# Discretionary Income

*Everyday Money — Finicade finance glossary*

Discretionary income is what remains after tax and essentials — the money you could stop spending tomorrow without losing your home or your health. It's the part of a budget that actually flexes: eating out, travel, subscriptions, upgrades. In US student-loan repayment rules it has a legal definition (income above 150% of the federal poverty line) that drives your monthly payment. As a personal metric it's the honest measure of how much slack a budget really has.

**Formula:** `Discretionary income = Disposable income − Essential expenses`

**Also known as:** spare income, discretionary spending power

**Related terms:** [Disposable Income](https://finicade.com/glossary/disposable-income), [Needs vs Wants](https://finicade.com/glossary/needs-vs-wants), [The 50/30/20 Rule](https://finicade.com/glossary/50-30-20), [Budget](https://finicade.com/glossary/budget)

Source: https://finicade.com/glossary/discretionary-income