What are "discretionary expenses"?

Discretionary expenses refer to non-essential expenditures that individuals can adjust or eliminate from their budgets based on their financial situation or personal preferences. These expenses often include things like entertainment, dining out, vacations, and luxury items. The nature of discretionary expenses allows individuals the flexibility to prioritize their spending according to their needs and goals, thereby making them an important aspect of personal finance management.

For example, if someone finds themselves needing to cut back on spending, they may choose to reduce their dining out or limit their entertainment expenses while still covering their essential needs like housing and utilities. This is why the understanding of discretionary expenses is crucial for creating a balanced budget that aligns with one’s financial objectives.