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Discretionary Expense


Definition: A discretionary expense can be recurring or non-recurring costs for nonessential items or services. A discretionary expense differs from a variable expense in that variable expenses are expenses required for comfortable living.

For example, the cost of basic clothing is variable because this cost depends on clothes you may need to replace, or clothes you need to buy because you have moved to a new climate. An expensive leather coat is a discretionary expense because a less expensive coat would keep you just as warm.

Discretionary expenses for a small business might be public relations, charitable donations, training and bonuses.

Also Known As: Discretionary Cost
I contributed more toward my vacation savings this year by cutting down on discretionary expenses such as restaurant meals and professional manicures.

All About Spending Categories in Financial Software

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