The availability and price of fuel on top of rising interest rates will have a real impact on many mortgage holders budgets. This is particularly the case after a series of interest rate drops. The reasoning around this is that as mortgage repayments drop there is more money to spend in other areas. Thus discretionary spending increases. We should be clear about what we refer to with discretionary spending. Equifax is the Company that records your Credit score. It defines Discretionary spending as nonessential costs that are not required to keep your household or business running. The Government has different methods of assessing Australian's spending in various areas - for us in Finance we consider areas listed below should be reviewed to see if savings can be made:-

dining out

concerts

movies

streaming services

gym memberships

leisure travel

gifts and charitable donations

streaming services (Netflix/Spotify),

takeout,

coffee shop visits,

alcohol,

holidays,

music lessons,

petrol & parking (use public transport).

Equifax gives guidance on how to assess what is discretionary and what is mandatory. It's best to distinguish between mandatory and discretionary spending in terms of needs and wants. If you don't pay your rent each month, you'll be evicted, so your rent is a need. Likewise, if you don't pay your power bill, your electricity will be shut off by the utility company. These expenses are categorized as mandatory spending because they're required to maintain your everyday life.

Discretionary expenses, however, are the things you can do without. You'll focus on your discretionary spending to pare down your budget, save money and avoid a financial crisis. When your personal or business income shrinks, so should your discretionary spending. Your mandatory spending, on the other hand, will likely remain steady.

If you are concerned we are here to help.