Discretionary Purchases

Definition

Discretionary purchases refer to goods and services that are not essential for survival or basic needs, but are optional and can be chosen based on personal preferences or desires.

Analogy

Think of discretionary purchases as the toppings on a pizza. While the crust and sauce are necessary, the choice of toppings like pepperoni or mushrooms is discretionary and depends on individual taste.

Related terms

Non-Discretionary Purchases: Non-discretionary purchases are essential goods and services that are necessary for survival, such as food, housing, and healthcare.

Disposable Income: Disposable income is the amount of money an individual has available to spend or save after taxes have been deducted from their income.

Luxury Goods: Luxury goods are high-end products or services that are not considered necessities but provide additional comfort or prestige. Examples include designer clothing, luxury cars, and expensive vacations.