You are a lucky college graduate with the generous new salary of $4,700 a month. You estimate you will be paying about 20% towards taxes. Given this, if you wanted to save according to the 90-10 rule, how much should you be putting into savings each month?
According to the 90-10 rule, you should aim to save 10% of your monthly income. To calculate how much you should be putting into savings each month, follow these steps:
1. Calculate your monthly taxes: $4,700 * 20% = $940
2. Subtract the taxes from your monthly income to get your after-tax income: $4,700 - $940 = $3,760
3. Calculate 10% of your after-tax income: $3,760 * 10% = $376
Therefore, you should be putting $376 into savings each month based on the 90-10 rule.
According to the 90-10 rule, you should aim to save 10% of your monthly income.
To calculate the savings amount, first, determine the monthly income after taxes.
Step 1: Calculate the amount of taxes:
Taxes = 20% of $4,700 = 0.20 * $4,700 = $940
Step 2: Calculate the after-tax income:
After-tax income = Total income - Taxes
After-tax income = $4,700 - $940 = $3,760
Step 3: Calculate the savings amount:
Savings amount = 10% of after-tax income
Savings amount = 0.10 * $3,760 = $376
Therefore, based on the 90-10 rule, you should save $376 each month.