Non-discretionary Expenses
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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 costs?
What are Discretionary Fixed Costs?
- Market research and advertising campaigns
- Training and development programs for employees
- Research and development for specific products
What are some examples of non recurring expenses?
Types of Non-Recurring Items
- Infrequent or Unusual Items. The first type of non-recurring item is Infrequent or Unusual Items. ...
- Extraordinary Items (Infrequent and Unusual) Extra-ordinary Items are both infrequent & unusual and are reported net of income tax. ...
- Discontinued Operations. ...
- Changes in Accounting Principles. ...
Which of these is an example of discretionary spending?
What are 2 examples of discretionary spending? 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.
What is not a discretionary expense?
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. These are generally considered wants, while non-discretionary expenses are usually referred to as needs.
What are non-discretionary items?
Non-Discretionary Items means expenditures payable by the Partnership for taxes, utilities, insurance, debt service and expenses or other amounts required to be paid by the Partnership under contracts or agreements of the Partnership.
What are some 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...•
Is insurance a non-discretionary expense?
Non-Discretionary Expenses means expenses Borrower is required to pay for taxes, insurance premiums and utilities serving the Property, to the extent not included in the Approved Budget or Interim Budget, as applicable.
What is the difference between discretionary and nondiscretionary?
Difference between a discretionary and nondiscretionary bonus. Unlike a discretionary bonus, the nondiscretionary bonus does have specific criteria the employee must meet to qualify for the bonus. The employer predetermines the criteria and the employees expect to earn the bonus if they meet the criteria.
Is eating out a discretionary expense?
Discretionary Expenses So, groceries are a variable expense, but dining out is a discretionary expense. Examples include: Entertainment. Dining out at restaurants.
What is non discretionary income?
Non-discretionary income is used to pay for necessities such as rent, loans, clothing, food, bill payments, goods and services, and other typical expenses. For example, suppose an individual has an income of $100,000 and pays an income tax rate of 35%.
What are the 4 types of expenses?
Terms in this set (4)Variable expenses. Expenses that vary from month to month (electriticy, gas, groceries, clothing).Fixed expenses. Expenses that remain the same from month to month(rent, cable bill, car payment)Intermittent expenses. ... Discretionary (non-essential) expenses.
Is gas a discretionary expense?
Although variable costs are quite often discretionary expenses, some may be necessities. Buying gas for your car each month is a variable expense, as are car repairs and maintenance. Grocery shopping is also a variable expense.
Is Medicare discretionary spending?
Discretionary spending does not include expenses for Medicare, Medicare, TANF, and other mandatory programs. By law, these are fixed expenses of the government budget.
Which two expenses are considered variable non discretionary expenses?
Variable, nondiscretionary expenses are as follows: Food. Utilities....Show Me the MoneyFood.Utilities.Entertainment.Vacations.
What is a non discretionary account?
Non Discretionary Accounts. 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.
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 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).
What is the best practice for every business?
First and foremost the reduction of expenses is the best practice that every business should apply, and I applaud you for that question. There are ways to reduce it but it depends on what aspect you want to reduce the cost without affecting the productivity.
What is a HELOC loan?
A home equity line of credit (HELOC) gives you access to cash through a portion of the equity you’ve built in your home. The amount of credit is determined by a combination of your home’s value and your remaining mortgage balance. There can be several advantages to HELOCs, including low-i
What is front ratio?
That is often referred to as your housing expense or front ratio.
How much money do you need to save for emergencies?
You need to save 6–12 months of living expenses for emergencies like injury or job loss so problems don’t lead to bankruptcy or ruin your retirement.
What is the 7S technique?
Practice the 7S Technique. (Sort/Clearing. Set/Organize, Shine/Sweep, Standardize, Sustain, in that case you maintain the Spirit/Strength and Safety/Security). That’s how we practice this positive attitude. The basic foundation of Quality Management System or the ISO 14001.
Why do we need to buy a home?
You need to buy a home as a hedge against the cost of living increasing where you want to live faster than the rate of inflation.
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.
What is the 50-30-20 budget?
One popular budgeting option—the 50-30-20 budget—involves dividing in the following manner: 2 . 50% for household spending, including fixed and variable expenses. 30% for your wants or discretionary spend items.
Why is sticking to your budget so hard?
If sticking to your budget is challenging because you've already slashed discretionary expenses, consider cutting fixed costs to help you stick with your financial plan. The key is to make sure that the total amount of your expenses doesn't exceed the income available to you and budgeting for savings.
Why is it important to make a budget?
Making and following a budget can help increase your financial security and build wealth. 1 . Whether you’re budgeting for the first time or updating your existing spending plan, it's essential to account for your income sources and your expenses. Every month, you probably spend in these categories: Fixed expenses. Variable expenses.
What is fixed expense?
