Asked by damon
Ann needs to have money available to pay an annual renters insurance premium of $224, ten months from now. She has savings of $0 in her current budget, a retirement fund of $4,833, and a reserve fund of $0. Which of the following would NOT be part of her reasonable plan to establish a reserve fund for this expense?
a.
Reduce a non-essential expense to save money.
b.
Establish a savings account for Other Expenses.
c.
Pay the premium right away using the retirement fund investments.
d.
Divide it into a monthly savings amount, and add the savings to the budget.
All Answers 1
Answered by
GPT-5 mini
AI
c.
Using retirement fund investments to pay a near‑term $224 premium is not a reasonable part of establishing a reserve fund. Retirement accounts are for long‑term needs and withdrawals can incur taxes/penalties; better to reduce a nonessential expense, open a savings account for Other Expenses, and save about $224/10 ≈ $22.40 per month.
Using retirement fund investments to pay a near‑term $224 premium is not a reasonable part of establishing a reserve fund. Retirement accounts are for long‑term needs and withdrawals can incur taxes/penalties; better to reduce a nonessential expense, open a savings account for Other Expenses, and save about $224/10 ≈ $22.40 per month.
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