Non-Discretionary or Mandatory Spending
- Living Expenses
- Debt
- Taxes. Taxes fluctuate as you age as they shift from salaried income to capital-gains rates. It’s important to have money set aside for annual taxes.
- Insurance and Health Care. Health care costs tend to rise faster than inflation and can be a big expense as you age. ...
What is discretionary and non-discretionary spending?
Discretionary and non-discretionary spending are terms used to describe the categories of expenses you use daily in life . Some expenses are necessary, such as your rent, mortgage and utilities; others are more luxury or 'frivolous' purchases, such as your daily coffee or the cost of your golfing or traveling.
What are some examples of discretionary spending?
Discretionary spending refers to purchases that aren’t considered essentials. It is what people often spend money on after they’ve settled their obligations like bills and debt. Discretionary spending are expenses that an individual doesn't require to live. Some examples include recreation and entertainment activities.
What are some examples of discretionary costs?
Examples of Discretionary Costs. Examples of discretionary costs are advertising, building maintenance, contributions, employee training, equipment maintenance, quality control, and research and development. Terms Similar to Discretionary Cost. A discretionary cost is also known as a managed cost or a discretionary expenditure. Related Courses
Which of these is an example of discretionary spending?
There are two types of discretionary spending: defense and non-defense. Defense spending is funding for the Department of Defense and other related agencies, which makes up a bulk of the entire budget. Non-defense discretionary spending is everything else, such as education, transportation, and environmental protection. There are pros and cons to discretionary government spending.
What is total expense?
Can you have two incomes if you plan to reproduce?
Is a car payment considered discretionary?
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What are considered non-discretionary expenses?
Expenses are divided into several categories, namely non-discretionary and discretionary. While non-discretionary expenses are considered mandatory—housing, taxes, debt, and groceries—discretionary expenses are any costs incurred above and beyond what is deemed necessary.
What are examples of discretionary expenses?
These include:Taxes.Employee salaries.Debts repayments (including loans and mortgages)Rent.Utility bills (including Internet costs)Inventory (especially for retail and other businesses that sell physical goods)Software that directly powers your business.More items...•
What are non-discretionary items?
Non-discretionary: Goods or services which are purchased because they meet a basic need (food, shelter, healthcare), are required to maintain current living arrangements (car maintenance, school fees), or are a legal obligation (compulsory insurance, stamp duty).
Which two expenses are considered variable non-discretionary expenses?
Variable, nondiscretionary expenses are as follows: Food. Utilities....Show Me the MoneyFood.Utilities.Entertainment.Vacations.
Is clothing a discretionary expense?
Clothes. While clothes do service a function and meet basic living needs, they are also a prominent category for discretionary spending.
What is a discretionary example?
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. adjective.
What does non discretionary mean?
Definition of nondiscretionary : not left to discretion or exercised at one's own discretion : not discretionary nondiscretionary purchases such as food and housing During the first half of the 1990s, Americans were forced to spend more for certain nondiscretionary items …— Cheryl Russell.
Is gas a discretionary expense?
Non-Discretionary or Mandatory Spending Rent. Groceries. Gas. Utility bills.
Are car payments discretionary?
Discretionary income is the amount you have left over after paying for essentials, such as rent, food, utilities, car, and insurance payments.
What are 5 examples of variable expenses?
Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.
What is the primary difference between non discretionary and discretionary activities?
A nondiscretionary bonus is the opposite of a discretionary one. The employer predetermines the specific criteria that is required to receive a bonus, and employees expect to earn the bonus if they meet the criteria.
What is an example of 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.
Is a phone bill a discretionary expense?
Like there are different types of finance, discretionary expenses can take many forms and may include: Electronics, such as a television or a phone upgrade.
Is an example of a discretionary fixed cost expense?
Examples of discretionary fixed costs include advertising, research, public relations, management development programs, and internships for students. Discretionary fixed costs can be cut for short periods of time with minimal damage to the long-run goals of the organization.
What can discretionary funds be used to pay for?
Nondefense discretionary spending funds an array of federal activities in areas such as education, transportation, income security, veterans' health care, and homeland security. Over the past four decades, spending in that category has generally ranged from about 3 percent to 4 percent of GDP.
What is discretionary spending?
In contrast, discretionary spending refers to non-essential expenses, such as hobbies and travel.
What is a non-discretionary account?
In finance, a non-discretionary account is a brokerage account that requires client permission for each trade made by a broker. Thus, the broker would have to contact the client for each trade. A discretionary account, on the other hand, allows brokers to initiate and close trades without client permission.
Is research and defense discretionary spending?
Funding for research and defense is considered discretionary spending.
Who is True Tamplin?
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
What is non discretionary expense?
Non-Discretionary Expenses means those Operating Expenses, the payment and amount of which are not within the discretion of Owner or Manager, including without limitation utility charges, salaries and benefits of Property employees, scheduled payments of principal and interest on indebtedness encumbering the Property, real estate and personal property taxes and assessments, insurance premiums, amounts due and payable under service contracts and other agreements entered into in accordance with any Annual Plan, and Operating Expenses required to be paid by Legal Requirements or Insurance Requirements.
