait for the time to spend it.
Step 4: Build flexibility into your budget
The variable costs are as follows. Variable costs are those that change. This means that no matter how carefully you plan, there will still be months when things don’t go as expected. It’s okay! The key to sticking to a budget is giving yourself permission to make adjustments when life happens.
Try these tips to have more flexibility in your budget.
- Create other categories. Set aside a small amount each month for unexpected expenses that don’t fit into a specific category. Jesse and I both have budgets for our pocket money. This is money that we can spend on anything we like. In some cases, you might use it to pay for variable expenses, such as a lunch with a friend, new clothes, or a gift for someone.
- Rollover of unspent funds: If you don’t spend all of your sinking fund in one month, be sure to roll it over to the next month. This will help you build a buffer for higher spending months. Sometimes you have sinking funds (like car repair bills) that you don’t touch for months at a time. As you accumulate more and more money, you will have money ready when something happens!
- Please re-evaluate regularly: As your lifestyle changes, your expenses will also change. make it a habit review the budget Adjust your sinking fund contributions each month as needed. It is true that we “took money from Peter to pay Paul.” This means that you have a lot of money in one category and you don’t spend much money there, so you move some of it to another category. A fairly empty category. It’s a good idea to do this from time to time. However, if you do this often, you may want to adjust your categories.
Remember: Give yourself grace
No budget is perfect, and no one sticks to a budget 100% of the time. There will be months when you spend too much money or forget about expenses. When that happens, don’t throw in the towel. Instead, give yourself grace, learn from it, and keep moving forward.
If you make a mistake when budgeting, instead of giving up, ask yourself, “What can I learn from this so I don’t make the same mistake again?” Then ask, “What can I do now to get out of this situation and get my budget back on track?”
I’m here to support you in trying to use your money more systematically. As always, keep in mind that budgeting is an ongoing process and not a one-time event. However, by planning ahead for the future, Create a budget for variable expensesEven if your current budget doesn’t have enough room, it will save you a lot of stress and burden in the future. It’s worth it when you have unexpected variable costs and you have money set aside to wait.
PS Do you need step-by-step help setting up a budget? Check out my new resources: 1 hour budget. A simple and effective guide that walks you through the process of setting a realistic budget in just 60 minutes.
Do you want this to be the year you finally stick to your budget?!
Managing your budget doesn’t have to be a complicated task. please use these free budget spreadsheet Easily plan and track your monthly expenses.
Source: Money Saving Mom® – moneysavingmom.com
