Disposable income is the amount of money that individuals or households have available to spend or save after paying taxes and essential expenses. It represents the income that can be used for non-essential items, such as entertainment, dining out, or vacations. This financial measure is important because it reflects the economic well-being of consumers. Higher disposable income often leads to increased spending, which can stimulate the economy. Conversely, lower disposable income may result in reduced consumer spending, affecting businesses and overall economic growth.