Discretionary income is the amount of money someone has to do whatever they want with after they pay their necessary bills. Discretionary income is similar to disposable income because it's derived from it.
A key money philosophy I heard one time was to always assess your personal finances as if they were a business. Basically, is your business profitable each month? Or is it bleeding money?
If someone is on income based repayment (IBR) then discretionary income is used to see how much that person would pay toward their student loans each month.
There are two ways to calculate your discretionary income: 1. For your general knowledge so you can implement a pay yourself first strategy. 2. So you know about how much to pay back in student loans.
Consider doing the following to increase the amount of discretionary income: 1. Assess needs vs wants 2. Never buy anything over $100 without giving yourself a 48 hour grace period
3. Checkout of online shopping carts 1x per month 4. Identify reasons to delay gratification 5. Cancel all your email subscriptions