This year the Smith family has been on a very tight budget and has finally put together a monthly budget. If their monthly food bill is $550 and their annual combined income is $47, 500, what percentage of their income is set aside for food?

Answer: First, you need to find out how much the Smith family spends each year on food. $550 x 12 months equals $6600.

Next, you need to divide $6600 by $47, 500 which equals 0.13894.

Finally, convert the decimal to a percent by moving the decimal point two places to the right.

Your answer: The Smith family spends 13.89 % or about 14% of their annual income on food.