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You are paid $14.50/hr. Your deductions are FICA 7.65, federal tax 10.4% state tax 6.5%. You work 17 hr/wk and save 11% each week

how much do you save per month?

1 answer

To determine how much you save per month, follow these steps:

  1. Calculate your weekly earnings: \[ \text{Weekly Earnings} = \text{Hourly Rate} \times \text{Hours Worked per Week} = 14.50 \times 17 = 246.50 \]

  2. Calculate deductions:

    • FICA: 7.65% of weekly earnings: \[ \text{FICA} = 0.0765 \times 246.50 \approx 18.86 \]
    • Federal Tax: 10.4% of weekly earnings: \[ \text{Federal Tax} = 0.104 \times 246.50 \approx 25.65 \]
    • State Tax: 6.5% of weekly earnings: \[ \text{State Tax} = 0.065 \times 246.50 \approx 16.04 \]

  3. Calculate total deductions: \[ \text{Total Deductions} = \text{FICA} + \text{Federal Tax} + \text{State Tax} = 18.86 + 25.65 + 16.04 \approx 60.55 \]

  4. Calculate net earnings: \[ \text{Net Earnings} = \text{Weekly Earnings} - \text{Total Deductions} = 246.50 - 60.55 \approx 185.95 \]

  5. Calculate savings:

    • Savings rate is 11% of net earnings: \[ \text{Weekly Savings} = 0.11 \times 185.95 \approx 20.45 \]

  6. Calculate monthly savings:

    • Assume there are about 4.33 weeks in a month on average: \[ \text{Monthly Savings} = \text{Weekly Savings} \times 4.33 \approx 20.45 \times 4.33 \approx 88.67 \]

Therefore, you save approximately $88.67 per month.