What is the difference between discretionary and disposable income?
Regarding this, what is the discretionary income?
Discretionary income is the money you have left over from your post-tax income after paying for necessary expenses like rent, utilities and food. That means you have $1,500 of essential expenses and $1,500 in discretionary income, which you can put toward discretionary expenses.
Also Know, what is an example of disposable income? disposable income. noun. Disposable income is defined as money that a person has left over to spend as he wishes after all of his required expenses have been paid. An example of disposable income is the $100 left in your checking account once all of your bills have been paid.
Similarly, you may ask, what is monthly disposable income?
Also known as disposable personal income (DPI) or “take-home pay,” disposable income, is the amount of money available after taxes and other employee deductions have been taken out of your paycheck. It's not truly “disposable” because it has to cover your family's most essential needs each month.
What is good disposable income?
Many experts say your necessities—rent or mortgage payment, food, taxes—should account for only 50 percent of your budget, while discretionary spending should account for 30 percent or less. The remaining 20 percent should be used for other financial goals, such as paying off debt, saving, or investing.