Fixed Expenses. Fixed expenses are necessary ongoing costs that don't change in amount or frequency. They might arrive monthly, twice a year, or once a year. For example, you may pay insurance premiums twice a year, but the payment is identical and predictable. Some common examples of fixed expenses include:
How to reduce variable expenses?
For example, you need clothing, but you can reduce costs by switching to shopping at consignment shops instead of buying brand-name items from more expensive stores.
Should variable expenses be reduced?
Variable expenses should come next since these are also required costs. Reducing variable expenses can be easier than reducing fixed expenses. If you want to cut energy costs, you could lower the thermostat setting or unplug power-hungry (but infrequently used) appliances.
Is dining out a discretionary expense?
So, groceries are a variable expense, but dining out is a discretionary expense. Some expenses can contain discretionary, variable, and fixed categories. For example, you may need a cell phone for work or health reasons. Choosing between a brand-new phone or an inexpensive or refurbished phone is a variable expense.
What is discretionary income?
Most individuals receive some sort of income. The amount of income remaining after paying off all necessary expenses is known as discretionary income. It can be spent on goods and services or saving/investing at the individual’s discretion. Also, various essential expenses exist.
How does leverage work?
Leverage comes in two main forms: 1 Operating leverage is applied when a company takes on more fixed costs as opposed to variable costs. This amplifies the impact of revenue increases flowing to the bottom line. However, it also amplifies the impact of revenue decreases. 2 Financial leverage is applied when a company takes on more debt. It amplifies the impact of revenue increases and decreases flowing to the bottom line.
What are some of the expenses that people spend without thinking about it?
spend a lot without even thinking about it. 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.
What will be the first expenses cut in a recession?
If a recession occurs, discretionary expenses will be the first expenses to be cut by a business.
What is cyclical business?
Companies that sell discretionary products or that provide discretionary services are fairly cyclical businesses. It means that their revenues and earnings fluctuate over time.
What is an economy made of?
An economy is made up of many households and individuals. The economy grows through increased production and spending, and the individuals within a market-based economy. spend a lot without even thinking about it. Some of the expenditures are necessary expenses – food, water, clothing, and shelter.
What is the difference between a product and a service?
Products and Services A product is a tangible item that is put on the market for acquisition, attention, or consumption while a service is an intangible item, which arises from. . Necessary items are price inelastic since no matter how much they are, we are still going to pay for them.
Why is it important to track discretionary expenses separately from essential ones?
That's why it's a good idea to track discretionary expenses separately from essential ones so that it is easy to see how costs can be reduced.
Why are discretionary expenses the first to go?
Discretionary expenses are normally the first to go because stopping them is unlikely to have a major impact on a business or household. In a corporate environment, discretionary expenses are usually costs linked with promoting or boosting a company’s standing in the market.
What is discretionary income?
Businesses and individuals pay for discretionary expenses with discretionary income —the amount of money left over after paying for housing, food, taxes, and other necessities. When times are good, people have more money to spend, and they normally do so on things they don't need, such as luxury items and other services—cars, vacations, restaurants, entertainment, electronics, etc.
Why is it important to track discretionary expenses?
Tracking discretionary expenses enables businesses and households to identify where they can save money in times of financial difficulties.
What are essential expenses?
Certain expenses, though, must be paid to keep things running, such as housing costs, taxes, and health insurance for individuals and payroll, warehousing costs, and transport for businesses. These are considered essential expenses, as the income-earner must pay them on a regular basis or else suffer the consequences.
What are hobbies and sports related expenses?
Hobby and sports-related expenses, such as crafting, sewing, and gym memberships
Is discretionary expense subjective?
What constitutes a discretionary expense is subjective. As such, it may differ considerably among individuals and businesses. For example, a stable, well-established company could probably get away with slashing its advertising budget for a while if the need arises. A new company facing hardship, on the other hand, would probably need to make cutbacks elsewhere, being mindful that boosting exposure and getting its name out there is imperative to keeping the business afloat.
What is discretionary spending?
Discretionary spending applies to costs and expenses that are non-essential.
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.
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 do business leaders care about budgets?
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.
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 hand in hand with team perks?
Hand-in-hand with team perks is the need to offer a comfortable work environment. Modern offices can include everything from cosy couches and painted slogans to darkened nap rooms.
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.
What are non discretionary expenses?
Non-discretionary Expenses. Expenses that are mandatory to maintain your quality of life. These included fixed expenses that are uniform and predictable over time such as rent. Non-discretionary expenses also include variable expenses that are unpredictable and bumpy such as out-of-pocket medical fees. Administration Fees.
What is personal expense?
Personal expenses are personal or family costs that are immediately consumed. This can be contrasted with costs that are an investment in the future such as purchasing land. The following are common examples of personal expenses.

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…