Anne is 22, just out of college, and moving to a new city for her first job. She is concerned about her finances. She wants to start saving for an emergency fund and to buy a new car for about $24,00 in 2 years with a 20% down payment and finance the rest over 4 years. Her gross income is $40,000 and her disposable income is $31,000. Her monthly living expenses will be about $2,000 ($1,400 fixed). Her employer offers a retirement plan and a credit union. She has $5,000 in a regular checking account. Anne has started shopping around for accounts to hold her liquid assets and would like the highest rate possible as well as avoiding fees if her balance falls below a specified minimum balance. Her thought is to open 2 accounts; one for paying monthly bills and the other for short-term savings.
2. What amount and within what timeframe should she try to reach for her emergency fund? What type of account would you recommend she hold it in (and why)?