Disposable Income

Disposable income is money that can be spent, saved, invested or otherwise disposed of after taxes and certain other obligations (such as union dues, employer-mandated health care costs or other similar fees) have been paid. Another term for disposable income is take home pay. Since most fees and taxes are beyond the control of workers, the only ways to increase disposable income is by a pay raise, working additional hours, developing an additional source of income or finding different employment at a higher rate of pay with more disposable income. An increase in disposable income is considered a sign of prosperity while a drop in disposable income is often a trailing indicator of an economic slowdown. Disposable income is also known as discretionary income or spendable income.