The Myth They Call Disposable Income

Disposable income, as you've probably heard is money you have after paying bills. It's termed as such because it's the money you can spend on discretionary things like anther bag, a newer smartphone, nicer shoes, etc.  What you've probably never heard is that disposable income is a myth.
Disposable income, as you've probably heard is the money you have after paying bills. It's termed as such because it's the money you can spend on discretionary things like another bag, a newer smartphone, nicer shoes, etc.

There's even a rough formula:
Income - Utilities - Food - Other Payables = Disposable Income

What you've probably never heard is that disposable income is a myth.

If you're employed, no matter how large your salary is, you do not have disposable income.

What do I mean?

Got money left after paying bills? That's for paying yourself! (And you should've paid yourself before paying other people!)

Got money after paying debts? That's for your emergency fund!

Got money left after saving for your emergency fund? That's for your retirement fund!

Got money left after saving for your retirement fund? That's your child's education fund!

Oh wait, you're single and don't have a child? It doesn't matter. That remaining money is still for your investment fund.

Your income is disposable only if your future is disposable too.

Yes, you need to buy food, clothing and enjoy life every now and then.

But unless you're a billionaire whose great, great grandchildren are already set for life because of your wealth, you don't have disposable income.

All you have are limited, numbered pieces of paper on which to build your future.

Maybe that involves a trip around the world, your own business, that dream house in a resort area, whatever.

That's what your money is for. It's not to buy some company's over-priced or over-hyped product.

So before you hand over your cash, ask yourself - Is that what your life's goal? Is that more important than buying your dreams on installment?

It's your money, it's your choice. All I'm saying is, don't just spend it all.


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photo credit: Jonathan_W (@whatie) via photopin cc

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