Question

Your fixed expenses are $834.02/month. You save 5 months' worth in an emergency fund over a year’s time. How much did you save per month?

Answer 1

To determine how much you need to save per month for an emergency fund that covers 5 months' worth of your fixed expenses, you can follow these steps:

1. Calculate the total amount needed for the emergency fund:
\[
\text{Emergency Fund} = \text{Fixed Expenses} \times 5
\]
\[
\text{Emergency Fund} = 834.02 \times 5 = 4170.10
\]

2. Since you want to save this amount over a year (12 months), divide the total emergency fund amount by 12:
\[
\text{Monthly Savings} = \frac{\text{Emergency Fund}}{12}
\]
\[
\text{Monthly Savings} = \frac{4170.10}{12} \approx 347.51
\]

So, you would need to save approximately **$347.51** per month.