Question

the samuels family often faces unexpected expenses, such as when one of their dogs gets sick. this year, they received a $5,000 income tax refund. which option below represents a wise compromise between giving themselves a treat and preparing for unexpected expenses?

○ spend the $5,000 on a vacation and promise to save more when they get home

○ spend $1,000 on things they want and save the rest for unexpected expenses

○ save the entire amount for unexpected expenses and begin saving for a vacation

○ save what they think their unexpected expenses will cost and spend the rest

Explanation:

To find a wise compromise, we need a balance between spending (treating themselves) and saving (preparing for unexpected expenses).

• The first option spends all $5,000 on a vacation with just a promise to save later, which is not a solid plan for unexpected expenses.
• The second option spends $1,000 (a treat) and saves the remaining $4,000 for unexpected expenses. This provides immediate enjoyment while also building a financial buffer.
• The third option saves the entire amount, so there's no treat, which isn't a compromise.
• The fourth option is vague as "what they think" unexpected expenses will cost might not be accurate, and it doesn't clearly balance the two goals like the second option.

Answer:

B. spend $1,000 on things they want and save the rest for unexpected expenses