how much of your income is "discretionary" per month (San Diego: apartment, month-to-month)

[Tedsterman]

Best guideline is the 50/30/20 Rule or Must Haves/Wants/Savings

Must Haves: Housing, utilities, food, clothing, healthcare, transportation, etc.
Wants: Entertainment, gym membership, lessons, etc.

As written on an Excel spreadsheet my theoretical budget is:

46%/18%/36%

However after actually tracking all expenses and accounting the actual budget comes to:

46%/26%/28%

Throughout the year leakage occurs in the "wants" column in the form of eating out more than we should and spending on entertainment.

[skeke]

After I have taken care of ALL expenses, mortgage, car insurance, gas, groceries and cleaning supplies, cell phone, internet, cable, land line, water, utilities, hair appointment (yes I am a woman and that is NOT discretionary in my book), and so on, I have about 40% of my net income left for whatever purchases I choose to make or expenses that may come up as well as adding to my savings.

[stan4]

Since we technically have our mortgage bc we are leveraging that amount to do something else and we have no other debt, I guess almost all of it except taxes.

We always have a choice on how much we spend, don't we?

[Pedro2000]

It depends on how you eat and what you eat. Buying local organic produce isn't exactly cheap. So yeah you could save money and buy processed crap, cheap frozen food, pesticide filled GMO induced produce, or eat at Mcdonalds or at a pizza place (pizza is relatively cheap) all the time, and you'd save a lot of money on food. You'd probably have heart and health issues in due time, which suddenly means all those savings were kind of useless. You don't ever have to go to a gym, but if you're obese or overweight, that doesn't do anything for anybody. In a place like SD there are various options to do outdoor activities, but there are limitations.

It all depends to me. There are other things. I don't have cable tv or any of that, but I do use Hulu, Netflix, Amazon Prime, and so on. And that requires an internet. I also work from home a lot, so i depend on the internet and need a faster connection at times. So 70 bucks a month for the internet, which is deductible to me, but still a cost per month.

I honestly don't spend much money on myself. Most of my extra income goes to buying my kids things or visiting family who live back east(various states).. And with two kids and myself, travel costs can get expensive. I have been told by numerous people that I spoil my kids. In a way I do, but in another, when you grow up not having much, or you get handme down clothes or goodwill clothes half your life, i have no issues trying to give them everything.

[Ragnar]

We try to work a zero-balance budget each month, so very little seems discretionary. Every dollar has a place to go and it feels a little bit like we're living paycheck to paycheck, even though we are far from it. We need to say "no" to things more often than we'd like, but it's worth it to meet our savings, investment and other financial/life goals. My wife and I need to sit down before each month and decide where all of the income will go. The conversation can be tough, but it's good to agree on what we plan to spend ahead of time. We have an emergency fund set aside to cover about 6 months of basic living expenses that we can dip into if our budget is busted by a true emergency.

The beauty is that we can have a nice meal out together without feeling guilty about it, and we don't look back on the month and go, "crap," how did we end up spending that much on eating out (again)? If we know we will be traveling and eating out more in a particular month, we put it in the budget ahead of time. We track all of our expenses in Quicken and throughout the month compare them to the monthly budget so we know how we are doing. Sometimes we need to make mid-month adjustments and we find the wiggle room.

There are some things that have a mostly consistent expense from month to month (mortgage, insurance, utilities, retirement savings, etc.), and these items tend to be the non-discretionary ones. However, we still do a zero-based budget each month because in reality the expenses of each month are different, and doing the budget each month allows us to plan for vacations, Christmas home improvements, and other larger expenses.

My wife and I each get a set amount (usually around $75 each) to spend on whatever we want each month, so that would qualify as discretionary. In addition, there are other budgeted purchases that we can usually put off (clothing, dining out, beverages, hobby stuff, kid stuff, home improvement) if more pressing items arise, so those would qualify as discretionary to us as well.

By being disciplined and telling our money where to go, it actually feels like we have more money every month! And if there is budgeted money left over at the end of the month, we have many options - accelerate our mortgage principal payments and other long-term savings, put it toward a larger near-term savings goal like a vacation or car replacement fund, or simply have more fun with it the next month (within that month's budget, of course)!

[earlyretirement]

Originally Posted by Sassberto

Gas is discretionary? Food? Restaurant food, OK. But groceries? Ok some groceries... like craft beer, but is that really discretionary? I mean, it's beer.

Ha, ha. This ^. I didn't see the original post but food/groceries is definitely NOT "discretionary".

It's funny as I've met several people that look at groceries as discretionary but that is totally not the case. Not even addressing the OP here but just generally I have met people that do the total opposite and lump groceries as discretionary and things like expensive gym/country club memberships as necessary/mandatory/required.

