Sarah's essential (fixed) expenses are $850 per month, her essential (flexible) expenses are $500 per month, and her non-essential expenses are $200 per month. Her 401-K retirement account has $6,000, her education savings account has $3,000, and her emergency fund savings account has $2,000. Sarah wants an emergency fund of 5 times monthly living expenses (including essential and non-essential). How much more does Sarah need to save to have an adequate emergency fund?

To determine how much more Sarah needs to save to have an adequate emergency fund, we follow these steps:

### Step 1: Calculate Sarah's total monthly living expenses.

Her living expenses include:
- **Essential (fixed) expenses**: $850 per month
- **Essential (flexible) expenses**: $500 per month
- **Non-essential expenses**: $200 per month

\[
\text{Total monthly living expenses} = 850 + 500 + 200 = 1550 \text{ per month}
\]

### Step 2: Calculate the target emergency fund.

Sarah wants an emergency fund of **5 times her total monthly living expenses**, so:

\[
\text{Target emergency fund} = 5 \times 1550 = 7750
\]

### Step 3: Determine how much Sarah currently has in her emergency fund.

Her current emergency fund savings are $2,000.

### Step 4: Calculate how much more she needs to save.

The additional amount Sarah needs to save is the difference between her target emergency fund and her current emergency fund:

\[
\text{Additional savings required} = 7750 - 2000 = 5750
\]

Thus, Sarah needs to save **$5,750** more to have an adequate emergency fund.

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Would you like further details or have any questions?

Here are five related questions:
1. How can Sarah adjust her budget to increase her savings rate?
2. Should Sarah consider reallocating funds from her 401-K or education savings for her emergency fund?
3. How do essential and non-essential expenses impact the size of an emergency fund?
4. What are some strategies Sarah can use to build her emergency fund more quickly?
5. What other types of savings accounts could help Sarah manage her financial goals?

**Tip**: Automating savings into an emergency fund can make it easier to consistently set aside money without relying on willpower alone.

Learn how to calculate how much more Sarah needs to save for her emergency fund. This problem covers essential and non-essential expenses, savings goals, and budgeting strategies. Ideal for students or individuals looking to manage their finances. Includes detailed formulas and step-by-step solutions.

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