ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It’s smart to pay yourself first. One of the first things you should put in your budget is savings, whether it be for an emergency fund, a new car, a down payment on a home or other purposes.

Detailed explanation-2: -Generally, the bills you should pay first are the ones that cover necessities-the main resources that keep you and your family safe and healthy. These necessities include shelter, water, heat and food. Once necessities are paid for, focus on expenses related to your vehicle.

Detailed explanation-3: -You probably have bills for some (or all) of the things on your monthly expense list, but you may not have enough money to pay all of them. This is where prioritizing, or deciding what to pay first, comes in. Paying for shelter should always be the first priority, so you continue to have a roof over your head.

Detailed explanation-4: -The first step in creating a budget is to identify the amount of money you have coming in monthly. Look at your salary and determine your net income. Your net income is how much money you make after any deductions like interest and taxes. This is the number you should use when creating a budget.