16
QuizMultiple Choice

3.11 Budgeting

Question 16 • Personal Finance - EL3403

What is most likely the reason variable expenses should be planned after fixed expenses?

Answer
A
Fixed expenses are deducted from gross income, and variable expenses come from net income.
B
Variable expenses are a necessary part of fixed expenses but can only be calculated after fixed expenses.
C
Variable expenses are almost always higher than fixed expenses and need a greater budget.
D
Fixed expenses are required and constant, but variable expenses are more flexible.

Explanation

Fixed expenses, such as rent or a loan payment, are generally required and stay about the same each month. Variable expenses, such as dining out or entertainment, can change and are often adjusted to fit the money left after fixed costs are planned. Therefore, “Fixed expenses are required and constant, but variable expenses are more flexible” is the best reason.

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