ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The envelope system works great for managing spending on things that don’t normally have a fixed monthly expense.

Detailed explanation-2: -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-3: -Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).

Detailed explanation-4: -Discretionary Expenses So, groceries are a variable expense, but dining out is a discretionary expense.