Which expense is typically fixed?

Which expense is typically fixed?

• A. Mortgage payment
• B. Groceries
• C. Utilities
• D. Entertainment

Answer: (A)

Fixed expenses stay the same each month because they’re set by a contract or schedule rather than by how much you use something. A mortgage payment is typical for this pattern: the loan terms determine a regular principal and interest amount that you pay every month, so the payment tends to be predictable from month to month. In contrast, groceries change based on what you buy and how much you eat, utilities vary with how much you use appliances and the season, and entertainment depends on plans and spending that can go up or down. Because those costs fluctuate with activity, they’re considered variable expenses. So the mortgage payment best fits the idea of a typically fixed expense.

Fixed expenses stay the same each month because they’re set by a contract or schedule rather than by how much you use something. A mortgage payment is typical for this pattern: the loan terms determine a regular principal and interest amount that you pay every month, so the payment tends to be predictable from month to month.

In contrast, groceries change based on what you buy and how much you eat, utilities vary with how much you use appliances and the season, and entertainment depends on plans and spending that can go up or down. Because those costs fluctuate with activity, they’re considered variable expenses. So the mortgage payment best fits the idea of a typically fixed expense.