“Even though I keep a household budget, I can’t really see the effect…”
“I want to manage my household finances more efficiently and reduce unnecessary spending!”
Many people share these concerns. Managing household finances is an ongoing challenge for many. It’s easy to put it off or give up after just a few days… But wait! By properly understanding and categorizing the basics of household budgeting—fixed costs and variable costs—you could dramatically improve your financial situation.

I’ve heard of fixed and variable costs, but what’s the exact difference?
How should I categorize them to make household budgeting more effective?
This article will answer those questions. From the basic definitions of fixed and variable costs to practical categorization methods and household budgeting tools, I’ll explain everything in a clear and easy-to-understand way. By reading this article, you will:
- Clearly understand the difference between fixed and variable costs
- Learn how to categorize them to suit your household
- Discover specific ways to identify and reduce unnecessary expenses
- Manage your household finances more efficiently using budgeting tools
… and much more! This article is packed with valuable insights to enhance your budgeting skills. So, start today—master fixed and variable costs, and take control of your finances smartly and enjoyably!
Language: English Japanese
1. What Are Fixed and Variable Costs?
As a first step in household budget management, you often hear, “Let’s separate fixed and variable costs!” It’s generally explained as “distinguishing between expenses based on whether the amount paid each month is fixed or variable.” For example, take utility costs. The amount changes every month, yet many household budgets classify them as fixed costs. “Huh? They fluctuate, but they’re fixed?” I was also confused at first.
So, I did some research and organized the definitions of fixed and variable costs into two approaches. In Chapter 1, I will explain these two definitions in an easy-to-understand manner using concrete examples. You should be able to clearly understand and say, “Oh, that’s what it was all about!” Together, let’s clear up the confusion about fixed and variable costs and firmly grasp the basics of household budget management!
1-1 Definition of Fixed Expenses
“How much money do I regularly spend each month?” Have you ever wondered that? When managing a household budget, the first thing to understand is fixed costs. I categorized the definition of fixed costs into two approaches.
Definition 1: Fixed Amount
In this definition, fixed costs refer to expenses that remain the same each month. Examples include:
Housing costs
Insurance premiums
Communication costs (fixed plans)
Tuition fees for lessons
Subscription service fees (fixed rate)
These expenses are typically withdrawn from your account or paid every month in nearly the same amount.
The advantage of understanding fixed costs with this definition is that it makes predicting monthly expenses easier. By knowing the minimum required amount, planning a household budget becomes more straightforward. For example: “Since fixed costs are 150,000 yen per month, we can allocate the remaining income to variable costs and savings.”
However, there are some points to keep in mind with this definition. For example, if you switch your smartphone plan from a flat rate to a pay-as-you-go plan, communication costs become variable costs. Additionally, if you move and your rent changes, the amount of fixed costs will also change. In other words, fixed costs are not permanently set—they need to be reviewed periodically.
Definition 2: Essential for Living
In this definition, fixed costs refer to expenses that are essential for living and occur regularly each month. Examples include:
Housing costs
Utilities
Communication costs
Insurance premiums
Unlike Definition 1, this definition also classifies utilities and communication costs as fixed costs. This is because they are essential for daily life and occur every month. Even if the amounts fluctuate, these expenses are difficult to reduce, so they are considered fixed costs.
The advantage of using this definition is that it clarifies the minimum expenses required to maintain a living. This helps you identify the threshold that absolutely cannot be reduced and manage your household budget more realistically.
1-2 Definition of Variable Costs
When you feel like “I might have overspent this month…” it’s time to review your variable costs. I categorized the definition of variable costs into two approaches.
Definition 1: Costs that vary in amount
In this definition, variable costs are expenses that fluctuate in amount each month. Examples include:
Food expenses (e.g., dining out, treats)
Utility costs
Transportation costs
Entertainment expenses
Social expenses
Daily necessities
Clothing expenses
Medical expenses
These expenses can vary significantly depending on your actions and circumstances each month.
The advantage of using this definition for variable costs is that it helps you easily identify areas where you can save. It allows you to take concrete actions, such as “I ate out a lot this month, so I’ll cook more at home next month” or “I bought too many clothes this month, so I’ll cut back next month.”
Definition 2: Costs that can be managed in daily life
In this definition, variable costs are expenses that can be adjusted through your own efforts and choices. Examples include:
Food expenses (e.g., dining out, treats)
Transportation costs
Entertainment expenses
Social expenses
Daily necessities
Clothing expenses
Medical expenses
Subscription service fees
Unlike Definition 1, subscription service fees are considered variable costs because they can be canceled or adjusted by changing plans.
The advantage of using this definition for variable costs is that it reinforces the mindset of “I can reduce expenses through my own efforts.” This can boost your motivation to cut wasteful spending and save more by reducing unnecessary expenses.
1-3 Summary of Key Points of Definitions
To summarize the key points of the definitions, they are as follows:
Definition 1: Categorizing Based on Whether the Amount Is “Fixed” or “Variable”
Fixed costs: Expenses that remain the same amount every month.
Variable costs: Expenses where the amount fluctuates from month to month.
With this definition, the key factor is whether the expense amount remains constant or changes over time.
Fixed | Variable |
---|---|
Housing costs Communication costs (fixed plans) Insurance premiums Tuition fees for lessons Subscription service fees (fixed rate) |
Food expenses (e.g., dining out, treats) Utility costs Transportation costs Entertainment expenses Social expenses Daily necessities Clothing expenses Medical expenses |
Definition 2: Categorizing Based on Whether It Is “Essential” or “Manageable”
Fixed costs: Expenses that are essential for living and occur regularly, such as monthly bills.
Variable costs: Expenses that can be adjusted based on personal efforts or choices.
With this definition, the key factors are “whether the expense is essential” and “whether you have control over it.”
Fixed | Variable |
---|---|
Housing costs Utility costs Communication costs (fixed plans) Insurance premiums |
Food expenses (e.g., dining out, treats) Transportation costs Entertainment expenses Social expenses Daily necessities Clothing expenses Medical expenses Subscription service fees (fixed rate) |
Note that the classification of the same expense item may change depending on which definition you use. For example, utility costs are considered variable costs in Definition 1 and fixed costs in Definition 2. It’s not a matter of which definition is better or worse; instead, choose the one that best suits your household budget management style.
2. The Benefits of Separating Fixed and Variable Costs
This chapter explains the specific benefits of separating fixed and variable expenses in your household budget. It focuses on four key advantages: easier expense tracking, long-term savings through fixed cost reduction, prevention of wasteful spending by managing variable costs, and simplified budget setting.
Understanding these benefits will enhance your motivation for household budget management and provide concrete methods for achieving more effective savings. By reading this chapter, you’ll move beyond vague budget management and discover actionable ways to improve your finances.
2-1 Easier Expense Review

