Which of the following is an example of discretionary spending?

Discretionary spending refers to the portion of an individual's budget that is available for non-essential expenses. This type of spending can vary significantly from person to person, as it typically includes expenditures that one has the flexibility to adjust or omit without significantly impacting their day-to-day living.

The correct answer highlights nonessential goods and services as an example of discretionary spending. These could encompass items like entertainment, dining out, vacations, luxury items, or hobbies—choices that are often made after addressing necessary expenses.

In contrast, other options include typical fixed or variable expenses that are essential for maintaining a household. Monthly rent, transportation costs, utilities, and food are all considered necessary expenses. These expenses are typically fixed (like rent) or variable (like utilities and food) but remain crucial for survival and basic well-being. Therefore, they do not qualify as discretionary spending.

By emphasizing nonessential goods and services, the correct response captures the essence of discretionary spending—an area where individuals have greater freedom to manage and allocate their finances based on personal priorities and lifestyle choices.