17.2 Essential vs Discretionary

Unit 17.2

Essential vs Discretionary

VS.

Examples

If it hinders your ability to earn money or to live, it is an essential expense. Essential means extremely important or absolutely necessary.

Essential Expenses

Examples

Expenses that are not essential, or necessary, for you to earn a living and support yourself. This term means that it is at your discretion as to whether or not you spend money on an item

Discretionary Expenses

Discretionary

Essential

Essential

Discretionary

Discretionary

Essential

Define each expense as essential or discretionary:

An emergency fund is an easily accessible account (typically savings) in which you keep enough funds to cover your essential expenses for 3 to 6 months.

Suppose you want to build up an emergency fund with enough money to cover 5 months of essential expenses, and you want the fund to be ready in 15 months. How much do you need to set aside each month if your essential expenses are $960/month?

Example

You have $1,470 in essential expenses each month, suppose you would like to build up a 6-month emergency fund over a 21-month period of time. How much do you need to save each month to accomplish your goal?

You have $1,200 in essential expenses each month, suppose you would like to build up an 8-month emergency fund over an 18-month period of time. How much do you need to save each month to accomplish your goal?

Concerts

Pets

Jewelry

Car Insurance

Which of the following is NOT a discretionary expense?

Attending a Musical

Work Shoes

Mortgage Payments

Groceries

Which of the following is NOT a Essential expense?

Friday - 17.3 Budget PlannerMonday - Academic Catch Up DayTuesday - Flex DayWednesday - Unit 17 Project

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