What exactly am I spending my money on, and how much?
Even if you keep a household budget, your overall expenses might seem vague, making it hard to know where to start making changes. Have you ever felt that way? Separating fixed and variable expenses provides a clearer picture of your spending, making it much easier to identify areas for improvement.
By recording fixed and variable expenses separately, you can see at a glance how much money is going out each month as fixed costs and how much fluctuates from month to month as variable costs. This makes it easier to develop specific strategies, such as “My fixed expenses are this amount, so I need to reduce my variable expenses,” or “Among my variable expenses, food costs are particularly high, so I’ll try to eat out less.”
For example, if you look at your overall budget and feel like you overspent this month, it can be difficult to pinpoint the cause if fixed and variable expenses are mixed together. However, by separating them, you can quickly identify the reason, such as, “I overspent this month because I spent too much on entertainment, which is a variable expense.”
Furthermore, managing fixed and variable expenses separately makes it easier to compare them with past spending. You’ll be more likely to notice changes, such as, “Compared to last month, my fixed expenses haven’t changed, but my variable expenses have increased,” or, “I reduced my fixed expenses, which led to a decrease in my overall spending.” This approach allows you to identify areas for improvement in your household budget management more effectively.
In this way, separating fixed and variable expenses is an effective method for accurately understanding your household finances and identifying potential issues more easily.
2-2 Fixed Cost Reduction Leads to Long-Term Savings

