KAKEIBO | Classify “Essential vs. Flexible” Costs & Understand Monthly Expenses in Advance

Do you ever feel like you’re diligently tracking your expenses every month but still don’t have a clear understanding of where your money is actually going? Maybe you find yourself wondering,

It can be tricky to clearly separate the must-haves—like rent and utilities—from flexible spending—like dining out or hobbies—that you have more control over. But learning to distinguish between these two categories is a crucial step toward building a more effective and realistic budget. Furthermore, does the uncertainty of future expenses ever cause you stress? Thoughts like,

They can feel overwhelming. But imagine the peace of mind that could come from anticipating your likely monthly spending in advance—giving you the clarity and confidence to plan ahead with ease.

If you’re nodding along, wishing for a more efficient way to manage your finances—and craving the reassurance that comes from forecasting future expenses—the solution might be closer than you think. In fact, it could be right at your fingertips, inside a tool you already know: Excel.

Let me introduce you to KAKEIBO PRO/LiGHT, an Excel budgeting tool specifically designed to tackle these common financial management challenges. With this tool, categorizing your spending into Fixed (Essential) costs and Variable (Flexible) costs becomes surprisingly intuitive.

What’s more, the handy Regular Spending feature allows you to pre-register recurring payments like rent, loan installments, or subscription fees. This not only streamlines the process of managing your future expenses but also makes it much easier to forecast your monthly financial outlook with confidence.

In this article, I’ll walk you through exactly how you can use KAKEIBO PRO/LiGHT to smartly organize your finances, gain clear insight into your future spending, and move toward a more intentional, stress-free approach to money management. So, are you ready to leave behind vague financial worries and take a confident step toward mastering your budget?

1. Separate “Essential vs. Flexible”

When you decide to start managing your household budget—or want to make your current system more effective—one of the most important first steps is categorizing your expenses. Specifically, dividing your monthly spending into Fixed Costs (essential living expenses) and Variable Costs (spending you can manage or adjust) is key to understanding your overall financial picture.

This simple yet powerful step lays the groundwork for making smarter money decisions and identifying real opportunities for improvement. You might be wondering,

In this chapter, we’ll explore why it’s so important to distinguish between fixed and variable costs. You’ll get clear definitions, practical guidance on how to classify your spending, and a breakdown of the real advantages this brings to your financial routine. Taking this simple but powerful step can help dissolve vague financial worries and set you on the path to more intentional, effective money management.

1-1 Why is Separation So Important?

Do you ever find yourself thinking like that? One common reason for this confusion is that all your expenditures might be getting lumped together—making it hard to see where your money is actually going, and even harder to figure out where you can make meaningful changes.

Household spending generally falls into two main categories. First, there are Fixed Costs—expenses like rent or mortgage payments, utilities, and insurance premiums. These are essential for daily living and tend to recur regularly from month to month. Second, there are Variable Costs—such as groceries, social outings, hobbies, and clothing. These are more flexible, meaning the amount you spend can be adjusted based on your choices and lifestyle. Gaining clarity on these two categories is a powerful way to take control of your financial habits.

If you don’t separate your expenses into categories and only focus on the total amount spent, it becomes much harder to pinpoint the real issue when you think, “I spent too much this month.” Without that clarity, it’s also tough to figure out where meaningful cuts can be made. For example, was the overspending caused by a one-time large purchase—a variable cost? Or is it because your fixed costs are consistently too high? The solutions for each scenario are completely different, which is why distinguishing between the two is so important.

By clearly separating fixed and variable costs, you start by establishing your financial foundation—the minimum amount you need each month to maintain your basic lifestyle. From there, you can identify your adjustable zone—the spending you can potentially reduce or manage through conscious effort.

1-2 Defining the Categories

So, how exactly should you go about classifying expenses as Fixed or Variable? Don’t worry—it’s simpler than it might seem. Let’s break down the definitions and look at some specific, real-world examples to help make this process clear and actionable.

