What are considered discretionary expenses?

Discretionary expenses are often defined as nonessential spending. This means a business or household is still able to maintain itself even if all discretionary consumer spending stops. Meals at restaurants and entertainment costs are examples of discretionary expenses.

What are examples of non-discretionary expenses?

Non-discretionary spending is essential and non-negotiable spending defined within a budget. What are Non-Discretionary examples? Examples of these expenses include: rent, food, or mortgage payments. In contrast, discretionary spending refers to non-essential expenses, such as hobbies and travel.

What are two discretionary expenses?

A discretionary expense is voluntary spending. You want to buy something, but it isn’t mandatory. Entertainment and recreational purchases fall into this category. On the other hand, bills such as rent, mortgage payments and utilities are nondiscretionary expenses. You have to pay those.

What is a discretionary example?

The definition of discretionary is something that you use as desired or needed. When you have petty cash available to you to use, the money you spend is an example of discretionary spending.

What is not a discretionary expense?

Expenses are split into two categories – discretionary and non-discretionary. In simpler terms, non-discretionary expenses are those that are necessary to be incurred, also called as needs such as utilities, groceries, mortgage, taxes, etc.

Which are examples of discretionary spending?

Some examples of areas funded by discretionary spending are national defense, foreign aid, education and transportation.

Are car payments discretionary?

Disposable income is the money you have available to spend after your employer withholds taxes from your paycheck. It doesn’t account for any necessary bills you have like rent or car payments. Discretionary income is your remaining money available after subtracting necessary bills from your income.

What are the 4 types of expenses?

Terms in this set (4)

  • Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).
  • Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)
  • Intermittent expenses. …
  • Discretionary (non-essential) expenses.

Are groceries discretionary spending?

Discretionary Expenses
To determine whether something is a discretionary expense, consider whether it’s a want or a need. You need food, but you don’t need it to come from a restaurant. So, groceries are a variable expense, but dining out is a discretionary expense.

What are optional expenses?

These are optional expenses that one makes normally during a month. These spending are done basis wants rather than needs. For instance, the expenses incurred while going out for diner, buying luxury items for home decor, going on a trip, etc. comes under non-essential or discretionary expenses.

Is rent a discretionary expense?

While rent, mortgage payments, and groceries are necessary, discretionary expenses are those you incur voluntarily such as dining out or cable television. Your discretionary spending budget is only as big as the income you have available to fund it.

What are the 5 types of expenses?

The several types of expenses are:

  • Cost of Goods Sold.
  • Operating Expenses.
  • Financial Expenses.
  • Extraordinary Expenses.
  • Non-Operating Expenses.
  • Non-Cash Expenses.
  • Prepaid Expenses.
  • Accrued Expenses.

Is gas a discretionary expense?

Although variable costs are quite often discretionary expenses, some may be necessities. Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Grocery shopping is also a variable expense.

What are the 3 categories of expenses?

There are three major types of expenses we all pay: fixed, variable, and periodic. Do you know the difference?

Is a cell phone bill a fixed or variable expense?

Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. Car insurance, home insurance and life insurance are also fixed payments, along with your monthly electric and water bills.

Which of the following best defines discretionary income?

Discretionary income is the amount of an individual’s income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.