Non-Discretionary Purchases

Definition

Non-discretionary purchases refer to goods and services that are essential for survival or basic needs, such as food, housing, healthcare, and utilities.

Analogy

Imagine non-discretionary purchases as the foundation of a house. Just like a strong foundation is necessary for a sturdy house, non-discretionary purchases form the core expenses required for daily living.

Related terms

Discretionary Purchases: Discretionary purchases are optional goods and services that are not essential for survival but can be chosen based on personal preferences or desires.

Fixed Expenses: Fixed expenses are regular payments that remain constant each month regardless of usage or consumption. Examples include rent/mortgage payments and insurance premiums.

Necessities vs Luxuries: Necessities refer to items needed for basic survival while luxuries represent nonessential items that provide additional comfort or enjoyment.