Question

Ben and his housemates signed a lease for an apartment for 12 months for $563 per month of which Ben agreed to pay $215 per month. Which of the following statements best gives the reasons that Ben’s rent payment is an essential (fixed) expense?
a.
It cannot be eliminated in a later budget, in order to save money.
b.
Living expenses have a higher priority than any other type of expense.
c.
The spender controls the amount of the rent by choice of apartment.
d.
He agreed to pay the same amount every month.

Answer 1

d.

Fixed (essential) expenses are recurring obligations of a set amount — Ben agreed to pay the same $215 every month under the lease. The other choices are either inaccurate or don’t define “fixed” expenses.