Disposable income

Disposable income is the amount of an individual's total income left after taxes, plus any transfer payments (grants) received from the government or elsewhere. This income is available to be "disposed of" as either spending or saving.

Related Topics:
Income - Taxes - Transfer payments - Government

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Another concept that is often confused with disposable income is discretionary income. This is equal to disposable income minus the cost of the fixed expenses of life (such as rent/mortgage, food, car payments, insurance, etc.). It is income that can be saved or spent on goods and services wanted, not needed. Unfortunately, the definition of discretionary income is fuzzier than that of disposable income, making it harder to measure.

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