Arianna has just had a child. She and her husband’s net income is $60,000 a year between them. She has established a savings account for her child that needs to contain $90,000 after 18 years. What percent of her household’s income will need to be set aside for the baby’s college fund?(1 point)
To calculate the amount that needs to be set aside each year, divide the desired total amount by the number of years: $90,000 / 18 years = $<<90000/18=5000>>5,000 per year
To calculate the percentage of the household's income, divide the amount set aside each year by the total net income and multiply by 100: ($5,000 / $60,000) * 100 = 8.33%
Arianna and her husband will need to set aside 8.33% of their household's income for the baby's college fund.