Question

Your fixed expenses are $1,235.78/month. You want to save 5 months' worth for an emergency fund over a year’s time. How much must you save each month? Round any decimals to the nearest penny.

Answer 1

To calculate how much you need to save each month for 5 months' worth emergency fund over a year's time, you first need to find out how much 5 months' worth of expenses would be.

5 months' worth of fixed expenses = $1,235.78/month * 5 months = $6178.90

Next, divide this total amount by 12 months to find out how much you need to save each month:

$6178.90 / 12 months = $514.91

Therefore, you need to save about $514.91 each month to build a 5 months' worth emergency fund over a year's time.