Is It Possible to Live on Minimum Wage?
The federally set minimum wage is $7.25 per hour, as of 2011. While many states also have minimum wage laws, only a handful of states with such laws set the minimum wage higher than $7.25 per hour. Even so, people earning minimum wage might find it extremely difficult to pay for everyday expenses like rent and utilities, necessary for life. With some disciplined budgeting and creativity, however, it's possible to live on minimum wage.
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Understanding the Numbers
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Full-time employees typically work about 2,080 hours in any given year. If you multiply that by the federal minimum wage, you get $15,080 a year before taxes. Take away 15 percent for federal taxes and you get just $12,818 a year. In one month, that's a meager $1,068, assuming you live in a state with no state income taxes. If you live in a state with state income taxes, you'll take home even less.
Considerations
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In some parts of the country, like Boston and New York, $1,068 a month won't take you very far. Thus, if you plan to live on minimum wage, you should consider carefully where you want to live, choosing a place with a low cost of living. While you should look at obvious things such as how much rentals typically go for, look beyond that to how much things like groceries and utilities cost, as prices for the same goods and services can vary by geographic location.
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Stretching Your Dollars
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You may feel hard-pressed to find a location in the U.S. where minimum wage is enough to live by yourself. You can cut your living expenses by living with roommates. This will not only cut your rent expenses, but also how much you pay each month on utilities. You can further cut your dollars by opting to use public transportation instead of insuring a car to drive and by finding work near your home so you can walk or ride a bike to and from work. Creating a realistic budget and sticking to it also will keep you from overspending and help you find areas where additional savings can be achieved.
Beyond Survival
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You may think that on a minimum wage salary, there's no room for enjoyment. That's not true. While you may not be able to splurge on meals out and movies regularly, you can still find ways to have fun. Look around your local community for free events and activities. Libraries also are a good way to cut entertainment costs. Rent movies and books for free instead of paying for them. Volunteering to help at local festivals and other activities also can be great fun that doesn't cost you a dime.
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References
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