Your fixed expenses are $1,235.78/month. You want to save 5 months' worth for an emergency fund over a year’s time. How much must you save each month? Round any decimals to the nearest penny.

Question

$
/month

Answer 1

To determine how much you need to save each month for your emergency fund, follow these steps:

1. Calculate the total amount you want to save for the emergency fund, which is 5 months' worth of fixed expenses: \[ 5 \times 1,235.78 = 6,178.90 \]

2. Since you want to save this amount over a year (12 months), divide the total emergency fund amount by 12: \[ \frac{6,178.90}{12} = 514.9075 \]

3. Round this amount to the nearest penny: \[ 514.91 \]

Therefore, you need to save $514.91 each month.