Is minimum wage really that hard to live on? I was at a friend’s house last night for a small party and met a girl there she mentioned that she chose Hawaii because it was a place where you could do a lot of the things you enjoy for free and a lot of people don’t really focus on career paths. She then also mentioned that she would be happy living on minimum wage because it wouldn’t affect her lifestyle much… besides becoming slightly infatuated for the rest of the evening, I realized I had my next blog post set when she said that she could live on minimum wage quite confidently. Even though she said she could, is living on minimum wage possible?
What is minimum wage?
In the U.S. the current minimum wage rate is $7.25 (it may have changed depending on when you’re reading this post so check the post date). Based on that pay rate let’s do a little math.
In a given year full time workers put in approximately 2,080 hours. Multiply that by minimum wage and they’ll be pulling in $15,080 yearly ($1,257 monthly) before taxes. The tax rate for someone in this bracket is 15% for federal, state taxes will vary, we’ll simply use the 15% here to estimate on the low end. That means take home would be $12,818 a year, or $1,068 a month.
What can you buy with that?
How far your money goes will depend on where you’re living of course. In any part of the country you can probably find a decent place to live, most likely with roommates, for about $400-$500 a month. You can also fit in groceries for about $150, and your utilities will be about $40-$50. You may also have a small clothing allowance of $20-$30 a month if you thrift. Using a high estimate you’ll spend about $750 a month on expenses, which will leave you with $300 a month in disposable income. What you do with that will be above and beyond what it necessary to survive so things like eating out or recreation.
So is living on minimum wage possible? Yes, I think living on minimum wage is possible. I even wrote a post about how I do it, a few months ago. However, I think that if you’re even semi-ambitious you’ll move beyond $7.25 an hour in a very short period of time. What you do with your excess funds at that point is up to you, but realize that worse case scenario, you can survive on minimum wage with proper money management.
Have you ever lived on minimum wage? If not, do you think you could?
Do you think minimum wage should be higher, or is it enough to survive on?
Image from Sami73