Discretionary income is the money that you have left over after you have paid for your essential living costs, such as food, shelter and clothing. This money can be used for anything you want, including savings, investments, or luxury purchases.
Discretionary income is often used as a measure of someone's financial well-being. The more discretionary income you have, the more choices you have in how you spend your money.
There is no set definition of what counts as discretionary income, and it can vary from person to person. For some people, it may include money for travel or entertainment, while for others it may be limited to funds for retirement savings or debt repayment.
The amount of discretionary income you have can also change over time, depending on your circumstances. For example, if you get a raise at work or have a baby, your living costs will go up and you may have less money left over for discretionary spending.
How much discretionary income do you need?
There's no definitive answer to this question since everyone's budget and spending habits are different. However, as a general rule of thumb, you should aim to have at least 3-6 months of living expenses set aside in savings as your discretionary income. This will give you a cushion to cover unexpected costs or take advantage of opportunities that come up, without putting your financial stability at risk.
What is the 50 30 20 budget plan? The 50 30 20 budget plan is a simple way to budget your money. You start by allocating 50% of your income to your essential expenses, such as rent, food, and transportation. Then, you set aside 30% of your income for your discretionary expenses, such as entertainment and dining out. Finally, you save 20% of your income for your long-term financial goals, such as retirement or a rainy day fund.
This budgeting method can help you get a handle on your spending and ensure that you are meeting your financial goals. It can also help you stay within your means and avoid debt.
Is a car payment considered discretionary income?
Discretionary income is the amount of money that you have left over after you have paid for all of your necessary expenses, such as housing, food, and transportation. A car payment would not be considered a necessary expense, so it would fall into the discretionary income category. What are 2 examples of discretionary spending? 1. Entertainment: Movies, concerts, sporting events, etc.
2. Dining out: Meals at restaurants, fast food, etc. What are the three largest discretionary items in the federal budget? The three largest discretionary items in the federal budget are:
1. Social Security
2. Medicare
3. Medicaid