Question

Your realized income from your primary job is $2,034.24/month. Your fixed expenses are 30% of your primary job’s realized income. You have a second job that pays $9.50/hr with deductions of FICA (7.65%), federal tax withholding (11.5%), and state tax withholding (7.75%). If you want to save enough in the next 10 months to have an emergency fund that will cover 5 months using only 20% of your discretionaries from your primary job, how many hours per month do you need to work at your second job to meet your monthly savings goal?

Answer 1

We know,

Monthly income from my primary job: $2034.24
Fixed expenses per month: 30% of monthly income from primary job = 30% x $2034.24 = $610.27
Remaining income: $1423.97

Hourly income from secondary job: $9.5
Deductions are:
FICA - 7.65% of hourly income = 7.65% x $9.5 = $0.72675
Federal tax withholding = 11.5% x $9.5 = $0.10925
State tax withholding = 7.75% x $9.5 = $0.73625
Thus, the remaining income in hand would be $7.8445/hr

The amount he can earn in next 5 months: ($2034.24 x 5) + ($9.5 x 30 x 5) = $10171.2 + $1425 = 11592.2
=> $11592.2 is the amount he needs to save in next 10 months.

20% of primary income needs to be saved: 20% x $1423.97 = $284.794
In 10 months: $284.794 x 10 = $2847.94 (this is amount he will save from primary income)

Reamining amount to save: $11592.2 - $2847.94 = $8748.26 (this is the amount he'll save from secondary job)

$9.5 x 920 = $8740 (approx $8748.26)

Thus, it will have to work 920 hours to save that much.