Question

You earn a salary of $40000 per year and decide to save 20% of your gross pay. You then set a goal of creating $16000 and emergency fund. How long will it take you to achieve your goal?

Answer 1

Gross pay amount = $40,000

Percentage of the gross pay saved = 20%

Amount of gross pay saved per year = 20% of 40,000

Amount of gross pay saved per year = 20/100 * 40,000

Amount of gross pay saved per year = 20*400 = $8000

This means that $8000 is saved per year.

Next is to calculate the number of years it will take to save $16,000

Let us use the equality postulate;

1 year = $8,000

x year = $16,000

cross multiply

8000x = 16000

x = 16000/8000

x = 2

This means that it will take 2 years for me to achive my goal.