What is discretionary income?
- Content Type:
- Glossary
Discretionary Income Definition
The amount of money people have for spending after taxes and necessities are paid for. Also known as disposable income.
Discretionary Income is money that a person or household has left over after covering essential expenses like taxes, housing and food. Also known as disposable income, it is the amount the funds available for spending on non-essential items and activities. In marketing research, it helps gauge the potential market for goods and services beyond basic needs. This figure provides insights into the economic well-being of consumers beyond basic needs and helps businesses to make decisions about product development, market entry and growth strategies. Fluctuations in discretionary income impacts financial markets and resource allocation.
Who relies on discretionary income?
Marketing professionals, businesses and analysts use discretionary Income data to learn and understand consumer purchasing power. Insights help marketing professionals to target the correct market segments and tailor marketing strategies effectively.
Why should I care about discretionary income?
Understanding discretionary Income allows marketing professionals to identify their target audience's capacity to spend on non-essential goods. This insight helps companies to set pricing strategies, product positioning and promotional campaigns that align with consumer spending.