Question

Cristiano pedroso earns $80,000 a year. his monthly expenses total $4,500. what is the minimum amount of money that he should set aside in an emergency fund?

A. $2,150
B. $4,500
C. $9,000
D. $13,500
E. $40,000

Answer 1

Cristiano Pedroso should set aside a minimum of D. $13,500 for an emergency fund, which is equivalent to three months of his total monthly expenses of $4,500.

Step-by-step explanation:

The question is asking for the minimum amount of money Cristiano Pedroso should set aside in an emergency fund. A common financial advice suggests that an emergency fund should cover a minimum of three to six months of living expenses. Since Cristiano's monthly expenses total $4,500, the emergency fund should cover at least $4,500 times three months.

Calculating the emergency fund:
$4,500 (monthly expenses) × 3 months = $13,500
Therefore, the answer is D. $13,500.