ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -While there are hundreds if not thousands of different ways to budget, there are some universal truths when it comes to budgeting. For example, it’s best to not spend more than you’re bringing in, and your budgeting income should be based on your net income, not your gross income.

Detailed explanation-2: -One of the most common percentage-based budgets is the 50/30/20 rule. The idea is to divide your income into three categories, spending 50% on needs, 30% on wants, and 20% on savings.

Detailed explanation-3: -The largest expense for most Americans is housing. At $1, 050 per month, the cost of having a roof over our heads accounts for 21% of a household’s monthly budget. Percentage of income is based on after-tax income.

Detailed explanation-4: -One of the most essential parts of the budget process is projecting your sales revenues. While you might have irregular revenues such as profits from investments or the sale of assets, knowing your core revenue streams will help you form the foundation of your budget.