A discretionary expense is the money spent after you are done paying for all obligatory expenses. It is so-called because you spend this money at your discretion and you can get by without it. You can either choose to spend or save it but saving goes a long way in securing your financial freedom.

A CalPATH home loan advisor may also be able to provide some helpful tips to maximize savings with your mortgage or possibly tap into your home equity to get your monthly expenses under control.

How can you effectively manage discretionary expenses? Here are 5 tips!

1 – Monitor Your Spending

Identify your discretionary expenses and set a budget for them. Determine the expenses that are really spending on and then eliminate those that you can do without. Do you really need a premium subscription or is this basic enough? Do you have to take 2 annual vacations or will one do?

Use the budget to keep your discretionary spending in check and monitor it to make sure all expenses are within the set budget.

2 – Cut Back on Your Discretionary Spending

You don’t have to completely do away with everything, you just have to spend on things that you really need. For instance, if you have 4 magazine subscriptions, you can cut down to two.  If you have more than one online streaming service, you can unsubscribe from the rest and remain with one.

Cut back on all similar expenses and then channel the extra money towards your savings.

3 – Postpone Large Purchases

Before making any large purchase, ask yourself ‘do I really need to buy this now or can it wait?’ You will be surprised at how much money purchase delays can save you. The end goal is not to avoid buying the item but to save up until you can afford it without incurring extra debt.

Waiting will also give you time to determine the urgency of your purchase and more often than not, you will realize you never needed the item in the first place. Avoid using credit cards to shop as that is technically money that you don’t have

4 – Review Your Spending Patterns

Monitoring your spending is all about how you spend your discretionary income but reviewing your sending patterns is about where you spend the money. Make a list of all your monthly discretionary expenses and evaluate which category you spend most of your money on.

Do you spend more money on accumulated small purchases? Is eating out costing you more in the long run? Once you identify your spending patterns1, it becomes easier to cut back on unnecessary purchases.

5 – Track Due Dates

Monitor all subscriptions and debts that you pay on a recurring basis including subscription fees, credit card charges, and loan repayment to avoid accruing fees and fines. Create a system that will help you track the due dates so that you can always pay on time.

Manage discretionary expenses with the above tips

How you choose to spend your discretionary income goes a long way in determining what kind of financial future you will have. Managing your discretionary expenses and cutting back on unnecessary spending is the first step toward financial freedom.

About Mountain West Financial and the CalPATH Home Loan Program

Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm). A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!


Joe MooreBranch Manager

Links to sources used:

  1. 6 Ways To Track Your Spending – Forbes: https://www.forbes.com/sites/financialfinesse/2017/08/17/6-ways-to-track-your-spending/