Annual expenses for an individual are shown in the table. To prorate the annual costs into a monthly budget, how much money per month should be budgeted for home insurance?
| | Annual Expenses |
| --- | --- |
| Car Registration | $84.00 |
| Car Insurance | $565.00 |
| Home Insurance | $1,070.00 |
$[?]
Round to the nearest cent.
Answer (2)
Divide the annual home insurance cost by 12 to find the monthly cost.
Perform the division: 12 $1070.00 = $89.1666... .
Round the result to the nearest cent: $89.17.
The monthly budgeted amount for home insurance is $89.17 .
Explanation
Problem Analysis We are given the annual home insurance cost of $1,070.00 and need to find the equivalent monthly cost to include in a monthly budget. To do this, we will divide the annual cost by the number of months in a year, which is 12.
Calculating Monthly Cost To calculate the monthly cost, we divide the annual cost by 12: Monthly Cost = 12 Annual Cost Monthly Cost = 12 $1070.00
Performing the Calculation Performing the division, we get: Monthly Cost = $89.1666... We need to round this to the nearest cent (two decimal places).
Final Answer Rounding $89.1666... to the nearest cent gives us $89.17. Therefore, the amount that should be budgeted per month for home insurance is $89.17.
Examples
Budgeting is a crucial skill in personal finance. For example, if you know your annual expenses for various categories like groceries, transportation, and entertainment, you can divide each annual expense by 12 to determine how much you need to set aside each month. This helps you manage your cash flow and avoid overspending. Understanding how to prorate annual costs into monthly amounts allows you to create a realistic and manageable budget.
To budget for home insurance monthly, divide the annual cost of $1,070 by 12 months, resulting in $89.17. Rounding to the nearest cent gives the final monthly budget. Thus, allocate $89.17 each month for home insurance.
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