Flexible expenses are costs that are not considered to be fixed or set, but can be reduced or increased on an as-needed basis. Many corporation expenses as well as individual expenses are actually flexible in nature, in that there are ways to manipulate the amount of the expense and still remain within a balanced budget. Understanding what does and does not constitute a fixed cost or expense can make a significant impact on how well an individual or business manages income and stays within the monthly budget.
It is important to note that flexible expenses may or may not be connected with necessities. For example, food is considered an essential expense in the household budget. It is possible, however, to adjust the amount of resources that are devoted to food consumption for the weekly or monthly budget. All that is required to manage or control the cost of food is careful planning when it comes to grocery shopping, along with eliminating the number of times during the period that meals are eaten in a restaurant or ordered as takeout items. This same approach can be applied to flexible expenses of any type, even the selection of appliances for the home, the choice of automobile, or the selection of furnishings.
Various articles of clothing are examples of flexible expenses. The consumer has the option of purchasing garments that are available at a discount, or buying similar items that are sold at full price. Assuming that both garments are of similar quality, the consumer must make a decision regarding the purchase of one garment or the other, or even to forgo the purchase altogether. At each point in the process, the control is in the hands of the consumer, who can decide how and when to proceed with the transaction, controlling the amount of money spent in order to acquire a desirable or necessary item.
This is in contrast to fixed expenses, where there is no control over the amount of the expense. One example of a household fixed expense is the monthly mortgage or rent payment. It is important to pay the same amount each month in order to be considered current with the debt. There is no option of reducing or otherwise changing the amount of that month when and as desired, since the terms of the agreement governing the transaction do not allow for that type of activity.
Some debts involve a combination of fixed and flexible expenses. This is true with many credit card accounts. The debtor is expected to pay a minimum amount each month, with that amount determined by the lender, not the debtor. The debtor can choose to set aside funds to pay a figure above and beyond that required minimum payment. Should some unanticipated circumstance occur, the debtor can still keep the credit card account current by making the minimum payment due, while diverting the addition sum set aside to help manage the emergency.