discretionary income



Portion of an entity's income available for saving, or spending on non-essentials. It is what remains after expenses for basics (such as food, clothing, shelter, utilities) and prior commitments (such as school fees and loans) are deducted from the disposable income. Total amount of discretionary income in an economy is a key indicator of the level of possible economic growth and is the target of all commercial advertising. Also called hot money.

Use this term in a sentence

  • Alyssa did not have any discretionary income to spend or save, so she decided to get a part time job at the local coffee shop.

    4 people found this helpful
  • When your company has some excess discretionary income that may be the right time to try a risky business venture.

    8 people found this helpful
  • After budgeting for necessary expenses, you should still budget for retirement and an emergency fund before starting to spend your discretionary income.

    9 people found this helpful
Show more usage examples...

Related Videos


Have a question about this term? Ask for help in the
Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z