Which of the following best describes discretionary expenses?

Discretionary expenses refer to spending that is not essential for basic living. They are expenditures that individuals choose to make for entertainment, leisure, or non-essential items. This can include things like dining out, vacations, luxury clothing, and other items that enhance one's lifestyle without being necessary for survival or basic function.

In contrast, essential living costs encompass necessary expenses like housing and groceries, which are not discretionary but rather critical for day-to-day living. Fixed monthly bills, such as rent or mortgage payments, are recurring costs that must be paid and do not fall under discretionary spending since they are required to maintain basic living conditions. Long-term investments also do not fit the discretionary category as they involve saving or investing money for future growth rather than spending on non-essential items.

Thus, the description of discretionary expenses being tied to luxury items aligns accurately with how these expenses function within a personal finance context.