ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The idea is to split up your money according to how much you want to spend in each category-and then only let yourself spend until the cash in each envelope is gone. Envelope budgeting works best for variable expenses, like groceries and dining out, which change slightly every month depending on your spending habits.

Detailed explanation-2: -The envelope budgeting system is designed for people who primarily spend cash. It is intended to control their spending each month by limiting them to using only what’s available in each envelope. It can be used alongside other budgeting methods, such as zero-based budgeting.

Detailed explanation-3: -The envelope system is a way to track exactly how much money you have in each budget category for the month by keeping your cash tucked away in envelopes. At the end of the month, you can see how much cash is left by taking a quick peek in your envelope.

Detailed explanation-4: -When you get your paycheck, take out enough cash to “stuff” into each pouch you’ve labeled. As you spend money throughout the month, you’ll see the cash in each pouch slowly diminish-what’s important here is making sure the pouch doesn’t become empty before the end of the month.