What Are Fixed Costs?

Think of Fixed Costs as expenses that are absolutely necessary for living and occur regularly or continuously, often on a monthly basis. The amount might not be exactly the same every month, but these costs are generally consistent and not easily avoided. They’re usually tied to the essentials of daily life—things you can’t simply stop paying for without impacting your well-being or stability.

What Are Variable Costs?

Variable Costs, on the other hand, are expenses where the amount can be adjusted based on your choices, habits, and effort. These are flexible by nature. Even if they occur every month, what matters is that you have control over how much you spend. That flexibility makes them the key area where you can actively manage and potentially reduce your spending.

Subscriptions

While subscription services are often automatically deducted each month—much like fixed costs—I recommend classifying them as Variable Costs. Why? Because you have the option to cancel them. These expenses represent a choice, not an absolute necessity for daily living. By placing them in the variable category, they become easier to spot during reviews and stand out as potential areas for adjustment or cost-cutting when needed.

1-3 The Benefits of Categorization

You might be thinking like that. But here’s the thing: taking this extra step can significantly enhance the quality of your budget management. It brings structure, clarity, and insight—helping to ease those vague financial anxieties that often come from not knowing where your money’s really going. Let’s dive into the key benefits of making this simple but powerful distinction.

Benefit 1: Clearly Identifies Your Minimum Cost of Living

By listing and adding up all your fixed costs, you establish your financial baseline—the answer to the question, “How much money do I absolutely need each month just to get by?” Knowing this number offers significant peace of mind.

It becomes especially valuable when facing “what if” scenarios, like a sudden drop in income or transitioning to a job with a different salary. With a clear understanding of your minimum required living expenses, you can set more realistic savings goals, make confident financial decisions, and even plan investments more strategically.

Benefit 2: Makes Setting and Tracking ‘Flexible Spending’ Goals Easier

Variable costs are the expenses you have the most control over. By separating them from your fixed costs, it becomes much easier to set clear savings goals—like, “This month, I’ll aim to keep my variable spending under $XXX.”

This approach lets you strategize more effectively, identifying which categories—such as food, entertainment, or shopping—offer the best opportunities to cut back. And when you review your spending at the end of the month, you’ll see exactly how you did: which goals you met, which categories went over, and where you can adjust moving forward.

Instead of just feeling like you “spent too much,” you’ll have concrete numbers showing where your money went—and that clarity can be incredibly motivating as you build better saving habits.

Benefit 3: Helps Pinpoint Areas for Financial Improvement

When you’re ready to review your finances and cut back on spending, proper categorization helps you decide where to focus your efforts—Fixed Costs, Variable Costs, or both.

By categorizing your expenses, you gain the clarity needed to make informed, strategic choices. You’ll see exactly where your potential for improvement lies and what type of actions will make the biggest impact.

2. Sample Classifications

This chapter dives into concrete examples of expense classification based on different lifestyles. We’ll start with a case study of someone living alone, then look at an example for a family with children. Use these scenarios as a helpful reference to visualize how you might categorize your own household expenses.

2-1 Someone Living Alone

Living alone comes with a lot of financial freedom—you have full control over how and where your money is spent. But with that freedom can also come the occasional “Oops, I overspent…” moment or lingering worries about the future if things aren’t managed carefully.

To help bring more clarity and control, let’s walk through how typical expenses for a single-person household can be classified into Fixed and Variable costs.

When you take the time to classify your own expenses this way, you might uncover some surprising insights—like, “Wow, I spend more on hobbies than I realized,” or “Maybe there’s a fixed cost I could actually reduce.”

2-2 Family with Children

For families with children, both the types of expenses and the amounts involved often look quite different from those of someone living alone. Of course, the specifics can vary depending on the family structure and the ages of the children, but let’s take a look at a sample classification for a typical household of parents with children.

This example can help you start thinking about how to categorize your own family’s spending in a way that reflects your real-life needs and priorities.