Isn’t there a way to reliably save money, even just a little, every month?
When you hear the word “saving,” you might imagine cutting back on food expenses or giving up things you want—sacrifices that require constant effort in your daily life. However, by reviewing your fixed costs, you can achieve long-term, reliable savings with a one-time effort.
Fixed costs are expenses that occur every month. Examples include rent, mortgage payments, insurance premiums, communication costs, and subscription service fees. If you review and reduce these expenses once, the savings will automatically continue every month.
For example, if you review your smartphone plan and switch to a plan that is 2,000 yen cheaper per month, you will save 24,000 yen per year and 120,000 yen over five years. This significant savings from a one-time effort is a unique advantage of reducing fixed costs.
Additionally, fixed costs are more likely to be reduced significantly at once compared to variable costs. For example, you could substantially lower your monthly expenses by reviewing your housing costs, moving to a property with lower rent, or refinancing your mortgage.
Of course, reviewing fixed costs takes time and effort. However, it’s well worth it. Reducing fixed costs is a powerful saving method that can have a significant positive impact on your household finances in the long run.
2-3 Control Variable Costs to Prevent Wasteful Spending

I tend to spend money wastefully… How can I learn to manage my money more systematically?
Everyone has likely experienced buying unnecessary items at a convenience store or making impulse purchases in daily life. By becoming aware of and controlling your variable costs, you can reduce wasteful spending and learn to manage your money more systematically.
Variable costs are expenses that fluctuate from month to month. Typical examples include food, daily necessities, entertainment, and social expenses. You can manage these costs to some extent through your own decisions and actions.
To manage your variable costs, it’s essential to first understand where your money is going and how much you’re spending. By recording and regularly reviewing the breakdown of your variable costs in your household budget, you can gain insights such as, “I ate out frequently this month” or “I spent too much on clothing.”
Based on these insights, it’s important to set and implement specific goals, such as “I’ll limit eating out to once a week next month” or “I’ll avoid buying new clothes this month.”
It’s also effective to set a budget to control your variable costs. By establishing a budget in advance, such as “Keep food expenses within 30,000 yen this month” or “Limit entertainment expenses to 10,000 yen,” you can prevent overspending. Controlling variable costs requires daily awareness and effort, but it is a crucial step in reducing wasteful spending and improving your household finances.
2-4 Easier Budget Setting

I want to manage the balance between my monthly income and expenses more effectively… How can I save money reliably and without undue stress?
The goal of household budget management is to control expenses within your income and save money. To achieve this, it’s important to first set a realistic and achievable budget. Separating fixed and variable costs makes budgeting much easier.
Since fixed costs are expenses that occur regularly, you need to know their amount when setting a budget. Once you know your fixed costs, the “minimum amount you need each month” becomes clear.
Next, you set a budget for variable costs. Since variable costs change from month to month, you should set an amount that you feel you can reasonably achieve by referring to past spending data.
Then, the amount remaining after subtracting the budgets for fixed and variable costs from your income is the amount you can save. This becomes your realistic savings goal. If you need to further reduce your expenses to achieve your savings goal, consider reviewing your fixed costs or cutting back on your variable costs.
In this way, by separating fixed and variable costs, you can easily understand the balance between your income and expenses and set a budget that allows you to save money reliably and without undue stress. Additionally, setting a budget will increase your motivation for household budget management and allow you to work more actively toward achieving your goals.
3. Utilizing KAKEIBO PRO / LiGHT
This chapter explains in detail how to use the household budgeting tool KAKEIBO PRO/LIGHT to categorize and manage fixed and variable costs effectively. It provides a step-by-step guide on setting up expense categories and items, as well as registering recurring payments using the Regular Spending feature.
Using this tool makes it easy to categorize fixed and variable costs (whether by Definition 1 or Definition 2) and provides a clearer picture of your overall spending. After reading this chapter, you will understand how to operate the tool and be able to apply it immediately to your daily household budget management.
3-1 Setting Expense Categories

I’ve started keeping a household budget, but there are so many items that I don’t know where to start…
Do you find yourself struggling with this problem? In KAKEIBO PRO and LiGHT, you first set categories to organize your expense items. These categories are broadly divided into fixed costs and variable costs. This classification is crucial and can accommodate either of the approaches described in Chapter 1: Definition 1 or Definition 2.
Additionally, KAKEIBO PRO and LiGHT have introduced a Business category. If you run a personal business or have a side job, you will likely incur business-related expenses. By categorizing these expenses under Business Expenses, you can easily separate personal and business expenditures for better financial management.
3-2 Setting Expense Items

