 TITLE: What Is Discretionary Spending? CONTENT: What Makes Up a Budget?\n-----------------------\nA budget includes all of your monthly expenses, and it's a way of comparing how much money you spend with how much you make. Keeping a budget allows you to see whether you're spending more than you earn, and helps you take steps to change things if you are.\nWhen you make a budget, you can break your costs into two categories: necessary expenses and discretionary expenses.\n**Necessary expenses** include the non-negotiable costs you need to cover each month, such as:\n*   Rent or mortgage\n*   Utilities\n*   Groceries\n*   Car loan\n*   Commuting costs\n*   Insurance premiums\n*   Prescriptions\n*   Student loan payments\n*   Credit card payments\n*   Personal loan payments\n**Discretionary expenses**, on the other hand, are the nice-to-haves. You can think of discretionary expenses as quality-of-life purchases. They're purchases that are important to leading a satisfactory life, but that you could go without if push came to shove. Discretionary expenses include a broad range of costs and purchases, and the amount you spend in this category can vary greatly from month to month.\nHere are some common discretionary expenses that may appear in your budget:\n*   Restaurant meals, including dine-in and takeaway\n*   Meal kit subscriptions, such as Blue Apron or HelloFresh\n*   Gym memberships\n*   Personal grooming services, including hair and salon visits\n*   Luxury clothing and accessories\n*   Books, magazines and other media\n*   Music or TV\/movie streaming subscriptions, such as Netflix, Spotify, Pandora or Disney+\n*   Online movie rentals or movie theater tickets\n*   Concert tickets\n*   Subscription boxes, such as FabFitFun or BarkBox\n*   Travel costs, including airline tickets and hotel bookings\n*   Birthday gifts\n*   Holiday expenses, including gifts, baking supplies, cards, postage and the like\nWithout a budget that tracks your fixed and discretionary expenses, these costs can run together and cause you to lose sight of how your spending aligns with your income. If you spend too much on discretionary items and don't leave enough room for your necessary expenses, you could miss payments and risk harm to your credit, or worse.\nBut remember: Just because an expense is non-essential doesn't mean it's not important. For instance, your gym membership may be integral to your physical and mental health.\nA budget helps you see exactly what your finances look like, and it allows you to adjust your lifestyle expenses as needed to manage your money, build savings and avoid debt. END