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A variable expense fluctuates and is not usually a monthly expense, but comes often at unforeseen times and can stress your monthly budget. People often end up putting variable expenses on credit cards which can get them into trouble when they start piling up. Variable expenses include clothing, visits to the doctor or dentist, automobile maintenance, vacations, gifts for friends or family, and so on. These types of expenses can be difficult to get a handle on.

Here is a practical way to approach budgeting your variable expenses. Estimate what you might spend in a year for each variable category, add them up, then average that amount over 12 months. Let’s say your variable expenses average out to $300 per month. Begin setting aside this amount each month because you may have several good months with very low expenses and then get hit hard at Christmas or in the summer.

Second, you will have to set priorities. If you find out your car needs new brakes and that eats up your $300 variable expense budget for this month, then put off buying clothes or a making a trip till you have a chance to recover and build up your variable expense reserves again.

When you get to the end of a year, look at all your variable expenses and see how close you were with your budget. If necessary, adjust the amount you set aside for variable expenses and put off the things that are not as important.

There are free budgeting spreadsheets and software that have all 12 months of the year included. If you prefer this method, you can write in amounts for expenses that come in different months. Choose the method that suits you best.

One of the first steps in setting up a budget is to determine whether an expense is fixed or variable. If you get a bill every month, that is the easiest way to determine your fixed expenses. These would be expenses like rent, student loan, car payment, phone bill, insurance, internet, cable or satellite TV, and so on.

Some fixed expenses have a variable amount in them. One example would be if you go over your allotted minutes on your cell phone, the fees for additional minutes can be fairly hefty. I have unlimited minutes on weekends so I have disciplined myself to make calls to family and friends at that time.

Many consider food to be a variable expense. If this is the case for you, choose an average monthly amount and try to stay around that budget. I grew up in a home with 10 kids and we ate at home 95% of the time and to go out was a special treat. Our food budget was fairly fixed. However, when you start going out to eat more often, your food budget can get out of control. To keep your food budget steady, decide how often you will go out: once or twice or week let’s say and plan on preparing meals the rest of the time. Also, when you go grocery shopping, have an amount fixed in your brain. If your food budget is $80 per week, stay within that and leave the extra goodies and treats on the shelf.

Another expense normally classified as a variable expense is your heating bill, especially if you live in a northern state with colder winters. One way to balance out your heat payments is to set up a balanced payment plan with your utility company. This averages out your monthly payments so you really are paying a more fixed amount every month instead of large bills in the winter. Another approach is to rent an apartment that has heat or all utilities paid. Here the landlord knows the basic costs and has included them in your rent.

These are all ways to stabilize or fix your expenses so you don’t get surprised on some months and end up spending too much. Now it is time to get these expenses written down somewhere. We have given you a list of free budgeting spreadsheets and software in our resources section. Choose one that you like and get your fixed expenses entered into your budget.

We live in a culture that says, “Buy what you want now and worry about paying for it later.” This does not lead to happiness or freedom. Instead, it adds to your stress and causes you nothing but worry in the long run. I have found that you have to start by living within your means, then you will have something leftover to invest with. How you invest your extra time and talent will lead to your financial freedom.

So let’s start with financial discipline. Have you ever sat down and drawn a line down the middle of a piece of paper, then put what you make on one side and what you spend per month on the other? That is how you begin to create a personal budget and get a handle on your finances. If you are spending too much or have nothing left to invest, what can you give up each month?

You have to be willing to sacrifice something now to get something  better for  yourself or your family in the future. You can spend the extra time researching or studying new skills you want to learn. Invest your time researching needs and put together a personal business plan you can start on the side that will meet those needs. It’s best if you work on something you are familiar with.

We’ve put together a resource page that includes a list of free spreadsheets and software that you can use to create a personal budget. Start here, cut your expenses, invest in study and research, and you can get started on the road to financial freedom.