1 year, 2 months ago
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How much of my income can I use as disposable income?
How much of my income can I be spending as disposable income? What percentage of my income would you recommend that I use as disposable income?
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M$1 Answer
Disposable income is the remainder of your hard earned money after settling you tax obligations to the government. By having a figure on disposable income one can surmised that the economic well-being of an individual. In addition, disposable income is considered the main gauge in calculating the person's net worth, however there are alternative measures.
In this regard it is crucial that we distinguish between disposable income and discretionary income, since they can be confused interchangeably. As far as discretionary income, this usually refers to the income that remains after deducting taxes and common household bills. In relation to this, it can be safe to conclude that disposable income is much larger than discretionary income.
Personally speaking, in terms of the amount of income I utilize after determining disposable income, I usually follow this 5:3:2 ratio, this means that my living cost should fall at most 50% of my disposable income, while 30% will be allotted to luxury items and the remainder which is 20% will be for personal savings & settlement of personal obligations.
Sources:
http://www.wisegeek.com/what-is-disposable-income.htm
http://www.investopedia.com/terms/d/disposableincome.asp
http://www.reallifedebt.com/whats-your-disposable-income-4617.html
http://www.britannica.com/EBchecked/topic/165882/disposable-income
In this regard it is crucial that we distinguish between disposable income and discretionary income, since they can be confused interchangeably. As far as discretionary income, this usually refers to the income that remains after deducting taxes and common household bills. In relation to this, it can be safe to conclude that disposable income is much larger than discretionary income.
Personally speaking, in terms of the amount of income I utilize after determining disposable income, I usually follow this 5:3:2 ratio, this means that my living cost should fall at most 50% of my disposable income, while 30% will be allotted to luxury items and the remainder which is 20% will be for personal savings & settlement of personal obligations.
Sources:
http://www.wisegeek.com/what-is-disposable-income.htm
http://www.investopedia.com/terms/d/disposableincome.asp
http://www.reallifedebt.com/whats-your-disposable-income-4617.html
http://www.britannica.com/EBchecked/topic/165882/disposable-income
You can leave an optional "tip" with Mahalo's virtual currency, Mahalo Dollars. If you are asking a difficult question that might require some research, or if you'd like a wide variety of feedback, a higher tip often leads to more answers to your question.
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