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Discretionary Expenses

The last category of expenses is the discretionary expenses. These are expenses for everything else including food, entertainment, clothing, gifts, travel, household goods, electronics, hobbies, small repairs, furniture, children’s needs and any other items where money is spent. You have the most control over these types of expenses, and they get a lot of attention when it comes to budgeting for this reason.

Budget Framework

Generally speaking, the budget should be created over a 1-year period. Why? There are seasonal spending patterns that affect what you spend. What you purchase in the winter in terms of food, entertainment, travel, gifts will be different than in the summer. What you do with your children during summer break or camps will be different than when they are in school. Shopping for gifts tends to be highest at Christmas time and lowest in the summer time versus other points in the year. To capture these seasonal differences, a budget should be done over a calendar year. There can be a breakdown by month or quarter if this is helpful to manage day to day bills.

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