Money words

What is discretionary spending? Meaning, examples and how to budget it

Discretionary spending is money spent on things you choose, not things you must have. Here is what counts, how it differs from needs, and how to budget it.

Checked October 22, 2026

Discretionary spending is consumer spending on things beyond necessities, like dining out, streaming and vacations. Cambridge names food, clothes and fuel as necessities.

What discretionary spending is

The Cambridge English Dictionary defines discretionary spending as consumer spending on things other than necessities, and gives food, clothes and fuel as examples of necessities. Put simply, it is the spending you get to decide on.

The Consumer Financial Protection Bureau (CFPB) has no glossary entry for the term, but it defines the two sides. Its needs start with what people must have to survive, such as food, clothing and shelter, and also cover what a person needs for work and for protecting their money and property. Wants are the upgrades and nice-to-haves that living, earning and protecting what you have do not depend on. This site treats discretionary spending as, roughly, the wants.

How it shows up in your budget

Dining out, streaming services, hobbies, concerts, vacations and gifts are the usual examples. The gray ones are lines where a need and a choice share a bill, like groceries, a phone plan or a haircut. Splitting those lines in two gives you a smaller, more honest wants number.

Because it is the part you can change quickly, discretionary spending is a natural place to look when a month runs over.

A made-up month of wants, worked out

Eating out: $200
Subscriptions: $40
Fun: $200
Clothes: $100
Trips fund: $160
Total wants: $700
On $3,500 of take-home pay: $700 / $3,500 = 20%

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