1. What Are Fixed Costs?

Fixed costs are regular expenses that remain constant regardless of business activity or personal lifestyle changes. These include rent/mortgage payments, insurance premiums, and subscription services.

2. How the Calculator Works

The calculator uses the simple formula:

Where:

• Rent/Mortgage — Monthly housing payment
• Utilities — Regular bills like electricity, water, internet
• Insurance — Health, car, home, or other insurance premiums
• Subscriptions — Streaming services, gym memberships, etc.
• Other — Any additional fixed expenses

3. Importance of Calculating Fixed Costs

Details: Understanding your fixed costs is essential for budgeting, financial planning, and determining how much income you need to cover essential expenses.

4. Using the Calculator

Tips: Enter all your regular monthly expenses in pounds sterling. For annual costs, divide by 12 to get the monthly equivalent.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between fixed and variable costs?
A: Fixed costs remain constant (like rent), while variable costs fluctuate with usage (like groceries or utility bills in some cases).

Q2: How often should I calculate my fixed costs?
A: Review them whenever your financial situation changes (new home, changed subscriptions) or at least annually.

Q3: Should I include taxes in fixed costs?
A: Only include taxes that are fixed amounts (like council tax). Income tax varies with earnings.

Q4: What percentage of income should go to fixed costs?
A: Ideally less than 50% of your net income, allowing room for savings and discretionary spending.

Q5: Can fixed costs be reduced?
A: Yes, through renegotiating contracts, switching providers, or eliminating non-essential services.