Question

Your realized income is $2,085.44, and your fixed expenses are 30%. You want to save 6 months’ worth in an emergency fund. If you only want to put 50% of your discretionary monies toward the emergency fund each month, how many months will it take to fully fund it, excluding interest accrual? (Note: Round up to the next whole month.)

Answer 1

Firstly:

30% of 2,085.44

= 30÷100 x 2085.44

then

= 1459.808

50% of that = 50÷100 x 1459.808

= $729.904

Answer 2

3 months

Explanation:

If your fixed expenses are 30% of your realized income we can determine how much money you spend on expense a months as:

`=2085.44*(30/100)=625.63`

So you spend $625.63 which is fixed expense, therefore the remaining amount that you have after expenses:

`=2085.44-625.63=1459.81`

If you want to save 50% of the rest of your money = 1459.81=$729.904 each month you will save 6*729.904=$4379.424

For an emergency fund we assume that you want to save as much as one realized income a month. There it will take:

=2085/729.904 = 2.85

therefore it will take 3 months