What is a common example of a variable expense?

Utility bills serve as a common example of a variable expense because they fluctuate based on usage. The amount owed can vary from month to month depending on factors such as the season, energy consumption, or changes in household size. This unpredictability distinguishes variable expenses from fixed expenses, which remain consistent regardless of usage but are obligations that must be paid each month.

In contrast, rent or mortgage payments represent fixed expenses because the amount due usually remains constant over the lease term or loan period. Similarly, insurance premiums typically don't change frequently and are often set for a specific term, making them fixed expenses as well. Car payments also fall into the category of fixed expenses, as they are predictable monthly obligations defined by the terms of a loan or lease agreement. Therefore, utility bills correctly exemplify a variable expense due to their inherent fluctuations.