Mr. Smith has
looked over his expenses and has
arranged them
into Needs
and Wants. One item of note
is what may be a Need may be
a Want
for someone else. For example, Mr. Smith
work requires him
to
commute to various locations and therefore public transportation would
not be an
option for him. Therefore, Mr. Smith
categorized
his car payment and fuel expenses as needs. See
his analysis is here.
Fixed vs.
Variable
Expenses
You
will now need to divide your expenses into variable and fixed
expenses. Variable
expenses are
those that are not month-to-month expenses or are those expenses
without a firm
commitment.
Fixed
expenses are those that occur month-to-month or are
fixed commitments.
Example
Mr.
Smith has organized his expense categories into variable
and fixed expenses. See his spreadsheet here.
Decision Matrix
The next step is to combine
these
two groups in a decision
matrix. See the example
below.
Example
Mr. Smith
organized his expenses into a decision
matrix. See the example here.
