The reason that discretionary income involves money that you can afford to lose because you make a choice.
Discretionary income can be spent on anything whether investment, consumption or savings, so you can choose to totally gamble it away, if you like.
You may well make a choice to invest into bitcoin with all of your discretionary income or you might choose some portion of that discretionary income to go into investing rather than buying cigarrettes.. and yeah, cigarrettes are equally valid if a person chooses to use his discretionary income to buy cigarrettes and perhaps some other thriller, exciting and expensive habits that a person might have.
The person with the expensive habits might find that when he arrives 10 years down the road that he had not made any financial progress in life. He thought that he was happy with his various expensive habits, yet maybe 10 years down the road he is in his 50s rather than his 40s, and he is finding that his income is going down or he is not able to earn as much money, and even though he had a lot of fun in his youth, he has nothing to show for it.
He made choices when he was in his 20s, 30s and 40s, and some people choose to focus on investing, others choose to focus on consuming and perhaps some choose to focus on saving, yet if they kept their money in cash rather than assets (such as bitcoin), then they might find that their savings did not appreciate in value and instead it lost value... so we make choices, and there are consequences to our choices, and discretionary money means that we can choose to do whatever we like whether it is investment consumption or savings.
I would not say to do only one of them, yet we can figure out out to strike a balance since we likely need to bring ourselves some pleasures, yet if our budget is tight, we might have to choose to figure out how to prioritize investing, even if investing means that we won't be able to consume as much in the present.
None of us can tell anyone else whether to prioritize cigarettes over investing... and part of the idea of discretionary is that we can do what we like with it, which is a reason why some folks refer to discretionary income as disposable income... meaning we can throw it away if we like, and when we invest into bitcoin maybe we might think that we are throwing it away, and we are willing to wait 4-10 years or longer before we will start to cash in on the investment, and we are not guaranteed to be in profits, but we invest into something like bitcoin that we believe is more likely to be profitable than not.
You’re absolutely right, discretionary income is quite discrete which is why it’s something that we can easily afford to do whatever we feel like doing with our discretionary income, it’s quite our own responsibility to decide whatever we feel it’s comfortable for us to deal with it, an individual can always choose to gamble with it with playing whatever they feel like doing with their discretionary income and they can also choose to save the money somewhere in the bank that will not have any future interest unlike bitcoin that we would have opportunities for future interest, Some individuals save them as fiat money and also be thinking of having fun with their discretionary income, like buying expensive clothes and shoes and also buying cars and living an expensive lifestyle, or be clubbing with their discretionary income, but the truth is that Bitcoin doesn’t stop and individual from living their life or probably be enjoying their life as they feel like doing or doing whatever that makes them happy like going for basketball games or soccer games, but it’s important and necessary for an individual to consider his life choices and decision, because there will be a time where we would definitely have to think about the choices that we have made when we were younger and then when we get older what would have become our decision and choices that we made when we were young, so using our discretionary income with something reasonable like buying and investing into bitcoin which would be a good decision for a lifetime.
However we know there are people who can constantly have a discretionary income and have this basic expenses but we should consider not making a mistakes that will affect our lives in a long term, and also we can try to strike a balance with our lifestyle and our basic expenses because investing in bitcoin doesn’t stop us from having a good fun life, which is why we are investing in bitcoin with our discretionary income and we can possibly have control of this funds instead of the money to control our decisions, as an individual I can possibly consider buying bitcoin with my discretionary income instead of appreciating whichever possible lifestyle and might seems like we are throwing money away, then we can decide to invest with some of this discretionary income, because we might not possibly invest all our discretionary income, but if I decide to invest with all my discretionary income and I know it’s sustainable that is also quite good, then as an investor I can decide to invest in bitcoin for one or two circles depending on my lifetime goals and plans which will be a better decision of holding bitcoin for a long term, instead of throwing our discretionary income into something that would seems like we’re wasting our money on unnecessary spending and then we are making mistakes, well I must say right now that I’m in my accumulation journey I shouldn’t be having any time to appreciate lifestyle choices, instead I would prioritize buying more bitcoin and doing it more aggressively with caution.
You are right discretionary income is financial freedom that can be spent or invested. some people choose not to invest rather than spending, but they forget investment also brings about growth in the market , discretionary income is the money leftover that can be used for investment or savings. some investor spend their discretionary income on luxury, vacation thinking he is saving his funds. the reason why discretionary income matters a lot it increase economic activity, more money the investor put on the investment it gives you more earnings. finally discretionary income increases, investor have more flexibility and also investor sees it as more opportunity.