ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Your needs are your daily expenses and your short-term spending. Think groceries, gas, car payments, rent or mortage payments – the list goes on. These are the things you need to budget for, because if you don’t – well, you can find yourself in some serious financial trouble. Then there are your wants.

Detailed explanation-2: -One of the most important aspects of creating a budget is separating wants from needs. Before assigning dollar amounts to any categories, it’s important to know which parts of your monthly expenses are an absolute need, and which items would be nice to include, but are not a necessity.

Detailed explanation-3: -Needs are those bills that you absolutely must pay and are the things necessary for survival. These include rent or mortgage payments, car payments, groceries, insurance, health care, minimum debt payment, and utilities.

Detailed explanation-4: -Step 1: Calculate your net income. The foundation of an effective budget is your net income. Step 2: Track your spending. Step 3: Set realistic goals. Step 4: Make a plan. Step 5: Adjust your spending to stay on budget. Step 6: Review your budget regularly.