George's car insurance comes due every six month. What is the best way to budget for this expense?
A.He should wait for the premium notices to arrive and pay them from his current income.
B.He should put the entire amount of the premium in a savings account the first time he gets paid at the beginning of the year.That way, adequate funds will be there when he needs them.
C.He should averge the annual cost of the insurance by dividiing the total premium by 12. Then, he should budget the resulting monthly amount under the heading,Insurance. Finally,he would do well to put that monnthly amount in his savings account and pay the premiums when they come due from the amount he has saved
D.He should get ask his employer to with hold the amount needed to pay the premiums from his pay check.
I got b. But im not sure about this one.
Already answered.
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Ok so my next choice would be C.
It's great that you're considering different options to budget for George's car insurance expense. Let's go through each option and assess its effectiveness:
A. Waiting for premium notices and paying them from current income: This option may work if George has a steady income and is disciplined in setting money aside when the premium notices arrive. However, it may put a strain on his monthly budget, especially if the premium amount is significant.
B. Putting the entire amount of the premium in a savings account at the beginning of the year: This option is a proactive approach since George is setting aside the total premium amount upfront. By doing so, he ensures that the funds are available when the payment is due. However, if the premium is a substantial amount, it might be challenging for George to allocate such a significant portion of his income at once.
C. Averaging the annual insurance cost and budgeting a monthly amount: This is a sensible approach. By dividing the total premium by 12 and budgeting the resulting monthly amount, George is effectively spreading out the financial burden. Putting the monthly amount into a savings account ensures that he has the funds available when the premium becomes due. This option allows for better cash flow management and avoids the strain of a lump sum payment.
D. Requesting his employer to withhold the amount needed for premiums from his paycheck: This approach may work if George's employer offers such a service. By having the premiums automatically deducted from his paycheck, it ensures that the funds are set aside without requiring George's direct involvement. However, not all employers provide this option, so it might not be available to him.
Considering all the options, option C (averaging the annual cost and budgeting a monthly amount) seems to be the most practical and manageable choice. It allows George to spread out the expense over the year while building up a savings buffer for the premiums. Make sure to consider George's specific financial situation and preferences when making a decision.