Minute by minute

my thoughts on making the most out of all of life's minutes…

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Word Up Wednesday – Disposable -v- Discretionary Income

Many times people use or hear the term “Disposable Income” and think – this is all the money that people have leftover to do whatever they please.  Play money.  Not play money is the Monopoly sense….but money with which to play.

This is, however, incorrect.  Disposable Income is that income that is earned minus taxes.  So basically – disposable income is take-home money.

Within Disposable Income all your expenses need to be accounted.

On the contrary – Discretionary Income is all the leftover money that one has after taxes and expenses have been taken out.  

Discretionary income = (Gross income – taxes – necessities)

From both a personal and business standpoint, it is important to acknowledge both incomes.

For personal:  Your disposable income needs to include things like food, mortgage, cars, utilities…all your normal expenses.

Then after all those are taken out – you can budget things like vacations, gifts, fun stuff from the discretionary income pile.   $$$

From a small business owner aspect….you need to realize which income stream does your service or product fall into for your clients or customers.

It is pretty sweet if you are in the disposable income side.  But don’t take that for granted.  You need to keep yourself in a status that makes your service or product a “need” in their eyes.

If you happen to fall into the discretionary income part…that’s not a bad thing. People spend a lot of money of things they don’t technically need.  And just because times are tough and people are cutting back, they aren’t cutting back on everything.  Just make sure you are offering your service or product to the best of your ability, which will make it really hard to cut out of your customer’s lives.

Happy Wednesday!


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Word Up Wednesday – Budgets

Welcome to my first installment of Word Up Wednesday – where I take a common business term and define it and show examples of how to implement this word in your small business.  And as in many cases, many business terms can help while managing your home, so I’ll offer examples for personal use as well


Budget – (n) – An estimate of the income and expenditures for a future period of time, usually one year.

At the beginning of any year, there is always lots of talk about budgets.  We need to work on the budget.  We need to balance the budget.

A balanced budget is that simple – income balances expenditures.  If your expenses are greater than your income, you need to find ways to cut expenses or increase income.

Small Business Application – every business, big or small, corporation or sole proprietor, many employees or just one (you) should have a budget.  Items that should be considered on the budget are:

Operating expenses, overhead expenses, insurance, subscriptions, taxes, payroll, continuing education, and savings.   All income needs to be projected as well.

Personal Application – every family should have a family budget.  Items to include in the household budget are:

Rent or mortgage, utilities, insurance, vacations, gifts, investments.

The important and difficult part of the budget is predicting realistically.  It is always best to err on the side of caution by not over or under inflating expected income or expenses.  Using last year’s figures or averaging out figures over a few years are good ways to predict.

There are many tools and templates that are available (many free) online to help set up a budget.  I also offer help in setting up a budget for either your small business or your household.

Today’s Question – Is there an item that you always forget to include in your budget?

Happy Wednesday!