What best describes a fixed expense?

• A. Grocery bill that varies
• B. Mortgage payment each month
• C. Buying groceries on sale
• D. Utility bill that changes

Answer: (B)

Fixed expenses are costs that stay the same from month to month, making them predictable for budgeting. A mortgage payment each month fits this description because the amount is set by the loan terms and remains the same each month, regardless of other spending. This consistency is what makes it a classic fixed expense.

In contrast, a grocery bill that varies changes from month to month depending on what you buy, so it’s a variable expense. Buying groceries on sale can save money, but it doesn’t change the fact that grocery costs can go up or down; it’s about prices and deals, not the inherent nature of the expense being fixed. A utility bill that changes with usage also varies month to month, since larger or smaller energy or water use alters the amount due.

So the mortgage payment each month is the best description of a fixed expense because its amount is constant and predictable, aiding steady budgeting.