People generally feel more comfortable spending on non-essential items when broader economic conditions are positive. Discretionary spending is influenced not only by how much disposable income one has remaining after paying for essential expenses, but also by the overall economic climate. Discretionary spending could also include luxury goods and travel. These might include recreation, entertainment or other items consumers purchase when they have money leftover after necessary expenses are covered. The term discretionary spending, on the other hand, is used to describe non-essential costs. Necessary expenses are living costs that cannot be avoided.
Necessary spending is the money used to cover basic or essential needs, such as housing and food.
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