Chapter 18 – Variable Expenses

“Beware of little expenses. A small leak will sink a great ship.” ~Benjamin Franklin

In chapter 15, we discussed the difference between fixed and variable expenses.  We went through fixed expenses such as housing, food, and clothing.  Then we went through the fixed-variable expenses which should be fixed but can vary depending on lifestyle choices.  Examples include transportation and saving AT LEAST 10% of your income.  In this chapter, I’d like to discuss a variety of other expenses that are purely variable.  You have complete control over these types of expenses, and if your financial situation starts to get strained or you want to increase your savings rate, you can reduce or eliminate these.


“Bring the whole tithe into the storehouse, that there may be food in my house.  Test me in this,” says the LORD almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.” (Malachi 3:10)  I feel it’s important to talk about this initially because if you’re a Christian, then tithing is fixed, and it’s 10% of your income BEFORE any other expenses.  The point of this chapter is not to get into a theological debate, and we will dissect religious finances in much later chapters.  Just a quick fact to whet the appetite, the Vatican Bank has about $8 billion in assets.[1]  Religious entities are major centers of gravity in the financial genome.


Entertainment may be the easiest place to reduce or eliminate expenses if you’re struggling with finances or looking to increase your savings rate.  I would caution eliminating all your entertainment.  Like we’ve discussed in previous chapters, budgeting can be like dieting, and it can be hard.  If you don’t allow yourself some entertainment, then you may find budgeting to be too difficult. Or worse, you may regress and spend more than you were originally.  Common examples are movies, video games, music, board games, and sporting events.  We’ll explore all of these in future chapters as each one of these is a billion-dollar industry.


Some would argue that living a normal, modern life requires internet and phone service.  This may be true, but you can certainly reduce your expenses for these variable expenses as well.  For many people, internet expenses have become akin to car or home insurance: they don’t understand what they’re paying for, and often end up spending too much for services they don’t use.  Sometimes cutting internet services to the basic package can save a lot of money.

The prices we pay are for the phone themselves (and sometimes the added insurance), data, text messaging, and on the seemingly rare occasion, actual cell phone service.  The phones and plans are incredibly expensive and mobile phone usage becomes ubiquitous for every human.

Not having the right plan can be costly.  If you exceed your data limits, the overage charges are punishing.  The type of plan needed is specific to each person and each family.  The author of Creating Commas blog saved $112 a month by reducing the plan.  The author also calculated that the total savings was $33,641 using a common “25 times your annual salary” calculation.  Most people save money by not upgrading to the newest phones and/or reducing data usage by maximizing free Wi-Fi or the Wi-Fi you already have at home.

Sometimes internet, phone, and television services can be duplicative, and we pay too much money for all of them.  It seems increasingly popular to reduce or eliminate the television or cable services first and just use streaming services like Netflix or Hulu.  The author of the Poorer Than You blog switched to streaming services back in 2009—probably saving quite a bit of money this last decade.  Television/cable providers are true oligopolies, where few companies control the majority of the market share and take advantage of rapid prices increases instead of pure competition which can reduce prices.  You basically only have the choice between DISH Network, DirectTV, or a cable provider.  These companies lure you in with small introductory rates then rapidly increase the prices and/or limit services.  It’s no wonder why so many people are ditching these companies and moving to streaming services.


Daycare expenses can be costly.  For 25 years, daycare prices have outpaced inflation.[2]  While it may seem facetious, each year you wait to have kids, the more expensive they will be.  Often times, couples find themselves “working just to work.”  This means that when the second person gets a job, his or her pay is equal to the incurred expenses one has because of the job – meaning, daycare, transportation costs, clothing, and meals out with coworkers.  This shouldn’t stop people from getting a job because you can still gain work experience and compete for promotions.  Day care becomes fixed if both people of a couple are working or a single parent works, but having kids is an option so I put it as one of the variable expenses.  Once you have kids, the related expenses become fixed.  Here’s a great article on why and how the author of the Chief Mom Officer blog chose to save money on daycare.


A reader suggested vacation spending.  Some may consider vacations as part of entertainment, but I feel it deserves its own section.  Vacations are important for mental health—especially when traveling to different countries is involved.  Traveling to foreign countries has been the favorite part of my military service.  The average vacation costs $1,145 ($4,580 for a family of 4).[3]  There are too many variables to specifically write about all the possibilities of saving money when vacationing.  Before you do travel though, do a quick Google search on saving money at your specific location (i.e., “Saving money on a Las Vegas vacation”).  There are hundreds, sometimes thousands, of articles on how to save money while traveling.


A reader suggested self care and/or beauty products.  As a male personal finance blogger, you may assume I would recommend eliminating self care or beauty products first, to save more money.  Full disclosure though, I spend nearly $50 on beauty products a month.  I take self care, healthy eating, and fitness seriously.  Just like investing, small investments when you’re young can pay huge dividends when you’re older.  Taking care of your skin when your young is easier than worrying about it when you’re older.  Our spending habits in America agree with that statement as well.  24% of those surveyed spend over $100 on beauty products when they are 18-29 years old; compared to 18% for 30-59 and only 8% for those 60 years and older.[4]  If you want to increase your savings rate, this is a good place to reduce expenses, but I don’t recommend eliminating it.


This list is not inclusive, and I’d like to keep it updated with suggestions from readers!  What expenses do you consider variable?  Tell me about your variable expenses, and what decisions you’ve made to cut back on them by contacting me through this blog by leaving comments, or through my Facebook or Twitter accounts.  If you’d like to be featured, be sure to leave your social media information!