Question

You set a goal of creating a $15,000 emergency fund. You earn a salary of $40,000 per year and decide to save 15% of your gross pay. Your taxes are $4,000 a year. How long will it take for you to achieve your goal?

Answer 1

Answer: 7.5 years

Step-by-step explanation: First, we need to calculate your annual savings by multiplying your gross pay by 15% and then subtracting the taxes:

$40,000 x 15% = $6,000 (annual savings before taxes)

$6,000 - $4,000 = $2,000 (annual savings after taxes)

Next, we can calculate how many years it will take to save $15,000 by dividing the goal by the annual savings:

$15,000 ÷ $2,000 = 7.5 years

Therefore, it will take you 7.5 years to achieve your goal of creating a $15,000 emergency fund by saving 15% of your gross pay.