What are typical examples of items included in discretionary spending?

Discretionary spending refers to the portion of an individual's budget that can be adjusted and is not essential for basic survival or well-being. The correct answer highlights typical examples of discretionary spending, which includes items such as charitable giving and entertainment.

Charitable giving is often considered discretionary because individuals can choose the amount they donate, what causes they support, or whether to contribute at all based on personal values and financial ability. Entertainment, including dining out, vacations, and hobbies, also falls under discretionary spending, as these expenditures can be altered or eliminated without impacting fundamental needs like shelter or food.

In contrast, rent and mortgage payments, utilities, transportation costs, and insurance premiums are classified as essential expenditures. These obligations are considered necessary for maintaining a basic standard of living, meaning individuals typically cannot adjust them easily without significant consequences.