Discretionary Spending
Quick Answer
Discretionary spending is money spent on non-essential items and services, representing the flexible portion of a budget.
Definition
Discretionary spending is money spent on non-essential items and services, representing the flexible portion of a budget.
Explanation
Discretionary spending includes dining out, entertainment, travel, hobbies, luxury items, and subscriptions. In the 50/30/20 budget rule, 30% of income goes to wants (discretionary spending). Reducing discretionary spending is the easiest way to increase savings.
Tracking discretionary spending often reveals surprising totals. A spending freeze for 30 days can reset habits and identify what truly adds value.
Example
Cutting $200 monthly in discretionary spending ($50 on dining, $50 on subscriptions, $100 on entertainment) saves $2,400 per year.
Frequently Asked Questions
What is Discretionary Spending?
Discretionary spending is money spent on non-essential items and services, representing the flexible portion of a budget.
How does Discretionary Spending work?
Discretionary spending includes dining out, entertainment, travel, hobbies, luxury items, and subscriptions. In the 50/30/20 budget rule, 30% of income goes to wants (discretionary spending). Reducing discretionary spending is the easiest way to increase savings.Tracking discretionary spending often reveals surprising totals. A spending freeze for 30 days can reset habits and identify what truly adds value.
Can you give an example of Discretionary Spending?
Cutting $200 monthly in discretionary spending ($50 on dining, $50 on subscriptions, $100 on entertainment) saves $2,400 per year.
Free Excel Templates
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