Question

Angela's monthly disposable income is ​$2 comma 3682,368. She has monthly expenses of ​$2 comma 1272,127 ​(including recreational expenses of ​$289289​) and net cash flow of ​$241241 per month. Angela analyzes her personal budget and decides that she can reduce her recreational spending by ​$6464 per month. If Angela is saving ​$305305 per​ month, what is her savings rate​ (i.e., savings as a percentage of disposable​ income)?

Answer 1

Answer:

12.88%

Explanation:

Angela's disposable income $2,368

monthly expenses including recreational expenses ($2,127)

net cash flow $241

after expenses are reduced by $64, her net cash flow will increase to $305

Angela's monthly savings rate = (net cash flow / disposable income) x 100 = $305 / $2,368 = 12.88%

A person's savings rate is how much money they save (do not spend) compared to their total disposable income.