10. David just found a job with a take-home pay of $2,000 per month. He must pay $900 for rent and $150 for groceries each month. He also spends $250 per month on transportation. If he budgets $100 each month for clothing, $200 for restaurants and $250 for everything else, how long will it take him to accumulate savings of $600.
a.) 3 months.
b.) 4 months. David has $150 left over after he spends his cash. More importantly, if continues to save that money, he will have built an emergency stash of cash to cover one month's expenses in a year.
I know that many financial writers suggest three to six months but often, numerous every day costs are eliminated in an emergency. In David's case, this means nomore restaurants, less spent on transportation and possibly no new clothes. For someone like David, and emergency account of $2,000 could last him almost two months. c.) 1 month.
d.) 2 months.
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