Even if you’re working full time in a position that pays minimum wage, your after-tax income will only be slightly over $1,000 a month. While living off of so little is difficult, it can be done if you’re willing to make a few sacrifices and adhere to a strict budget. The following steps can be taken to ensure that you can make ends meet with a $7.40-an-hour wage.
Keep Housing Expenses to a Minimum
It is no secret that housing expenses consume a significant portion of take-home income; in fact, apartment rentals are costly enough to ruin your budget. According to a 2007 report published in BusinessWeek Online, the average monthly rent is as high as $723 for a 1,000 square foot apartment, even in Oklahoma City, which boasts the cheapest rental costs in the country. In Austin, where apartments are also relatively affordable, a one-bedroom apartment costs $545 a month.
Even in affordable cities, a person making minimum wage cannot afford to pay rent alone. It is vital, then, that you find a roommate if you want to be able to cover your housing expenses. Search for apartments located outside of metropolitan areas; downtown apartments in large cities can cost hundreds of dollars more each month.
Search for rentals that include utilities costs; knowing that you owe a fixed amount for utilities each month will help you stick to your budget. Plan to spend no more than $400 a month for rent and utilities. If you have one roommate, choose a two bedroom apartment for which the cost of rent and utilities is less than $800 a month. The savings are even greater with multiple roommates.
Limit Transportation Costs
Transportation costs will also comprise a large portion of your monthly budget. The price of a gallon of gas lingers at well above three dollars, making driving difficult for those earning only minimum wage. To reduce your transportation costs, take advantage of public busses. If you live in a small city without a bus system, consider biking to work to avoid paying high prices at the pump.
If you must drive, plan to use as little gas as possible. Limit the number of trips you make to the grocery and other stores. Plan to stop at the grocery on the way home from work to limit driving.
Drive cautiously to avoid accidents and keep car insurance costs at a minimum. If you’re a student, maintain a decent grade point average to take advantage of student discounts.
Avoid the Drive Through
A daily $5 lunch at the drive through may be convenient, but it will cost you $140 a month, which is approximately what you should budget monthly for food. Avoid fast food trips and purchase all of your food at the grocery store.
Read the Sunday paper to discover which stores are offering deals on food for the week, and clip coupons to save even more money. Avoid pre-packaged meals and other frozen foods, which tend to be more expensive due to their convenience. You would also be wise to evade soft drinks and sugary snacks, as they offer very little nutritional value, in addition to being relatively costly.
Take Charge of Your Health
Healthcare costs are on the rise, with health insurance being expensive even for those who have comfortable salaries. To avoid unaffordable healthcare bills, you must take steps to protect yourself from illness and disease. Eat a balanced diet and exercise regularly to stay in shape. Avoid drinking and smoking, which not only compromise your health, but also take more money out of your budget.
See a doctor only for medically necessary treatment, and avoid emergency room visits unless a true emergency is present. A trip to the emergency room typically costs at least $150, even for the most basic treatment.
Health insurance will likely be impossible to afford with low wages, but if your company does offer an inexpensive plan, you would be wise to take advantage of it. Staples, for instance, provides employees with basic health coverage for only $72 a month, a rate that is worth paying if your budget allows. Some companies may even offer discounts to employees who are in good health and who do not smoke.
If you must take medicine, ask for generic prescriptions. If you are taking birth control, visit a women’s clinic to receive a discount card for oral contraceptives such as Beyaz.
Eliminate Extras
If you want to make ends meet while earning minimum wage, you must keep track of every dime you spend and eliminate unnecessary expenses. Trips to the movie theater and $4 drinks from Starbucks will ruin your budget and should be avoided.
You should also eliminate superfluous expenses like premium cable, which can cost $100 or more a month. You can purchase a subscription to Netflix for only $7.99 a month and enjoy unlimited movies and television programs. A cell phone is likely a necessary expense, but be sure to keep your monthly bill as low as possible by avoiding phones that require data plans.
Plan for the Future
If you want to avoid living paycheck-to-paycheck for the rest of your life, you must plan for a better future. Being a good employee is the first step in setting yourself up for future success. Always be on time to work, and make an effort to exceed your supervisor’s expectations. This will make promotion more likely; if you’re applying for a better job elsewhere, it will ensure that your supervisor will give you a good recommendation.
You may also qualify for government loans or grants that will enable you to further your education. Local community colleges are the best choice for low-income students, as they boast low tuition and prepare students to work in specific trades.
By attending college and following a strict budget now, you can prepare yourself for a more affluent future. Living off of minimum wage is difficult, but if you make wise decisions, you can make the most of your current situation and enjoy higher earnings in the future.
Jennifer Long - Jennifer Long holds a bachelor's degree in psychology from the Ohio State University and has completed research projects in the field.
