ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -To get the average, add up the amount of money spent for 12 consecutive months, then divide by 12. This will give an average of how much has been spent per month. Calculating average monthly expenses requires actual or estimated figures for all monthly costs.

Detailed explanation-2: -The rule is very simple in practice. It asks you to break your in-hand income into three parts. 50% of the income goes to needs, 30% for wants and 20% to savings and investing. In this way, you will have set buckets for everything and operate within the permissible amount for each bucket.

Detailed explanation-3: -The rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must-have or must-do. The remaining half should be split up between 20% savings and debt repayment and 30% to everything else that you might want.

Detailed explanation-4: -Income refers to total profits (net income) after subtracting expenses from revenue. Below is a simple way of calculating total expenses from revenue, owner’s equity, and income: Net income = End equity-Beginning equity (from the balance sheet) Total Expenses = Net Revenue-Net Income.