What is an example of discretionary spending?

Mara Wormington asked, updated on October 26th, 2022; Topic: what is the definition of discretionary spending
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discretionary expense is a cost that a business or household can survive without, if necessary. Discretionary expenses are often defined as nonessential spending. ... Meals at restaurants and entertainment costs are examples of discretionary expenses.

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Similarly, what are 4 examples of discretionary spending?

Some examples of areas funded by discretionary spending are national defense, foreign aid, education and transportation.

Finally, what is an example of discretionary? The definition of discretionary is something that you use as desired or needed. When you have petty cash available to you to use, the money you spend is an example of discretionary spending. Left to or regulated by one's own discretion or judgment.

Then, what is discretionary spending within a budget?

Discretionary spending refers to the portion of the budget that is decided by Congress through the annual appropriations process each year. These spending levels are set each year by Congress. ... By far, the biggest category of discretionary spending is spending on the Pentagon and related military programs.

How does discretionary spending work?

Discretionary spending is spending that is subject to the appropriations process, whereby Congress sets a new funding level each fiscal year (which begins October 1st) for programs covered in an appropriations bill. ... Mandatory spending is simply all spending that does not take place through appropriations legislation.

27 Related Questions Answered

Why is discretionary spending important?

Discretionary income is an important marker of economic health. Economists use it, along with disposable income, to derive other important economic ratios, such as the marginal propensity to consume (MPC), marginal propensity to save (MPS), and consumer leverage ratios.

What is discretionary spending in Congress?

What is discretionary spending? Discretionary spending is controlled through the annual appropriations process and includes funding for both national defense and non-defense.

Why did discretionary spending decrease?

In 2012 and 2013, discretionary outlays declined not only relative to GDP but also in nominal terms. That decline stemmed largely from a waning of spending from ARRA, reduced funding for military operations in Afghanistan and Iraq, and constraints imposed by the Budget Control Act of 2011.

Is Internet a discretionary expense?

Examples of essential expenses We're about to look at a detailed list of discretionary expenses. But first it might help to see some costs that are not optional. These include: ... Utility bills (including Internet costs)

What are discretionary goods?

Consumer discretionary is a term for classifying goods and services that are considered non-essential by consumers, but desirable if their available income is sufficient to purchase them.

What is the main difference between discretionary spending and mandatory spending?

What is the difference between mandatory spending and discretionary spending? Mandatory spending is spending that is required by current law and discretionary spending is spending that must be authorized by the government each year.

What mean by discretionary?

1 : left to individual choice or judgment : exercised at one's own discretion discretionary powers. 2 : available for discretionary use discretionary income.

What is a good discretionary spending?

"I would describe discretionary spending as the fun stuff, the things you want to spend money on, such as going out to eat, buying clothes, gifts, hobbies, entertainment, vacations, things like that," says Amy Jo Lauber, a certified financial planner with Lauber Financial Planning in West Seneca, New York.

Which is the largest item in discretionary spending?

National defense spending As of the fiscal year 2019 budget approved by Congress, national defense is the largest discretionary expenditure in the federal budget.

How do you track discretionary spending?

4 Tips for Tracking Your Discretionary Spending
  • Start using a money management tool. ...
  • Break down spending by category. ...
  • Identify opportunities to cut back on costs. ...
  • Consider placing discretionary funds into a separate bank account. ...
  • When you spend smarter, you save better.
  • Where does discretionary spending come from?

    The authority for discretionary spending stems from annual appropriation acts, which are under the control of the House and Senate Appropriations Committees. Most defense, education, and transportation programs, for example, are funded that way, as are a variety of other federal programs and activities.

    What are the two categories of discretionary spending?

    National defense discretionary spending was $714 billion in 2020, comprising 49% of discretionary spending. Non-defense discretionary spending includes a wide array of programs such as education, training, science, technology, housing, transportation, and foreign aid.

    What is discretionary spending and what are the 2 categories that we divide it into?

    Discretionary spending includes all programs for which funding is annually appropriated by Congress during the budget process. Totaling about one-third of the federal budget, discretionary spending programs can be further divided into two categories: defense and non-defense.

    What is non-discretionary spending?

    As it relates to personal budgets, non-discretionary spending refers to spending on expenses necessary for daily existence. Examples of these expenses include: Rent. Food. Mortgage payments.

    What is discretionary and non-discretionary?

    A discretionary account is an account that gives an investment adviser the authority to make individual trades without the consent of their client. A non-discretionary account is an account where the client always decides whether or not to conduct a trade.

    Is the military discretionary spending?

    Defense spending accounts for more than 10 percent of all federal spending and nearly half of discretionary spending. Total discretionary spending — for both defense and nondefense purposes — is typically only about one-third of the annual federal budget.

    What are the three largest discretionary items in the federal budget?

    Discretionary Spending The largest of these programs are Health and Human Services, Education, and Housing and Urban Development.

    What are some examples of mandatory and discretionary spending?

    For example, the administrative expenses associated with running the Social Security Administration generally are funded with discretionary spending, but the benefit checks sent to retirees and disability recipients enrolled in Social Security programs are classified as mandatory spending.

    Is social security discretionary spending?

    The discretionary budget and taxes are the two main tools of discretionary fiscal policy. The discretionary budget does not include Social Security, Medicare, or Medicaid. These are part of the mandatory budget. These programs were authorized by previous Acts of Congress.

    Is clothing a discretionary expense?

    Some of the expenditures are necessary expenses – food, water, clothing, and shelter. However, most of the expenditures in modern society are discretionary expenses. Most individuals receive some sort of income. The amount of income remaining after paying off all necessary expenses is known as discretionary income.

    How is budget discretionary income?

    For your discretionary income, use 30% for lifestyle expenses, like travel, restaurants and cable TV, and 20% to grow your savings or more quickly pay down debt. If 20% isn't adequate to reach these goals, you move money out of the 30% lifestyle column.

    What is consumer Discretionary example?

    Consumer Discretionary Examples: Apparel, textiles (Nike, Inc.). Food service/lodging (McDonald's Corp., Marriott International, Inc.). Household furniture, appliances (Williams-Sonoma, Inc., Whirlpool Corp.). Leisure-related (The Walt Disney Co., Brunswick Corp.).

    Is McDonald's consumer discretionary?

    Consumer Discretionary Sector Types of consumer discretionary companies include fast-food restaurants, entertainment products and services, clothing and automobiles. Some of the largest companies in this sector include McDonald's, Walt Disney, Amazon.com and Ford Motor Co.

    Is Starbucks consumer Discretionary?

    Below are some top consumer discretionary stocks to consider and a close look at this part of the stock market....Top consumer discretionary stocks.Consumer Discretionary StockDescription of Business
    Starbucks (NASDAQ:SBUX)Coffeehouse chain

    What is the largest category of discretionary spending identity three additional examples of discretionary spending?

    The largest category of discretionary spending is defense spending, which accounts for about half of all the federal government's discretionary spending. Other examples of discretionary spending are spending on education, scientific research, and law enforcement.

    What are the two biggest things that are considered mandatory spending?

    Social Security, Medicare, and Medicaid were the largest individual mandatory expenditures, together accounting for about 78 percent of all mandatory spending. Social Security, Medicare, and Medicaid make up nearly 50 percent of all federal spending.

    What is discretionary spending quizlet?

    Discretionary spending is what the President and Congress must decide to spend for the next fiscal year through annual appropriations bills. Examples include money for such programs as the FBI, the Coast Guard, housing, education, space exploration, highway construction, defense, and foreign aid.