Which of the following best describes fixed expenses?

Fixed expenses are best described as predictable costs that remain unchanged each month. Examples of fixed expenses include rent or mortgage payments, insurance premiums, and subscriptions. These expenses provide a reliable baseline for budgeting, allowing individuals to anticipate their regular financial commitments without concern for fluctuations.

In contrast to fixed expenses, variable expenses can change from month to month based on individual spending habits or needs, such as grocery bills or entertainment costs. While it is common for people to have both fixed and variable expenses, fixed expenses are essential for stability in budgeting since they do not fluctuate.

Understanding that fixed expenses are consistently the same can greatly assist individuals in planning their finances effectively, ensuring that essential costs are covered before discretionary spending or savings is considered. This predictability helps in establishing a solid financial plan.