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 envelope budgeting system involves assigning spending categories to individual envelopes. Each one is allotted a certain amount of cash, which is then used to cover spending for that category.

Detailed explanation-3: -Using the cash-based envelope system also helps avoid the overdraft fees and debt that can come with frequent debit and credit card swiping. Physically dividing up your money also makes you aware of exactly how much you have available to spend on a given item, which helps curb overspending on impulse purchases.

Detailed explanation-4: -Zero-based budgeting (also known as the “zero-sum budgeting” or the “envelope” system) is a system for allocating your money in which every dollar has a job. That means you have to find a use for every dollar you receive in income and have zero dollars “left over” in your budget at the end of the month.

Detailed explanation-5: -Fixed expenses cost the same amount each month. These bills cannot easily be changed and are usually paid on a regular basis, such as weekly, monthly, quarterly or from year to year. 1. It’s much easier to budget for fixed expenses than it is to budget for a variable expense or discretionary expense.