Discretionary spending refers to the portion of a budget that is not essential for basic living expenses. This includes expenses like dining out, entertainment, vacations, and luxury items. Unlike fixed costs such as rent or utilities, discretionary spending can be adjusted based on personal preferences and financial situations. Individuals and families often allocate a certain percentage of their income to discretionary spending to enhance their quality of life. It plays a significant role in the economy, as increased discretionary spending can stimulate growth in sectors like retail, hospitality, and travel. Managing this type of spending is crucial for maintaining financial health.