Final Answer:
The Perez family's financial priorities should be as follows:
(a) College fund
(b) Emergency fund
(c) Travel fund
(d) Wedding fund
Step-by-step explanation:
The primary consideration in determining the financial priorities for the Perez family is the long-term well-being and education of their daughters. Therefore, the college fund takes precedence as it ensures the necessary resources for their education. Investing in education lays the foundation for their future success and financial stability.
Next in line is the emergency fund. Life is unpredictable, and having a financial cushion for unforeseen circumstances is crucial. This fund provides a safety net, covering unexpected expenses such as medical emergencies or sudden job loss. Financial advisors recommend maintaining an emergency fund equivalent to three to six months' worth of living expenses.
While travel and weddings are significant life experiences, they are considered discretionary spending and can be accommodated once the essential priorities are secured. The family can plan for travel and weddings without compromising their daughters' education or financial security. Allocating resources in this order ensures a balanced approach, emphasizing long-term goals and responsible financial planning.
In terms of calculations, it is advisable for the Perez family to determine the projected cost of college tuition, accommodation, and related expenses. They can then set a realistic goal for their college fund by dividing the total cost by the number of years before their daughters enter college. Simultaneously, estimating living expenses for three to six months provides the basis for determining the size of the emergency fund. These calculations help the family make informed and strategic decisions about their financial priorities.