Take extracurricular activity fees, for example—even if they’re paid regularly each month, it can be helpful to treat them as Variable Costs. Why? Because they’re ultimately a choice. You can decide to pause, reduce, or change these activities based on your family’s needs and budget. Classifying them as flexible makes it easier to adjust your spending when necessary.

3. Classify Fixed & Variable Costs with KAKEIBO

That’s exactly what we’ll dive into in this chapter! We’ll walk through how to use the Excel budgeting tool KAKEIBO PRO/LiGHT to put everything into practice. With the tool’s Expense Category Setup and Expense Item Setup features, you’ll be able to organize your finances in a way that’s not only easy to manage, but also tailored to your specific lifestyle and needs.

3-1 Setting Expense Categories

When it comes to managing a household budget, simply recording what you spent and how much is just the beginning. To make reviewing and analyzing your spending easier down the line, it’s essential to group your expenses into clear, meaningful categories.

In KAKEIBO PRO/LiGHT, the first step is setting up these broad groups, known as Expense Categories. Think of this step as building the framework or skeleton of your budget—once it’s in place, everything else becomes more organized and easier to manage.

One of the most convenient features of KAKEIBO PRO/LiGHT is its ability to link each expense category directly to either a Fixed Cost or a Variable Cost. For instance, you might classify categories like Housing, Utilities, and Communications as Fixed Costs, while categories such as Food and Living Expenses would fall under Variable Costs.

Once set, the tool automatically tracks and totals these two types of costs separately. This means you can instantly see a clear breakdown: “How much did I spend on essential, non-negotiable expenses?” versus “How much went toward flexible, adjustable spending?”—a powerful insight for smarter budgeting.

That’s exactly where the bonus Category Classification List—an Excel file you’ll receive when you purchase the tool—comes in handy. This guide includes a comprehensive list of everyday expense items, already divided into Fixed and Variable Costs, along with sample category setups. It’s a great starting point to help you build a structure that fits your own lifestyle.

And of course, you’re free to customize it further by adding your own unique categories that aren’t included in the list. Let’s begin by defining the main framework of your budget using KAKEIBO PRO/LiGHT’s Category Setup feature—it’s the first step toward organizing your money with confidence and clarity.

3-2 Setting Expense Items

Once you’ve set up your broad Expense Categories, the next step is to define the more specific Expense Items that fall under each category. Think of it like this: the category is a large shelf, and the expense items are the detailed drawers within that shelf.

For example, let’s say you’ve created a Food category (that’s your shelf). Within that category, there are probably several different types of spending, right? Maybe you do grocery shopping, occasionally stop at a convenience store, enjoy dining out, or grab a quick coffee here and there. These become your Expense Items (the drawers). You might set them up with names like: Groceries, Eating Out, and Sweets/Drinks.

This level of detail gives you a clearer picture of exactly where your money is going within each category—making it much easier to review your habits, spot trends, and identify areas for potential savings.

You might be wondering like that. Here’s the good news: you don’t have to overcomplicate it. The key to successful budgeting is consistency. If your system is too detailed or time-consuming, keeping up with it can quickly feel like a chore—and that’s when people often give up.

This is yet another great opportunity to make use of the bonus Category Classification List that comes with the tool. This valuable reference file outlines a wide range of common goods and services—from groceries and daily essentials to leisure activities—and shows exactly which category and item they typically fall under.

So when you find yourself thinking, “Where should I categorize this expense?” this list becomes your go-to guide. For example, it might show that lunch at a café belongs under the Eating Out item within the Food category, while buying a new lightbulb fits under Household Goods in the Living Expenses category.

By referring to this list, you can greatly reduce the guesswork involved in categorizing your expenses. Questions like “Is this fixed or variable?” or “Which category and item does this fit into?” become much easier to answer, helping you set up your expense items smoothly and with confidence.

