Right now the federal minimum wage is $7.25 per hour. However, in some states minimum wage is higher than this.
When I was earning $11.50 an hour I personally, had to work two jobs just to get by. Which makes me wonder how people who are earning the minimum wage of $7.25 are able to make it.
Let’s take a look.
What You’d Earn Per Month on Minimum Wage
Our first step is to figure out what you’d bring home each month if you were earning the federal minimum wage. We’ll assume a forty hour work week.
40 hours per week X $7.25 per hour X 4.3 Weeks Per Month X 20% Tax Withholdings = $997.60
That’s only $997.60 take home pay after taxes working full time at the federal minimum wage. If I’m being honest, this is much less than I expected before doing the actual calculations.
So what would a minimum wage budget look like?
A Minimum Wage Budget
Making this amount of money last an entire month without any government help seems next to impossible, especially if there are kids added to this equation.
Our budget below is going to be for a single guy without kids who lives in a small Midwestern town.
- Rent – $450
- Utilities – $250
- Transportation – $150
- Food – $147
TOTAL – $997
In our example we’ve reached maximum capacity without covering anything except for the bare essentials. We’re also assuming that our guy can eat on $147 a month which is an extremely low grocery budget, even for a single person. The other assumption is that nothing bad will ever happen to this guy like a car breaking down, for instance.
As you can see living on $997 a month is no easy feat.
Is It Possible to Make it On Minimum Wage?
To answer our question – no, it’s not.
In my example above a single person without kids might be able to scrape by until something bad happens, which inevitably will. A car will break down, a medical bill will need paid and so on.
There’s no room for saving a penny when you’re working for minimum wage.
To top it off if you have children or a spouse to support than it’s impossible to live on minimum wage without receiving ample government assistance.
What’s The Solution?
I feel like everyone has an opinion on solving the poverty problem in America but it’s not so simple. Raising the minimum wage is one option but that can do major damage to small businesses and lower employment rates overall.
I come from a family of small business owners and if the government were to raise minimum wage to $15 an hour my family would have to cut half of their employees. They don’t have the money to double salaries so cutting back on staffing would be the only option. That’s how many small business owners feel.
It’s the ultimate catch-22. While you want to help people businesses cannot stay in business if the minimum wage is drastically increased.
In my opinion it looks like the only solution is to find more work if you’re struggling to make ends meet. I realize that this sometimes sounds a lot harder than what it actually is.
Here are some resources to help earn more money:
5 Ways to Make $500 a Month – In the post there are five things you can do on top of your day job in order to bring an extra $500 per month. It’s definitely worth checking out if you’re struggling to pay the bills.
Side Hustle Ideas – Here are a list of side hustle ideas to get you started.
Here are some resources for saving more money:
A $30 per Week Grocery Budget – In this post Crystal walks us through what a $30 per week grocery budget will look like as well as what to buy.
13 Ways to Save Money on a Low Income – In this post Jason goes through 13 very solid strategies on saving money on a low income.
How I Raise 2 Kids on $20,000 a Year – Here’s my story on how I was able to raise two happy, healthy kids on $20,000 a year salary.
Do you have any tips for those making minimum wage and struggling to get by?