Expenses can be classified into fixed and variable categories, with needs taking priority over wants in budgeting.
Expenses are categorized into fixed expenses and variable expenses. Fixed expenses, such as rent and insurance costs, remain constant, while variable expenses, like groceries and dining out, fluctuate based on priorities. Another method of categorizing expenses is by distinguishing between needs and wants. Needs, such as food and basic clothing, take precedence over wants like entertainment and designer clothes.
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