In 2014, nearly 550,000 American adults who earn an hourly wage were paid America’s federal minimum wage of $7.25, according to this government report.
Earning seven bucks an hour when you’re sixteen and living at home with mom and dad is one thing, but earning minimum wage when you’re an independent adult is entirely different.
Having to pay rent, eat, get to work each day and have basic medical and other needs covered on $7.25 an hour is no easy task, but it can be done with some effort.
Here are some suggestions for spending, saving and living while earning minimum wage.
*We’ve amended this post as of May 25, 2016 to include the final paragraph showing a suggested budget for a single person living on minimum wage.
Keep Housing Costs at Bay
Housing is most people’s single biggest expense. If you’re earning minimum wage, it’s important to keep housing costs reasonable. With a take-home pay of roughly $1,000, that’s going to take some work. Here are some suggestions for keeping housing costs affordable.
- Find shared housing if you can. Rent an apartment with a friend. Find a family with a finished basement available for rent.
- Look for a “work for rent” option. Look for an apartment where you can exchange landlord responsibilities for rent costs or a single family home or duplex where you can exchange or reduce rent costs for labor activities such as mowing the lawn, painting, etc.
- Live in an inexpensive area of town. Try to find a safe but cost-effective housing area.
Finding affordable housing on $1,000 a month won’t be easy, but it can be done if you’re willing to do some research and some negotiating with property owners/landlords.
Consider Transportation Costs
Transportation is most people’s second biggest expense and also needs to be kept at bay when you’re earning a lower income. The average new car payment is $482 a month (not to mention the opportunity cost loss) and that’s simply not an option for those earning minimum wage.
How can minimum wage earners keep transportation costs at bay?
- Live close to work if possible so you can walk or bike to work
- If walking or biking aren’t options, live close to public transportation
- Get the best public transportation deal by purchasing a monthly pass
- See if you can carpool to work and/or get rides from others on occasion
Owning a car is likely not the best option for those earning minimum wage. Gasoline costs, insurance costs, parking costs and upkeep costs can easily add up to a few hundred dollars a month, but if you can find a way to own a car for as cheap or cheaper than what public transportation costs, go for it.
Just remember to have extra money set aside in savings for insurance deductibles should you be involved in an accident and for unexpected auto repairs.
Keep a Lid on Grocery Costs
Grocery costs can also take a big bite out of a person’s monthly budget, but there are several ways to keep grocery costs low. In our case, our family of six spends no more than $500 a month on groceries. That equates to a maximum of $83 per person a month.
How do we keep grocery costs so low? Here are some tips.
- We menu plan meticulously. When there are options for dinner in the house, we’re less tempted to order pizza or go out to eat
- We plan our menu around the week’s upcoming sales. For instance, when chicken is on sale, we’ll have chicken casseroles, chicken soups, fajitas, chicken tacos, chicken salads, etc.
- We don’t buy a lot of snacks. Very rarely do we buy soda, chips and other snack items. Those items are expensive and are a detriment to one’s health as well. Instead, we save soda and chip purchases for special occasions such as movie nights.
- We cook from scratch. Processed foods are often much more expensive than cooked-from-scratch items, especially when it comes to desserts. Therefore we make items such as cookies, cakes, flour tortillas and specialty breads from scratch.
- We buy produce on sale or grow our own. Even if you don’t have the room for a big garden, you can save money by growing your own produce. Do you eat a lot of tomatoes? Buy a potted tomato plant and put it on the balcony. Or take part in a CSA or community garden. Prices are often much cheaper than store produce prices, and the food is much fresher as well.
By working to keep food costs at bay you can help make survival on minimum wage much more pleasant.
Look for Cheap or Free Entertainment Options
Going out with friends can be costly. As of 2015, the average person in America spent $219 a month on eating out. That’s a lot of cash no matter how much money you earn, but if you’re earning the minimum wage, $219 a month is astronomical; over twenty percent of take home pay.
Add in trips to the movies and other entertainment costs and you can eat up a large chunk of your income quite quickly. Here is a list of low cost activities to keep expenses to a minimum.
- Have game nights or movie nights your place or a friend’s place
- Split a meal with a friend when going out to eat
- Use coupons where possible or Groupon deals to cut entertainment costs
- Take advantage of movies and books at the library
- Hike, bike or walk with friends
- Share a potluck dinner at someone’s house or at a local park
- Start a book club and choose reads from your local library
One of the other ways we keep entertainment costs low is to make our favorite restaurant meals at home. There are many online resources that share popular restaurant recipes. One of our favorites is Better than Olive Garden Alfredo Sauce. This recipe gets rave reviews when we serve it to friends or family members and costs a small fraction of what we’d pay purchasing it at a restaurant.
There are many options for free or cheap activities that you can take advantage of, no matter how much money you earn. By keeping entertainment costs under control, you can help make living on minimum wage exciting without breaking the bank.
