What type of expense can fluctuate in its amount monthly, such as utilities and groceries?

The correct answer is indeed variable expenses. These expenses are characterized by their ability to change in amount from month to month, depending on consumption and personal choices. Utilities, such as electricity and water, can vary due to factors like usage and season, while groceries can fluctuate based on shopping habits, dietary needs, and price changes.

Understanding variable expenses is critical for personal budgeting, as they can directly impact the amount of disposable income available each month. By monitoring these expenses, individuals can make informed decisions about their spending, find areas for potential savings, and adjust budgets accordingly to reflect these fluctuations.

Fixed expenses, in contrast, remain constant over time—such as rent or mortgage payments—while discretionary expenses refer to non-essential items that one can choose to spend money on or forgo. Recurring expenses are regular payments that can be both fixed and variable, but they do not inherently fluctuate in amount like variable expenses do.