10 Emergency Fund Planning Flashcards
Melissa and Jim are both busy accountants and don’t have time for their own financial planning. They present you with the following information regarding their monthly expenses:
Expense Amount
Rent 2,600
Insurance (rental) 200
Car Lease (Jim) 399
Car Lease (Melissa) 499
Student Loan (Jim) 875
Health Insurance 665
Groceries 1,100
Cell Phone 285
Cable/WiFi 265
Gym Membership 35
Auto Insurance 525
Entertainment 500
Gas 225
Utilities 75
Clothing 100
Medical 125
Savings: Money Mkt 200
Savings: Retirement (J) 400
Savings: Retirement (M) 400
Jim and Melissa want to know if their $19,500 in savings is a sufficient emergency fund. If not, how long will it take to get there based on their current savings strategy?
Jim and Melissa currently are both earning incomes and would need three months of fixed and variable expenses on hand. Their total monthly expenses are $8,473. Three months’ worth would total $25,419, they currently have $19,500 saved. This leaves a gap of $5,919. At their current monthly savings of $200 (retirement savings cannot be applied), it would take 29.6 months to save enough.
