Round to the nearest penny.

You have a part-time job that pays $4.70/hr and average tips are $3.85/hr.
Your deductions are FICA 7.65%, Fed Tax withholding 12.3% and
State tax withholding 8.2%. You work 13hr/wk. You save
15% of your realized income each week. How much do you save
per month?

1 answer

First, let's calculate your total earnings per week from both your job and tips.

  1. Total Earnings Per Hour:

    • Hourly wage: $4.70
    • Average tips: $3.85
    • Total earnings per hour = $4.70 + $3.85 = $8.55/hr
  2. Total Earnings Per Week:

    • You work 13 hours per week.
    • Total earnings per week = Total earnings per hour × hours worked per week
    • Total earnings per week = $8.55 × 13 = $111.15
  3. Total Deductions: Now we will calculate the total deductions:

    • FICA = 7.65%
    • Federal Tax withholding = 12.3%
    • State tax withholding = 8.2%
    • Total deduction percentage = 7.65% + 12.3% + 8.2% = 28.15%

    Total deductions in dollars:

    • Total deductions = Total earnings per week × Total deduction percentage
    • Total deductions = $111.15 × 0.2815 = $31.31 (approximately rounded to two decimal places)
  4. Net Income After Deductions:

    • Net Income = Total earnings per week - Total deductions
    • Net Income = $111.15 - $31.31 = $79.84
  5. Amount Saved: You save 15% of your realized income each week.

    • Savings per week = Net Income × 15%
    • Savings per week = $79.84 × 0.15 = $11.98 (rounded to two decimal places)
  6. Savings Per Month:

    • There are typically about 4 weeks in a month.
    • Savings per month = Savings per week × 4
    • Savings per month = $11.98 × 4 = $47.92

Therefore, you save approximately $47.92 per month.