Of course, the list is just a starting point—a helpful guide, not a rulebook. You’re encouraged to choose the items that fit your lifestyle, add custom entries, and adjust the level of detail to match the way you want to manage your finances. As you build out your expense items this way, you’ll start to gain a much clearer and more personalized view of your spending patterns—making your budget more insightful and meaningful.

4. Anticipate Monthly Spending

Now that you’ve successfully classified your expenses into Fixed and Variable categories and set up your categories and items in KAKEIBO PRO/LiGHT, your understanding of both past and present spending should be much clearer. But to truly gain peace of mind with your finances, there’s another key piece of the puzzle: being able to anticipate your future expenses to some extent.

4-1 What is the “Regular Spending Setup” Feature?

As the name suggests, the Regular Spending Setup feature lets you pre-register expenses that you know recur on a fixed schedule—whether that’s monthly, every other month, or some other interval.

When managing household finances, it’s common to feel a lingering sense of uncertainty, wondering things like, “How much will I spend next month?” That unease can grow, especially when you have recurring payments not only in your fixed costs but also hidden among your variable expenses. It’s what leads to that lingering question: “What’s the total amount I absolutely must pay next month?”

Take subscription services for video or music streaming, for example. As we discussed earlier, these are categorized as variable costs, since you have the option to cancel them. However, in practice, a fixed amount is usually withdrawn on a specific day each month—making them feel a lot like fixed costs in daily life. The same goes for things like children’s extracurricular lesson fees or gym memberships. While they’re technically variable—because you could choose to stop them—they’re also recurring payments you’re almost certain to make each month.

This is exactly where KAKEIBO PRO/LiGHT’s Regular Spending Setup feature shines. It’s specifically designed to handle these kinds of recurring expenses with ease. To start, any expense items you’ve marked as Fixed Costs are automatically included in your Regular Spending List. That means essential payments like rent, loan installments, and insurance premiums are pre-listed for you, saving time and ensuring your core financial obligations are clearly visible at a glance.

4-2 Setting Up Regular Spending

So, let’s walk through how to actually set up your Regular Spending in KAKEIBO PRO/LiGHT. To begin, open the Regular Spending Setup menu (or a similarly named section) within the tool.

STEP 1: Confirm Your Fixed Costs

Start by checking that the categories and items you’ve set as Fixed Costs—such as rent, mortgage payments, insurance premiums, or essential communication fees—are automatically listed in the Regular Spending section. From there, you’ll typically input key details like: Payment method, Amount, Payment cycle (e.g., monthly, bi-monthly)

STEP2: Register Recurring Variable Costs

Next, you’ll manually add the items from your Variable Costs category that occur on a regular payment schedule. This includes:

For each of these items, you’ll enter the necessary information – Description, Payment method, Amount, Payment cycle, etc. – to register them onto the list.

5. Conclusion: Start Managing Your Money with Classification and Forecasting!

In this article, we’ve explored how crucial expense classification and forecasting future spending are as the first steps toward smarter money management, and how the Excel budgeting tool KAKEIBO PRO/LiGHT can help you achieve this.

By clearly separating your essential living costs (Fixed Costs) from the money you can manage (Variable Costs), you gain clarity on where to focus your efforts to improve your household finances. Furthermore, using the Regular Spending Setup feature allows you to anticipate not just your fixed costs, but also regular variable payments like subscriptions—so you know in advance how much money you’ll definitely need next month.

If you’ve been feeling vaguely anxious, thinking, “I somehow seem short on money each month…” or “I want to use my money more intentionally for the future, but I don’t know how…”, using KAKEIBO PRO/LiGHT can help make your current financial situation and future outlook much clearer. Don’t forget to use the bonus Category Classification List as a helpful guide while setting things up according to your own finances.

Classifying and forecasting your expenses doesn’t have to be difficult. Why not take advantage of this tool to truly visualize your cash flow, free yourself from vague financial worries, and take that first confident step toward secure and planned money management?