Voluntary and involuntary expenditure
What is expenditure?
Expenditure is a general term used to describe any money that you pay for goods or services. This includes taxes, fees, rent and other living expenses, in addition to any of your personal purchases.
Voluntary or Involuntary?
Whether an expense is voluntary or involuntary depends on your needs and wants and, to some degree, individual politics. Voluntary expenditure is an amount of money that you willingly pay for a product or service, while involuntary expenditure is an amount of money that you do not want to spend but must pay, either through force of law, or as part of your voluntary expenditure, for example, the goods and services tax (GST) on products considered luxury items.
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In general, voluntary expenditure covers things that you want, while involuntary expenditure covers things that you need, or need to pay. Most people do not want to pay taxes, fees, fares and tolls so we usually classify these payments under involuntary expenditure. In many cases these payments are necessary; taxes contribute to government spending e.g. to maintain infrastructure and services, a bank will charge fees for keeping an account with them or you might need to pay a fare or toll to travel to work. Another common involuntary payment is superannuation, even though when you retire you will be glad you paid for it.
Similarly, rent and other living expenses are commonly regarded as money we need to pay in order to live and therefore might come under involuntary expenditure. Although you may recognise food, clothing and shelter as necessities, sometimes the types of food, clothing and shelter could come under voluntary expenditure for example, milk and bread may be necessities and therefore categorised as involuntary expenses, but chocolate biscuits might be considered a voluntary expense.
We generally consider purchases such as entertainment as part of our voluntary expenditure because these are things we want to pay for, but what you consider voluntary or involuntary will depend on your lifestyle. Some people might consider connection to the internet a luxury, and therefore classify the expense of having the connection as a voluntary expense. Others might consider the internet a social or educational necessity, and therefore an involuntary expense.
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Expenses such as medication or medical treatment also fall between the voluntary and involuntary categories. On the one hand, you want to treat yourself in order to get better or maintain your health, but on the other, you don't necessarily want to pay for it.
Whether an expense is voluntary or involuntary is therefore not a matter of dividing products and services into two categories. Instead, regard these terms as opposing ends of a scale, on which you place your expenditure with reference to your personal understanding what is voluntary or involuntary for you.
Individual politics
In some cases, individual politics may contribute to your understanding of the voluntary or involuntary nature of an expense. In the example above, we mentioned that many people regard taxes as an involuntary expense, however, if you strongly supported the taxation system because you understood how the money contributed to society, then you might actually consider tax a voluntary contribution.
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