All the money that you spend can be grouped into one of the 3 types of spending.
This applies to you even if you haven't checked your spending since you opened your bank account.
They are: essential, discretionary, and savings.
- Essential spending is the money that we spend for necessities. Like, for basic living, such as food, housing, and medical care. All the money that you spend to maintain your current standard of living can be deemed essential spending. These are your 'needs'.
- Discretionary spending refers to money that is spent on non-essential items, such as entertainment, luxury goods, and travel. This type of spending is not necessary for survival, but it brings you comfort, joy and other things that make you who you are. These are your 'wants' and your 'spending money'.
- Savings spending refers to money that is spent or moved with the sole purpose of using it in the future. Saving can be used for a variety of purposes, such as buying a home, career improvement, or planning for retirement.
