ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A discretionary expense is a non-essential expense that is incurred by an individual, household, or business. Another way to think of discretionary expenses is to classify them as “wants” instead of “needs.” A common example is when an individual purchases a new smartphone whenever the latest edition comes out.

Detailed explanation-2: -Understanding Discretionary Expenses In simpler terms, non-discretionary expenses are those that are necessary to be incurred, also called as needs such as utilities, groceries, mortgage, taxes, etc. Discretionary expenses are those that one can do without and are beyond the needs of a person.

Detailed explanation-3: -Some examples of areas funded by discretionary spending are national defense, foreign aid, education and transportation.

Detailed explanation-4: -Still, fixed costs are tough to reduce in the short term. By contrast, discretionary expenses-like vacations, entertainment and eating out-can be quickly eliminated if the need arises. That need might arise if you find yourself out of work or you suddenly need to pay for, say, a major home or car repair.