ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A spending plan is a method for distributing your income among the mix of things you want and need. Creating a spending plan ahead of time will allow you to effectively manage your finances and determine where to best spend your money.

Detailed explanation-2: -A spending plan (also called a budget) is simply a plan you create to help you meet expenses and spend money the way you want to spend it.

Detailed explanation-3: -With a spending plan, you neatly divvy up your dollars to those things that matter most to you: your priorities. And when you make a decision to spend (or not spend) money, you look at what’s available in your budget categories, not how much is left in your checking account.

Detailed explanation-4: -Long-term vs. short-term: With a financial plan, you typically track your progress on a quarterly or semi-annual basis. With a budget, you record your income and expenses on a weekly or monthly basis. Generally, the closer you stick to your budget, the more progress you will make on your financial plan.

Detailed explanation-5: -The three types of budgets are a surplus budget, a balanced budget, and a deficit budget. The state budget is a financial document including income and expenditure for the year. An income-and expense-based spending plan is referred to as a budget.