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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.