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Here's how to deal with fixed and variable expenses in your budget

by , 16 September 2014
Does your company's income stay the same month after month? What about your expenses? Do they remain constant?

You probably answered 'no' to both of these questions and that's because most businesses have fixed and variable figures that make up their finances.

But when it comes expenses, how do you deal with these fixed and variable amounts so they don't throw off your budget?

Keep reading and we'll show you...


Here's how to work with your fixed expenses first

Fixed expenses, such as your rent, insurance costs and employee salaries, are extremely important. You have to pay these expenses no matter what and that's why you need to place these into your budget first. 
You need to make these expenses the first thing you deduct from your total income for the month to ensure you have cash enough to cover them.
To determine the importance of the expenses, consider the consequences of not paying them. For example, your landlord may kick you out if you don't pay the rent on your premises. So that means it's an essential cost you must pay on time.
But what about your variable costs?
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Here's how to deal with your variable expenses in your budget

Just because certain expenses vary, doesn't mean they're not important. Expenses such your telephone bill or electricity may vary from month to month but that doesn't mean you can forget about them.
These are your next highest priority after your fixed expenses. 
Again, consider the consequence of not paying to determine the importance of these variable expenses. For example, Telkom will turn off your phone line if you don't pay for it and you can't do your business without it.
The reason for separating these expenses is it will help you see where the change in your expenses comes from. 
So do this to effectively and accurately deal with your fixed and variable expenses. 

PS. Here is an amazingly simple way to manage your financials, with the Master Budget Series

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