Discretionary income is the money you have left after covering your essential expenses and taxes. It's what remains once you've paid for necessities like housing, utilities, groceries, transportation, and debt obligations. This is your financial breathing room—the funds available for wants rather than needs.

Think of discretionary income as your flexibility fund. It's what you can use for dining out, entertainment, hobbies, travel, or extra savings goals. Understanding how much discretionary income you actually have helps you make intentional choices about where that money goes, rather than wondering where it all went at the end of the month.