8.1.14 Money

Activity symbolActivity: Where Does the Money Go?

Let’s suppose your gross monthly income (that is, your income before taxes) is $3,960. Financial experts recommend that no more than $1,386 of this amount should go toward your mortgage. Based on your monthly salary, you should also spend no more than $316.80 per month on car payments. Additionally, it is advisable to place $792 of your gross monthly income into a savings account.

If you are putting these exact amounts toward these categories each month, which percentage of your gross monthly income will be spent on the following expenses?

(a) Mortgage

Hint symbol

Comment

Did you try rewording the given information, then translating it? For example, $1,386 out of $3,960 should go toward mortgage payments. This translates into the quotient dollar times 1386 divided by dollar times 3960. The $ symbols cancel (because they are units) and the quotient can be worked out. Remember, you will need to convert your unit-less decimal to a percentage.

Solution symbol

Answer

(a) The percentage spent on the mortgage is equation sequence dollar times 1386 divided by dollar times 3960 equals 1386 divided by 3960 equals 0.35 equals 35 percent.

(b) Car Payments

Solution symbol

Answer

(b) The percentage spent on car payments is equation sequence dollar times 316.80 divided by dollar times 3960 equals 316.8 divided by 3960 equals 0.08 equals eight percent.

(c) Savings

Solution symbol

Answer

(c) The percentage put into savings is equation sequence dollar times 792 divided by dollar times 3960 equals 792 divided by 3960 equals 0.2 equals 20 percent.

Of course, these numbers represent general advice. It might be better to purchase a used vehicle that is not too old and has a reasonable number of miles on it, and try to pay for it outright from your savings account, rather than to have a car payment.

8.1.13 World Populations

8.1.15 Saving for Retirement