Glossary
Fixed Cost
High fixed cost is one of the biggest reasons for a tight budget. It removes flexibility even before the month starts.
Practical example
If you earn $ 4,500 net and have $ 3,200 in fixed costs, you have $ 1,300 left for groceries, transportation, leisure, reserve, and unforeseen events. The margin is small.
Relation to personal finances
Keeping fixed costs below 60% of net income usually provides more security. Above that, any variation becomes pressure on the card.