Keep Health Care Costs Under Control if Possible
Health care expenses aren’t always controllable, but many of today’s most common diseases can be prevented, delayed or even reversed with a change in diet and exercise habits. And as a bonus, those changing to a healthier lifestyle can save money on health care costs as well. Here are some things you can do to keep health care costs affordable when living on minimum wage.
- Don’t smoke. Not only is smoking expensive (the average cost of a pack of cigarettes in America today is $5.51 – much more for states that host an additional “sin tax”), it has been shown to cause cancer, emphysema and other maladies such as COPD.
- Eat whole foods. Contrary to popular belief, it’s not more expensive to eat whole foods. We feed our family of six on primarily whole foods and still keep grocery costs to $83 a person per month. Eating primarily whole foods will help your body to function better, increase your energy levels and help you to sleep better too.
- Get and stay active. Exercise is listed as one of the top five things people can do to prevent heart attacks and other diseases. When a person exercises, they help their body to release toxins from organs and the bloodstream, they strengthen their lungs, muscles and bones and improve overall health. Exercise doesn’t have to be expensive, either. A daily walk around the neighborhood or weight-bearing exercises at home such as pushups, squats, sit ups and calisthenics will do the trick.
- Drink plenty of clean water. Since the human body is more than two-thirds water, it only makes sense that drinking plenty of water will help your body stay in balance. The general rule for water consumption is half your body weight in ounces per day. So if you weigh 150 pounds, you should be drinking 75 ounces of water each day. This amount needs to be increased if you have heavy physical exertion at your job or during workouts.
- Floss and brush regularly. The American Dental Association recommends brushing 2-3 times per day and flossing daily. By taking good care of your teeth, you can avoid expensive dental repairs.
- Minimize alcohol consumption. Not only is alcohol expensive, it can wreak havoc on your body when over-consumed.
- Get enough sleep. 7-8 hours per day is what the average person needs. Sleep has been shown to have healing properties as well, so be sure to get enough of it, working to create a schedule of going to bed and waking at approximately the same time each day.
By following the above steps to improve your health, you can help keep medical and dental costs affordable, even on a smaller income.
Save Something Each Month
Even when earning minimum wage, it’s vitally important to establish a habit of saving money each month. The reason is two-fold: First, choosing to live beneath your means – no matter what your income – will help you to be a better money manager in general.
Second, working to build up a solid savings balance – no matter how long it takes – will help assure more financial stability for you in the event of an expensive emergency or job loss.
Here are some tips for ensuring you save at least some of your paycheck each month.
- Set an amount you think you can afford to put aside each month, even if it hurts a bit. Even seemingly smaller amounts such as $5, $10 or $20 a month will begin to add up.
- Automate your savings when possible, either through your employer or through your local bank. By treating your savings amount like a bill, you’re more likely to forget about it.
- Make it a rule to not touch your savings except in the case of an emergency. No using it for spontaneous goings out with friends or sales at the local clothing store.
- Put all “found money” into savings. Tax returns, gifts, etc. qualify as “found” money.
- Put at least 25 percent of all raises into savings. Allow yourself the gift of having more money to live on, but commit to putting some of that money away each month since you are used to not having it anyway.
- Consider contributing something toward retirement, no matter how small. If your employer offers a 401(k) program, consider contributing some of your pre-tax dollars to an account. You likely won’t miss it. If not, think about opening up a Traditional IRA or Roth IRA. Most IRA’s require an opening deposit of as little as $50. From there you can contribute monthly or quarterly as you are able.
Keep Electronic Costs at Bay
Instead of buying a $600 iPhone, get a pay-as-you-go phone. It won’t have all of the bells and whistles but it will suit your needs and provide less stress on your budget. Cut the cable. Search for affordable Internet service or cancel Internet service altogether and use free Internet service at your local library.
Work to Find a Side Hustle
There are many options for side hustle jobs for people in nearly any situation. Consider your talents and interests, and work to find a side job that will help you to utilize those talents and interests. Some ideas? Deliver pizzas at night or newspapers in the morning.
Walk dogs for pet-owning neighbors or find a virtual assistant or freelancing job that you can do online. Any extra income you can bring in during the week will help ease your financial situation and make paying the bills more comfortable.
Choose to be Grateful
So much of surviving in tough circumstances boils down to attitude. No matter how bad a person has it, someone, somewhere always has it worse. Choose to focus on the things you do have instead of the things you don’t have. Give and serve where you can to help others. Those who have an attitude of gratitude live a happier life in general.
Those who work to live on a minimum wage income know it’s not easy, but it isn’t impossible either. With a little ingenuity and a lot of hard work, you can live a good life on any wage.
Suggested Budget for Minimum Wage Earners
Here is a suggest budget for someone living on minimum wage. The numbers suggested are for a one-person household. This budget assumes a $1,000 per month take-home pay after deductions for taxes and benefits.
What are your tips for living well on a smaller income?