What is an example of discretionary income?
Simply so, what is considered 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.
Likewise, how do you spend discretionary income? Discretionary Income: 5 Smart Ways to Spend It
- Pay Off Debt. This is probably the least fun way to spend discretionary income because you won't have anything tangible to show for it.
- Meet With a Fee-Only Financial Planner.
- Open a 529 Plan for Your Child.
- Invest in Your Home.
- Take a Vacation.
Additionally, what is discretionary income answers?
Discretionary Income. On the other hand, discretionary income is the amount of income a household or individual has to invest, save, or spend after taxes and necessities are paid. The individual has transportation, rent, insurance, food, and clothing expenses totaling $35,000 a year. His discretionary income is $30,000
What does 10 of your discretionary income mean?
For a simple example, let's say your annual discretionary income is $12,000 and you're on PAYE. That means 10% of your discretionary income would be your student loan repayment amount. $12,000 * 10% = $1,200 per year. So, your monthly payment would be $100.