DEFINITION of Flexible Expense
A flexible expense is an expense that is easily altered or avoided by the person bearing the cost. Flexible expenses are costs that may be manipulated in amount or eliminated by not engaging in the activity that incurred the expense.
BREAKING DOWN Flexible Expense
In personal finance, flexible expense are costs that are easily changed, reduced or eliminated. Spending money on entertainment and clothing represent flexible expenses. Even expenses that must be incurred, such as a grocery bill, can be considered flexible because the amount spent can vary.
Types of Flexible Expenses
A flexible expense may be recurring though the amount spent and the decision to incur that expense are still matters of choice. For example, if a household elects to order a television service, from a cable or satellite provider, the cost will recur each month and the extent of the expense may be adjustable based on the type of plan that is subscribed to. Plans that include access to channels such as Showtime, Cinemax, or HBO provide the viewers with movies and premium shows at higher costs than plans that exclude those services. As an alternative, viewers might solely use an à la carte, Internet-based streaming service such as Hulu or Netflix at lower costs than bundled programming offered through satellite or cable.
In fact, the recurring costs for streaming, cable, and satellite television could be eliminated entirely by choosing to only watch over-the-air, local broadcast television that is freely available to anyone with a digital antenna.
The cost of certain utilities, such as electricity, may be considered a flexible expense as the amount of power consumed by a household can fluctuate with usage. Turning off unused lights and appliances, and using light bulbs that draw less power are other ways to reduce power consumption and household costs.
Example of Flexible Expense
Regarding food expenditures, the dining choices made by the individual or household can fluctuate. For instance, a household might choose to only buy lower cost, generic store brand foods instead of higher-priced brand name items. The types of food selected, such as premium cuts of steak, can also effect the expenses on food. The choice to order food to be delivered to one’s home, as a meal kit to be prepared or as a cooked meal ready to eat, is another flexible expense.
The decision to dine-in and cook compared with going out to a restaurant to eat is another way such expenses are flexible. The frequency of dining out, the price scale of the restaurants, and the items chosen from the menu can all fluctuate the costs to the individual or household.