I’ve categorized my expenses, but what specific items should I register?
Once you’ve set up your categories, the next step is to register specific expense items within each category. In KAKEIBO PRO and LiGHT, defining these expense items in detail allows for a more precise household budget analysis.
For example, if you create a Food Expenses category, you would register expense items such as Groceries, Eating Out, and Coffee Shops under it. Similarly, under the Housing Expenses category, you would register Mortgage Payment, Management Fees, and Repair Reserve Fund.
You can freely set expense items according to your lifestyle. By properly defining expense items, you will be able to enter expenses into your household budget smoothly, without wondering which item an expense corresponds to. Additionally, it will be easier to identify spending trends and find opportunities to reduce unnecessary expenses.
3-3 Setting Regular Spending

I have payments that are debited on a fixed day every month… I’m worried because I sometimes forget them.
It’s easy to accidentally overlook recurring payments such as rent, monthly tuition fees, and subscription service charges. With the Regular Spending function of KAKEIBO PRO and LiGHT, you can register these recurring payments and avoid missing them.
In the Regular Spending function, you can register payment dates, amounts, and expense items. Once registered, these payments will be automatically entered into the expense sheet, reducing manual input effort.
This function is very useful regardless of which approach you use to classify fixed and variable costs—Definition 1 or Definition 2. For example, even if you classify subscription service fees as variable costs under Definition 2, registering them in the Regular Spending function allows you to anticipate that “I have a payment of XX yen this month.“
The Regular Spending function is not only useful for preventing forgotten payments but also for predicting future expenses. You can plan in advance, such as, “I have a payment of XX next month, so I’ll try to save a little.“
4. Utilizing KAKEIBO SLiM

Isn’t there a simpler household budgeting tool?
I can’t handle complicated features…
For those who feel this way, I recommend KAKEIBO SLiM. This tool has fewer features compared to KAKEIBO PRO and KAKEIBO LiGHT, making it simpler and more intuitive to use. KAKEIBO SLiM is the perfect tool for household budgeting beginners and those who want to start managing their household finances with ease.
Using KAKEIBO SLiM is very simple. First, based on the concepts of fixed and variable costs learned in Chapter 1, broadly classify your expenses into two categories. Then, set specific expense items for each category.
For example, under Fixed Costs, register items like rent, insurance premiums, and communication costs (flat-rate plans). Under Variable Costs, register items like food expenses, utility costs, transportation expenses, and entertainment expenses. Of course, you can also use KAKEIBO SLiM with the other approach introduced in Chapter 1, which separates fixed and variable costs based on whether they are essential for daily life.
You can freely customize the expense item settings to match your lifestyle. KAKEIBO SLiM does not include the Regular Spending feature found in KAKEIBO PRO and LiGHT; however, this makes operation simpler and easier for anyone to use.
KAKEIBO SLiM, while simple, firmly grasps the fundamental principle of household budget management: “understanding your expenses.” First, develop the habit of keeping a household budget with KAKEIBO SLiM and begin by understanding your spending trends. Then, if you require more advanced features, such as detailed analysis or future expense forecasting, you may want to consider upgrading to KAKEIBO PRO or KAKEIBO LiGHT.
5. Conclusion (Exclusive bonus)
“I thought categorizing fixed and variable costs in my household budget would be difficult… but it might be easier than I thought!” Is that how you feel after reading this article? Categorizing fixed and variable costs is not only the first step but also one of the most important steps in household budget management.
“But it’s still a hassle to actually keep a household budget…” Some of you may be thinking that. It’s true that taking the first step requires some effort. But don’t worry! There are many convenient household budgeting tools available today. By using KAKEIBO PRO, LiGHT, or KAKEIBO SLiM, which were introduced in this article, you can manage your household finances more easily and even enjoy the process.

Is my work done once I’ve separated my fixed and variable costs?
Of course not! Separating fixed and variable costs is just the starting point. From here, you need to take the next steps in advanced household budget management—regularly reviewing your expenses, cutting unnecessary spending, and saving for the future.
And now, for those of you who have read this blog to the end, I have a special announcement!
If you purchase the Excel household budget tool I created—KAKEIBO PRO, LiGHT, or SLiM—you’ll receive an exclusive bonus: a free Excel file with a categorization list of various daily expenses!



This file will help you easily classify your expenses into fixed and variable costs, making budget management even simpler. Take this opportunity to get KAKEIBO PRO, LiGHT, or SLiM along with the bonus categorization list and take your budgeting skills to the next level!
Lastly, I hope this article helps you improve your household budget management. Starting today, let’s practice smart budgeting by being mindful of fixed and variable costs!