A fuller guide to this term is on the way. In the meantime, the related terms below explain the ideas around it.
Related MoneyPedia terms
- Disposable IncomeThe money left over after paying taxes that you can freely choose to spend, save, or invest as you like.
- Discretionary SpendingMoney spent on nonessential things you want but could go without, like dining out, hobbies, or entertainment.
- Needs vs. WantsThe distinction between spending you truly must cover to live, like housing and food, versus spending you choose for enjoyment or convenience.
- Savings RateThe share of your income you set aside rather than spend, usually shown as a percentage of your take-home pay.
- Spending PlanA forward-looking plan for where each dollar of income will go before you spend it, covering bills, saving, and everyday costs.
- Net IncomeWhat is left of your earnings after taxes and deductions, which is the money you actually have available to spend or save.
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Plain-English education — not personalized legal, tax, or investment advice.