Can you Survive on Minimum Wage?

As of January 2017, the federal minimum wage in the U.S. is $7.25 per hour. Now that does not seem like much, but let’s take an in detail look at how this plays out over the course of a year or more.

Calculation

So $7.25 per hour? That equates to $290 per week assuming a 40 hour work week. In a year, this equates to $15,080 (assuming you work 52 weeks so no vacation). That does not sound like much, so lets do a quick analysis to see how this works out. Lets say you work in New York City. You pay $800 per month for rent, and $50 per month for commute. You are conservative on food so you pay $20 per day on food. Okay hold on lets stop there. Your monthly income is $1,160, and note that this a gross amount (net of tax) so the real number is closer to just below $1000. Now lets take a look at those expenses, which I feel are pretty conservative. It is tough to pay $800 for rent, unless you are sharing a bedroom, anywhere in the U.S. For food, its going to be tough to only spend $20 per day on average, so that is relatively conservative as well. This does not account for other expenses such as healthcare and dental insurance, clothing, and room for any “fun” expense, seeing a movie perhaps, etc. With those expenses we are at ~$1500 per month for the basic living essentials.

So in this scenario, it will be very difficult, if not impossible, to live on the current minimum wage in the U.S. This analysis also assumes you are single. If you are also supporting a family, then it definitely will not make ends meet. This is the unfortunate reality. However, there is a bright side. If we know this is an issue, and not a situation we want to be in, then we can take directed action now to change things.

Are We Talking 9-5?

So if this is not enough then what can we do? Well the first option is simple, work more per week than this. If your 9-5 is not getting it done, and you don’t have the option to go after a higher paying career then you should work double the hours or so. If you do this, then you will make $580 per week, and $30,160 per year. This is working 80 hours per week, and yes that is doable and many people work this many hours. Now if you are working this much, you wont have as much time to spend money, so although this is by no means a large salary, you may be able to save a bit on the side in addition to covering the basics.

This sounds tough doesn’t it? Well, if you are going to make minimum wage, you’ll have to work even harder because your hours do not go that far (relatively). Now, we don’t recommend this as a long term strategy by any means, but life can be amazing and life can be tough. After all they say you need to go through hell to get to heaven so you better start working hard!

Job vs. Career

What we do recommend is a real career. While a minimum wage job is a great start for someone that has never worked before, there are so many opportunities out there for those willing to invest in a career. This can be as a doctor, lawyer, banker, sales professional, marketer, and so many more. There are so many industries globally and hundreds of thousands of companies. Some of these careers may not be open to you from an academic standpoint, and some may not interest you, but that is life and it is your job to try things and find out your talents and skillsets, and how they can be valuable in this world. We have done posts in the past on careers, and we’ll be doing another summarized version coming soon!

 

Join our newsletter

Get financial tips from a licensed professional directly to your inbox.

Powered by ConvertKit

Speak Your Mind

*