Financial Reserves Answers

Your monthly living expenses are $1500 on an income of $1,650 per month. Your goal is to have an emergency fund of 4 times your monthly living expenses. Your emergency fund savings account has $2,400 and you put the remainder of your monthly income into the emergency fund each month. How much more money would you have to save each month to complete your emergency fund in 12 months?

Using a portion of her savings as a down payment, Sarah bought a new car in order to commute to her new job, reducing her savings account to only $2220. From her expendible income of $2440, essential expenses (fixed) are $1010 per month, essential expenses (flexible) are $500 per month, and nonessential expenses are $430 per month. Sarah has decided to reduce her nonessential expenses for 9 months to only $230 per month, in order to build her savings back up to $5820. Then she will return her nonessential expense budget to the original $430 per month.Choose the reason or reasons why Sarah would spend less money every month temporarily in order to have this fund.I. She realizes the importance of having an emergency fund.II. She wants to build up her retirement account.III.She understands that reducing expenses can increase savings.

Emergency funds are important because they ____________.

Using a portion of her savings as a down payment, Sarah bought a new car in order to commute to her new job, reducing her savings account to only $2220. From her expendible income of $2440, essential expenses (fixed) are $1010 per month, essential expenses (flexible) are $500 per month, and nonessential expenses are $430 per month. Sarah has decided to reduce her nonessential expenses for 9 months to only $230 per month, in order to build her savings back up to $5820. Then she will return her nonessential expense budget to the original $430 per month.Choose the reason or reasons why Sarah would spend less money every month temporarily in order to have this fund.I. She realizes the importance of having an emergency fund.II. She wants to build up her retirement account.III.She understands that reducing expenses can increase savings.

Alberto is making a budget. He owes a cell phone bill of $60 per month for 23 more months, plus the fees for any extra usage such as text messaging or extra minutes. Which of the following is the correct category for this expense?a.Essential (flexible) expenseb.Emergency fundc.Essential (fixed) expensed.Non-essential expense

If you want to increase the amount of monthly savings in your budget, which of the following methods would reasonably be the most effective?

Ben and his housemates signed a lease for an apartment for 12 months for $563 per month of which Ben agreed to pay $215 per month. Which of the following statements best gives the reasons that Ben’s rent payment is an essential (fixed) expense?

Which of the following statements best gives the reasons that a data usage bill for a smart phone is an essential (variable) expense?