Discretionary spending is defined as “The amount or portion of a person’s expenditures  used for spending on non-essential items; the portion of one’s expenditures which one may make as one sees fit.” It’s the amount that we have available to spend after we pay taxes, purchase food, buy clothing ^[2], and make arrangements for shelter. Since 1985, consumer discretionary spending has steadily increased at a 3.4 percent real rate (adjusted for inflation).

Today, in the midst of a global economic slowdown, many consumers have no choice but to become thrifty and frugal. There simply is no discretionary income to spend on discretionary items. But others, who still have discretionary income, are making conscious decisions to find a balance between frugality and spending.

Discretionary Thrift

This discretionary thrift is a relatively new trend amongst consumers and possibly signals that many are tired of the excessive consumption that dominated our lives over the last 25 years. People are setting up their emergency fund ^[3], recycling, buying used goods, teaching traditional values and skills to their children, and learning to handle their finances more like their great-grandparents rather then their parents. They’re making a budget ^[4], clipping coupons, comparison shopping, planting gardens, brown-bagging lunches, cooking at home more often, and even planning more frugal birthday parties, weddings, and vacations.

Find yourself in this same boat? Many people don’t like to admit their frugality. Somehow it seems boring and a bit old fashioned. However, the current recession has made discretionary thrift and frugality much more acceptable. Witness the increase in blogs dedicated to personal finance, simplicity, making things at home, and teaching people how to make extra money.