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I am ready to save. What is the next step?

Learn about different strategies for saving.
Savings are like a guardrail for your financial plans - they ensure that even if something unexpected happens, your plan remains in place and you are still building a better financial future.

Emergency fund

If you are following the 50/30/20 rule for budgeting, you are already setting aside 20, percent of your income for savings. Now, let's break that down even further. We already know that having an emergency fund is essential to protecting all aspects of our budget. An emergency fund is where most, if not all your savings should go until that fund reaches its intended amount.
The recommendation is that your emergency fund has three to six months' worth of living expenses/needs in it. Expenses like dining out and entertainment should not be included in this calculation, as they can easily be eliminated in case of an emergency. So, what does that look like in real life example?


Ella, who works as a store manager, has a monthly salary of dollar sign, 5, comma, 200. Ella has decided to start building an emergency fund and knows that she should have three to six months' worth of expenses in that fund. Looking at her monthly budget, Ella identified the following as her essential living expenses:
Rentdollar sign, 1, comma, 100
Utilitiesdollar sign, 220
Car paymentdollar sign, 460
Insurancedollar sign, 85
Groceriesdollar sign, 600
Phone & internetdollar sign, 129
TOTALdollar sign, 2, comma, 594
We can say that Ella has about dollar sign, 2, comma, 600 worth of living expenses per month. If her emergency fund is to have three months' worth of expenses, then her emergency fund should have dollar sign, 7, comma, 800 in it. But what if it's six months' worth of expenses? In that case, she should have dollar sign, 15, comma, 600 in emergency savings.
Ella has been following the 50/30/20 rule and is saving 20, percent of her income. If she is going to try and save three months' worth of expenses, it is going to take her about 8 months to do that.


If Ella' goal is having six month's worth of expenses in her emergency fund, how long will it take her to save the full amount?
(Remember, her goal is dollar sign, 15, comma, 600 and she saves dollar sign, 1, comma, 040 each month).
divided by
  • Your answer should be
  • an integer, like 6
  • a simplified proper fraction, like 3, slash, 5
  • a simplified improper fraction, like 7, slash, 4
  • a mixed number, like 1, space, 3, slash, 4
  • an exact decimal, like 0, point, 75
  • a multiple of pi, like 12, space, start text, p, i, end text or 2, slash, 3, space, start text, p, i, end text
start text, m, o, n, t, h, s, end text.

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