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Budgeting Part 2- Craft Budgets by Expense Type

While I realize the topic of budgeting can feel overwhelming, as we take small steps together, it will become less daunting. Imagine only trying to manage one budget at a time! That's precisely what we're going to do as we take the next stride in this financial revolution by creating a separate budget for each expense type.

Three Budgets in Excel: Fixed, Variable and Infrequent
Fixed, Variable and Infrequent Expenses

Step 1: Create a Budget for Fixed Expenses

Fixed expenses, commitments that require action to stop, are the bedrock of your financial stability. First, determine the monthly cost for each fixed expense, such as mortgage/rent, utilities, and insurance. Then combine these fixed expenses into their own budget for a clear overview of your consistent commitments.

Step 2: Create a Budget for Variable Expenses

Variable expenses, commitments that require action to start, add a dynamic element to your budget. Start by estimating your monthly costs for fueling your car, ordering groceries, or dining out. While we'll delve deeper into managing variable expenses soon, for now, just consolidate them into their own budget by categories for a focused approach.

Step 3: Estimate and Budget out Infrequent Expenses

In a world where monthly subscriptions have become the norm, we often entrust others to manage our budget for infrequent expenses. However, taking control of this aspect of your financial life can set you apart. By identifying, estimating, and allocating a small amount each month for these sporadic commitments, you not only regain control but also avoid unwelcome surprises in your budget. Here’s how:

  • Estimate Yearly Costs: Identify these infrequent expenses and estimate their yearly cost. Whether it's a subscription or a sporadic purchase, understanding the annual impact is key.

  • Create a Dedicated Budget: Devote a budget exclusively to infrequent expenses. This allows you to maintain clarity and control over these periodic financial commitments.

  • Monthly Allocation: Total the estimated yearly cost of your infrequent expenses, then divide it by twelve months. Allocate this monthly amount to your dedicated infrequent expenses budget.

This proactive approach places you firmly in the driver's seat of your financial journey. Not only does it ensure that you are well-prepared when these commitments arise, but it also grants you enhanced financial leverage. Consider scenarios where an annual membership offers significant cost savings compared to its monthly counterpart. By budgeting for the entire year on your terms, you gain the power to capitalize on these opportunities.


Feel free to leverage the free Excel download to implement these steps seamlessly and don't hesitate to reach out with questions or to share your experiences. Financial empowerment is a collective effort, and I'm here to support you every step of the way.

Tressa Lacy Budget Solution Step 2 Separating Budgets
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