Teaching Tip:  Mint.com has a great exercise called, “How Little Things Add Up,” that students can either do in class (if they have access to the internet) or before class.  It will give them an estimate of how much they spend each month on those “little things” like ATM fees, bottled water, energy drinks, movies, and more.  If done outside of class, have your students bring the write-up in and share their results with the class.  The primary assignment here is to focus in on at least two of these “little things” that can be reduced or eliminated.  The answers to this could either be discussed in class or handed in as a written assignment.

In Chapter 8 of Personal Finance: Turning Money into Wealth we look at Smart Buying, in fact, we even have a principle, Principle 6: Waste Not, Want Not – Smart Spending Matters.  What we are really talking about is how to make sure you get the most out of your discretionary income. After all, discretionary income refers to what’s left after taxes and the basic necessities like food, shelter, and clothing have been paid for – in effect, discretionary income is what’s left for investing, saving, and spending on non-basic needs, that is, the fun stuff.  Not only is it the most fun to spend, but it’s also easy to spend money on discretionary items without thinking.   That’s where you can get into trouble.  Take another look at your results from the “How Little Things Add Up” exercise.

Exactly how much you spend on discretionary items depends upon how much discretionary income you have.  Mint.com recent put together an infograph titled “Discretionary Dough: How Much Extra Cash Do Americans Have?” that not only looks at what Americans do with their discretionary income, but it also highlights, as you might expect, the fact that upper income Americans account for a large portion of discretionary spending.

Discussion questions:

1. Look at the personality traits at the bottom of the mint.com infograph “Discretionary Dough: How Much Extra Cash Do Americans Have?”  Of the eight statements, how many of your answers line up with the answers given by the groups with highest and lowest levels of discretionary spending? Discuss in a short paper or be prepared to share your results with your class.
2. Work through the mint.com exercise, “How Little Things Add Up,” what was your level of monthly spending on discretionary items?  What “little item” spending category surprised you the most?  What two “little items” could you reduce or eliminate, and how much would that save you per month?  Be prepared to share this with your class.