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** This lesson is generated with AI assistance and approved by Danny Nelson. This lesson will communicate the essence of the topic for now until Danny can create a full lesson. **
A fixed expense is a recurring cost in personal finance that remains constant each month or period, regardless of changes in income, usage, or activity levels.
Common examples include rent or mortgage payments, insurance premiums, loan installments, and subscription fees like gym memberships or streaming services.
These expenses are predictable and easier to budget for compared to variable ones, as they don't fluctuate with consumption.
Managing fixed expenses involves negotiating better rates or eliminating unnecessary ones to free up cash flow.
In budgeting, fixed expenses form the foundation of essential outflows, helping individuals allocate remaining funds to savings or discretionary spending.