Does an agent pay for expenses from the operating account?
Except as otherwise provided herein, Agent will pay in a timely manner all expenses for the Property from the Operating Account to the extent that the expenses are contemplated in the Annual Budget, constitute Emergency Expenses or Non-Discretionary Expenses or are otherwise approved by Owner.
Can a manager pay non discretionary expenses?
If a Proposed Budget is not approved, Manager may, nevertheless, pay Non-Discretionary Expenses. Notwithstanding the foregoing, the Managing Member shall have the right to call for an additional Capital Contribution by the Members without the consent of any Member if the Managing Member determines that additional Capital Contributions are required ...
Can an agent incur emergency expenses?
Agent may, at any time, incur Emergency Expenses and, subject to the provisions of this paragraph, Non-Discretionary Expenses without Owner's prior approval.
Why is it important to track discretionary expenses separately from essential expenses?
Tracking discretionary expenses separately from essential expenses makes it easy to see where, and to what degree, expenses can be reduced.
What is discretionary spending?
Discretionary and non-discretionary spending are terms used to describe the categories of expenses you use daily in life. Some expenses are necessary, such as your rent, mortgage and utilities; others are more luxury or ‘frivolous’ purchases, such as your daily coffee or the cost of your golfing or traveling. A simpler way of thinking of the difference between discretionary and non-discretionary expenses is differentiating the categories as “wants” compared to “needs.”
Why is it important to have a good idea of your daily, monthly and yearly spending?
As you approach retirement, it’s important to have a good idea of your daily, monthly and yearly spending so that you can have a good idea of your overall budget and expenses to help project what you will spend in retirement—and save and invest accordingly.
Do you have to pay down the principal balance of a loan?
Any loans or credit you’ve taken out that you’ll need to continue to pay down the principal balance with periodic interest payments, including:
What are discretionary marketing costs?
Discretionary marketing costs include: Advertising (online and more traditional) Events (attending or exhibiting at trade shows, and hosting your own) Video production. Agencies and freelancers.
Why does discretionary spend matter?
The main reason that business leaders care about all of this is that, when it’s time to balance the budget, cost-cutting usually has to come from discretionary funds. By definition, you can’t cut essential costs without really shaking things up.
What is the most important thing to think about when making discretionary payments?
The most important thing to think about is how people make discretionary payments: Your strategic spend - salaries, raw materials, and other fixed costs - are predictable. They’re made on the same day each month, to the same people, in the same way. Once they’re set up, they pretty much run themselves.
Why is it so hard to manage costs?
Because costs are so varied, it’s hard to manage them all (especially for your finance teams) Most importantly, you need to take these expenses seriously. Keep a close eye on what's spent, and why, and ensure that company finances are respected as they should be.
What is a must have for a spend management system?
In order to track spending properly, your system needs to give you: Flexible ways to spend (virtual cards for online, physical cards, invoice processing tools, and more) Variable limits and budgets because each team should have its own set amount.
Do discretionary costs need to be paid?
In fact, many of these costs really do need to be paid if you want to have any kind of long-term success.
Is marketing discretionary or optional?
Marketing. Marketing is a classic example of something that is discretionary but not optional. You simply don’t stand a chance of succeeding without some sort of marketing strategy and a little money to back it up. But what makes most marketing a classic discretionary expense is just how variable it can be.
What is total expense?
The total expense or back ratio is the minimum amounts due on your credit cards, installment loans, school loans (1% if you are deferring them unless you are doing a VA loan) child support, alimony and any back tax or other defaulted repayment arrangements you have made plus the housing expenses (Housing expenses).
Can you have two incomes if you plan to reproduce?
You shouldn’t count on two incomes if you plan to reproduce. All of one person’s wages may be required to buy acceptable child care from other people, and you may prefer one person staying home.
Is a car payment considered discretionary?
You could try to lower your light bill by doing things to winterize your house, but it is still considered non discretionary because don’t have ultimate control over the expense. On the flip side, if you decided to buy a cheaper car to stay below your budget, then the car payment is non discretionary because you already used your discretion in buying a less expensive car (assuming a car is essential where you live).
Non-Discretionary Expenses
- As it relates to personal budgets, non-discretionary spending refers to spending on expenses necessary for daily existence. Examples of these expenses include: 1. Rent 2. Food 3. Mortgagepayments In contrast, discretionary spending refers to non-essential expenses, such as hobbies and travel. For example, going to a movie or buying an expensive gif...
Non-Discretionary in Legal Contracts
- As it relates to legal contracts, non-discretionary spending is spending required by a contract, budget, and other lawful commitments. For example, the budget for a government department may set aside a certain amount for environment-related initiatives as non-discretionary spending.
Non-Discretionary Expenses Explained
- Within the U.S. budget, non-discretionary spending is referred to as mandatory spending and includes spending on social service programs, such as social security, Medicaid and Medicare. Funding for research and defense is considered discretionary spending. As the U.S. population grows older, the share of mandatory spending is expected to rise relative to discretionary spendi…