Ariana 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 income will need to be set aside for the babies college fund.

Question

Ariana 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 income will need to be set aside for the babies college fund.

Answer 1

To calculate the percentage of household income that needs to be set aside, we first need to determine the total amount that Ariana needs to save each year for the child's college fund.

Let's break down the total amount needed after 18 years: $90,000 / 18 = $5,000 per year.

Now, we can calculate the percentage by dividing the annual savings by the net income and multiplying by 100: ($5,000 / $60,000) * 100 = 8.333...%.

Therefore, Ariana will need to set aside approximately 8.33% of her household income for her child's college fund.