Question

George's car insurance comes due every six months. What is the best way to budget for this expense?

A. He should wait for the premium notices to arrive and pay them from his current income.

B. He should put the entire amount of the premium in a savings account the first time he gets paid at the beginning of the year. That way, adequate funds will be there when he needs them.

C. He should average the annual cost of the insurance by dividing the total premium by 12. Then, he should budget the resulting monthly amount under the heading, Insurance. Finally, he would do well to put that monthly amount in his savings account and pay the premiums when they come due from the amount he has saved.

D. He should get ask his employer to withhold the amount needed to pay the premiums from his paycheck.

Answer 1

I'd go for C, but B would work, too, if he has that much money all at once.