ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Some expenses, such as vacation costs and luxury items, are not necessary to maintain a household and, thus, are classified as discretionary expenses. In other words, the income-earner can pay for these goods or services at their own discretion.

Detailed explanation-2: -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-3: -What are Non-Discretionary examples? Examples of these expenses include: rent, food, or mortgage payments. In contrast, discretionary spending refers to non-essential expenses, such as hobbies and travel.

Detailed explanation-4: -These are optional expenses that one makes normally during a month. These spending are done basis wants rather than needs. For instance, the expenses incurred while going out for diner, buying luxury items for home decor, going on a trip, etc. comes under non-essential or discretionary expenses.