Consumption Spending Income Living Standard????

Just want to make sure I have this all straight --

Income is the total income from all sources (wages, investments, SS, Real Estate)

Spending is the total of spending from all source (Housing, Taxes, Medicare..including expenses identified in the special expense entry) but does not include discretionary spending such as vacations or Green Fees

Consumption is the total amount available to spend after the expenses in spending have been satisified. That is Consumption = Spending + Other amount spent (Green Fees Dinding out Food, Clothing, Auto Insurance, vacations etc.)

Living Standard = consumption/# of people

Is this right?


Living Standard per Adult is actually for the 1st adult. Discretionary spending uses that in combination with economies of scale for additional adults and children. It's not integer division.

See How do consumption and living standard differ in the program? for a more detailed and precise explanation.

See also How is discretionary spending calculated?

I found those by clicking on the tag topics in the right hand column of the question forum.

a user

dan royer's picture

Chris points you in the right direction . . .

Also: Total income is what you see in the Total Income report with the grand total on the far right-hand column.

Total spending is revealed in the Total Spending report; however, note that that it does not show Taxes which for whatever reason are not viewed as "spending." Furthermore, note that discretionary spending is part of the total spending amount. I often point out that if you look at the total spending report, start with the right-most column, the total, and start subtracting as you move through columns left, you end up with the amount in the discretionary spending column, the first column.

This discretionary spending is, in other words, everything you have to spend AFTER you have paid taxes and AFTER you have paid for everything to the right of the first column in the Total Spending report.

Finally, notice that there is a column for Saving in the Annual Suggestions report and in the Regular Assets report. It's the same number. The discretionary spending is also AFTER that saving. That is, discretionary spending is available after you have saved or disssaved (put into or withdrawn) from Regular assets.

Living standard is typically calculated with a factor of 1.6 (see Assumptions) not simply dividing discretionary spending by number of people. Furthermore, it may also reflect there being children in the home that cost, say, 70% that of an adult.

Dan: I'm a bit confused about how and where income taxes are taken into consideration. You state that Total Spending as shown in the Total Spending report "does not show Taxes which for whatever reason are not viewed as "spending."..." but then state that "...discretionary spending is, in other words, everything you have to spend AFTER you have paid taxes..."
Doesn't ESP need to include the taxes in either the "Special" spending or the "Discretionary Spending" category in the Total Spending Report? Thanks

dan royer's picture

Sorry if I was confusing.

Taxes are shown in the Detail/Taxes report but also shown, fed and state combined, in the Regular Asset report.

The discretionary spending is what is left over to live on after you pay out for all the items in the total spending report and your taxes. So when you look at your discretionary spending (i.e., household consumption) you know that you do not have to pay taxes out of this money, and you also know that the items in the total spending report have already been paid for.

So my point was just that the Total Spending report reveals all your spending--specifically, see the column headers in the total spending report to see what it is accounting for. What is not shown there (but rather accounted for elsewhere) is Taxes. The program does not describe Taxes as "spending" per se. It describes taxes as, well, taxes and accounts for them elsewhere in the program and obviously doesn't ignore them.

So when you look at Discretionary Spending (or the per-adult equivalent of living standard) you are looking at bottom line number that reflects the fact that taxes have already been paid, all items in Total Spending report have already been paid, and any amount that you are asked to Save in the Saving column of of the Regular Assets report (see also the Saving column in the Annual Suggestions report) has already been set aside into regular assets.

Let me know if you need further clarification.

Thanks Dan. Got it. For annual budgeting, it would be great to have a spending report which shows the scheduled special expenditures (by item and amount), the reserve fund contributions and funds for taxes (with the amounts set aside estimated for State and the Feds). While I'm new to the program and may have missed it, I didn't see this anywhere.

Thanks again,

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