Round any decimals to the nearest penny.

Question

Your realized income is $2,085.44, and your fixed expenses are 30%. You want to save 6 months worth in an emergency fund. How much do you need to save?
$

Answer 1

To calculate how much you need to save for an emergency fund that covers 6 months of your fixed expenses, follow these steps:

1. Calculate Fixed Expenses: Since your fixed expenses are 30% of your realized income: \[ \text{Fixed Expenses} = \text{Realized Income} \times \text{Fixed Expense Rate} = 2,085.44 \times 0.30 = 625.632 \]

2. Round to the Nearest Penny: Rounding $625.632 to the nearest penny gives: \[ \text{Fixed Expenses} = 625.63 \]

3. Calculate Emergency Fund for 6 Months: Now, multiply your fixed expenses by 6 to find out how much you need in total for your emergency fund: \[ \text{Emergency Fund} = \text{Fixed Expenses} \times 6 = 625.63 \times 6 = 3,753.78 \]

Thus, the total amount you need to save for your emergency fund is $3,753.78.