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Expenses
Definition
Expenses are the costs incurred for goods, services, and obligations, representing money spent on living needs and wants.
Explanation
Expenses are categorized as fixed (mortgage, insurance), variable (groceries, utilities), and discretionary (entertainment, dining out). Tracking expenses is essential for creating an accurate budget and identifying saving opportunities.
Small expenses add up: a daily $5 coffee costs $150 per month, or $1,800 per year. Expense tracking apps and spreadsheets help monitor spending patterns.
Example
Monthly expenses of $3,500 might include $1,200 rent, $600 groceries, $400 transportation, $200 utilities, $300 insurance, and $800 discretionary.