George's car insurance comes due every six months. 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 average the annual cost of the insurance by dividing 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 monthly 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 withhold the amount needed to pay the premiums from his paycheck.
I'd go for C, but B would work, too, if he has that much money all at once.
The best way to budget for George's car insurance would be option C: average the annual cost of the insurance by dividing the total premium by 12. Then, he should budget the resulting monthly amount under the heading "Insurance." Finally, he should put that monthly amount in his savings account and pay the premiums when they come due from the amount he has saved.
This approach allows George to spread out the cost of his car insurance over the year and ensures that he has the necessary funds to pay the premiums when they are due. By averaging the annual cost and saving a portion each month, George is less likely to struggle with a large lump sum payment.