Originally Posted by Ragnar

My wife and I each get a set amount (usually around $75 each) to spend on whatever we want each month, so that would qualify as discretionary. In addition, there are other budgeted purchases that we can usually put off (clothing, dining out, beverages, hobby stuff, kid stuff, home improvement) if more pressing items arise, so those would qualify as discretionary to us as well.

By being disciplined and telling our money where to go, it actually feels like we have more money every month! And if there is budgeted money left over at the end of the month, we have many options - accelerate our mortgage principal payments and other long-term savings, put it toward a larger near-term savings goal like a vacation or car replacement fund, or simply have more fun with it the next month (within that month's budget, of course)!

Ragnar as usual nails it. I realize that my wife and I are NOT the norm but we still are somewhat disciplined with most things. The one area we absolutely set no budget is on groceries. I tell her never to worry about whatever she wants to buy, especially for the kids when it comes to food. So we do spend a pretty massive amount of money on food. We spend $2,000 a month on food and we have 2 young kids. Kids love veal (from Whole Foods) and other stuff and stuff like Pediasure is darn expensive. But that's one area that I think is a requirement.

Other things that are more discretionary in nature are things like dining out which I totally agree is discretionary. I don't set a limit on that either and routinely meet up with friends 3 or 4 times each week for lunch/dinner and we have date lunches or nights at least twice a week.

Although we can afford it, we really don't spend much money besides our biggest passion of traveling which we spend a fortune. But other than that all our money mostly goes towards stuff for the kids. Pre school, various extra curricular activities, etc. Health insurance which is mandatory, life insurance which is mandatory if you have kids. Things like kids college savings fund which I put in each month religiously and future retirement savings which is mandatory.

[rgb123]

well that is exactly what I meant -- how much you actually "spend" on groceries and dining out is COMPLETELY discretionary, as none of us are really starving. I doubt most of us truly know how much we spend on groceries and eating out, I think most of our actual spending on food is in fact discretionary in the true sense.

This is really what I was considering, how much of my "living" money is necessary and how much am I overspending where I could cut back. I've tried to budget groceries before but find its very hard as a single person to get it right as some food eventually goes to waste as my plans for the week change in terms of how much I'll eat at home vs. out. I just don't have that predictable of a schedule.

Anyway thanks to everyone for the serious replies.

[rgb123]

Originally Posted by Tedsterman

Best guideline is the 50/30/20 Rule or Must Haves/Wants/Savings

Must Haves: Housing, utilities, food, clothing, healthcare, transportation, etc.
Wants: Entertainment, gym membership, lessons, etc.

As written on an Excel spreadsheet my theoretical budget is:

46%/18%/36%

However after actually tracking all expenses and accounting the actual budget comes to:

46%/26%/28%

Throughout the year leakage occurs in the "wants" column in the form of eating out more than we should and spending on entertainment.

This is interesting, I might need to explore this one further.

A year ago I drastically cut my rent, and I also just recently paid off my car. For the last few months I've had more play money than before and I'm trying to figure out a better budget, and if I want to move back into something more expensive again (which is a real possibility since I work from home and need certain comforts to be productive)

[earlyretirement]

Originally Posted by rgb123

well that is exactly what I meant -- how much you actually "spend" on groceries and dining out is COMPLETELY discretionary, as none of us are really starving. I doubt most of us truly know how much we spend on groceries and eating out, I think most of our actual spending on food is in fact discretionary in the true sense.

This is really what I was considering, how much of my "living" money is necessary and how much am I overspending where I could cut back. I've tried to budget groceries before but find its very hard as a single person to get it right as some food eventually goes to waste as my plans for the week change in terms of how much I'll eat at home vs. out. I just don't have that predictable of a schedule.

Anyway thanks to everyone for the serious replies.

Hi rgb,

I think your question is a good one. Actually I do believe that many people do know more or less what they spend each week/month on groceries. As a society/nation, most Americans are clueless what they spend on junk or everyday stuff. However, I do believe most households know what they spend on groceries each week.

But most people that I know that don't have a clue they spend on everything else DO know what they spend on groceries each week.

[rgb123]

Originally Posted by earlyretirement

Hi rgb,

I think your question is a good one. Actually I do believe that many people do know more or less what they spend each week/month on groceries. As a society/nation, most Americans are clueless what they spend on junk or everyday stuff. However, I do believe most households know what they spend on groceries each week.

But most people that I know that don't have a clue they spend on everything else DO know what they spend on groceries each week.

I'm sure more "households" do but I'm not sure how many single people do. Actually I read a study on it last night, that most people report themselves in a certain "zone" like (thrift, moderate, etc.) but there is a significant portion in the "do not know" and "luxury" type when it comes to food.

oh, and I know how much I spend on food, its just not down to a certain dollar....it varies by month. But I know the ballpark.