What Is Fixed Expense?

Banking Term Definition | Last Updated: April 2026 | Browse All Terms

Fixed Expense — A regular cost that stays the same amount each month, like rent, a car payment, or a subscription. Fixed expenses are the foundation of any budget because they are predictable.
Definition
A regular cost that stays the same amount each month, like rent, a car payment, or a subscription. Easier to budget for than variable expenses.

Example: "Rent ($1,200) and my phone bill ($50) are fixed expenses. Groceries vary month to month."

Why It Matters

Fixed expenses are the foundation of any budget because they are predictable. Since these costs don't change month to month, you can plan for them with certainty. Common fixed expenses include rent or mortgage, car payments, insurance premiums, streaming subscriptions, and loan payments. Add up all your fixed expenses first when building a budget, then allocate whatever remains toward variable expenses and savings. If your fixed expenses consume more than 50% of your take-home pay, you may be "house poor" or overextended.

Try it: Sort fixed expenses in the budget calculator. Open tool →

Related Banking Terms

Variable Expense A cost that changes from month to month, like groceries, gas, entertainment, or clothing. Budget A plan for how you will spend and save your money over a period of time, usually monthly. Net Income The amount of money you take home after taxes and other deductions are subtracted from your gross (total) pay.

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