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Dividends and discretionary income. #finance friday

#financefriday

Today I will get a dividend from Taylor Wimpey and yesterday it was Standard Chartered. I won’t receive huge amounts of money but those small payments add to my discretionary income, that income I have left when I’ve paid for all the essentials like housing, energy, food and telecommunications. Discretionary income is that income that we use to go to the pub and socialise. Not that I go to the pub anymore. Socialising is essential for good mental health. A little exercise is good for maintaining good general health but when it comes to good mental health, as social animals, we need to socialise and that usually costs money. Many elderly people use small shops simply because it gives them social contact with people. On warmer days, I visit my neighbour and we sit in the garden, have a beer and chat, that helps us both.

Inflation

Inflation is now cutting everyone’s discretionary income but the poorest in society face the biggest cuts and, in many cases, people don’t have enough money for the essentials and certainly don’t have much money for socialising or enjoying life. It isn’t surprising that they have the most mental health problems.

Investing

Investing can give you more discretionary income in two ways, your shares can go up in value and you can get dividends. Oil majors BP and Shell pay quarterly dividends and they are doing rather well now. Shares tend to go up in value when there are fewer shares in circulation and both BP and Shell are planning on share buy-backs. The high oil price makes both companies good bets at the moment but what will happen to the share price when the oil price drops? Both companies have lost assets because they were invested in Russia too. I think I’ll get a few more dividends from both companies but I’ll probably sell when the oil price begins to drop.

Recession?

Investors are speculating about a recession. I think we are already in a recession and central banks are making it worse. We are recovering from a global pandemic and the government wasted money on HS2, Brexit and other pet projects. We now need a fairer society and we need to support the most financially vulnerable. It won’t happen, of course.

I’ll continue to collect dividends and although they may be modest contributions to my income. They make a big difference to my discretionary income and will allow me to socialise that little bit more. I can also be thrifty and frugal to increase my discretionary income too. I’ll even be able to make the occasional donation to the food bank and I think they will need every donation this year.

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