Discretionary Spending
BudgetingGlossary term
Definition
Non-essential expenses you choose to make, such as dining out, entertainment, subscriptions, and hobbies. This is the most flexible part of a budget and usually the first area to cut when trying to save more or reduce expenses.
Related terms
- Needs vs WantsA fundamental budgeting concept distinguishing between essential expenses required for survival and well-being (needs) and non-essential expenses for comfort or enjoyment (wants). The 50/30/20 rule suggests allocating 50% to needs, 30% to wants, and 20% to savings.
- Variable ExpensesCosts that fluctuate from month to month, such as groceries, utilities, gas, and entertainment. Tracking variable expenses closely helps identify spending patterns and opportunities to save.
- BudgetA financial plan that outlines expected income and expenses over a specific period. Creating and following a budget is essential for managing money and achieving financial goals.
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