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Article - How do people make it on Minimum wage

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					How do people survive on minimum wage?
You know it's not much, but once you crunch the numbers you see just how meager it is.
By MSN Money partner on Wed, Nov 9, 2011 6:46 PM
This guest post comes from Andrea at So Over Debt.


One of my clients recently reported getting a job at a fast-food restaurant. Since she's been unemployed and desperately looking for
work for nearly a year, I was thrilled for her. She was very excited that she'll be making $7.50 an hour -– a whole quarter more
than minimum wage.

After she left my office, I got out a calculator. I've never worked for minimum wage, so I didn't know exactly how much -- or how little --
money that is.

 Assuming 80 hours per pay period, my client will be bringing home around $462 every two weeks. That's with no health insurance or
retirement contributions.

If I brought home $924 a month, would I even be able to survive? I decided to find out.

My minimum-wage budget
First, I decided which of my expenses are absolute necessities. This is what I came up with:


        Rent (My parents own my home, and I don’t currently pay rent, but most people do)
        Utilities
        Food
        Phone (People will say this isn't necessary, but I have a child. No way would I go without a phone.)
        Car insurance
        Gas


Note that I left out my car payment. If I were making minimum wage, I know I'd have to drive something, but not something with a huge
monthly payment. So I'm pretending my car is paid off.

The budget in action
Here's how those costs would add up:


        Rent: $400 (the amount I would be paying if my parents would let me -– I realize it would be much higher in some areas)
        Utilities: $200 (current average of electricity, water and gas for my house)
        Food: $200 (assuming we could survive on $50 a week)
        Phone: $25 (prepaid phone)
        Car insurance: $100 (full coverage)
        Gas: $140 (this is what I currently spend to drive to/from work)
        Total: $1,065


OK. I ignored my car payment. I don't have anything fun, like cable or Internet access. And I'm still over budget by about $100.

What about government assistance?
I checked on that. In Kentucky, a family of two making $1,200 a month before taxes qualifies for $165 in food stamps. Even if I could
make that cover all the groceries for the month, that leaves me with only a little more than $100 a month for everything I didn't list
above.

My son would qualify for Medicaid, but as an able-bodied adult, I wouldn't. So if I got sick or had to take a prescription medication every
day, I'd fly through that $100 in no time.

How the heck does this work?
There are so many things I didn't account for in my minimum-wage budget: Clothing, Car maintenance, Birthdays, Christmas, School
field trips, Toilet paper, and toothpaste.

With these numbers, is it any wonder so many people are in debt? Personally, if I knew I was going to spend more than I made just to
exist, I’d try to drown out that misery with TV or Internet access at home, even though I know I couldn't afford it. I'd probably use store
credit cards to buy clothes (if I could even get approved for them). Payday loans would be my backup plan for emergencies. And
retirement? Pfft, what's retirement? I couldn't even afford to get my oil changed!


Honestly, the first thing I would do is drop my car insurance. This would free up another $100 a month, but I would risk getting a ticket
or totaling my car in a wreck. I don't even want to think about what would happen if I was injured while driving and had no insurance of
any kind.

I complain about my student loans constantly, but if I hadn't gone to college and could qualify only for minimum-wage jobs, there is
simply no way I could make it. Even if I made stellar financial choices at all times, I would run out of money every month. I can't figure
out how any single parent could make this work.

Could you make it on minimum wage?
I feel like I must be missing something here. With 4.4 million American workers making at or below minimum wage (and remember, I
gave myself an extra quarter an hour), there has to be some kind of secret I don't know about. It hurts my soul to think that there are
people struggling with this every day -- not because they are curious but because it's their reality.

 Have you ever worked for minimum wage? How about doing it while supporting a household? Could you find a way to alter your
budget to make it work?



Answer on a separate sheet of paper in complete sentences!
   1. What are some wants missing from her list of absolute necessities that you would like to have when you become
       independent? Would you be able to afford these things on minimum wage?
   2. Keeping all of her estimates the same, assume that you now have a $200 a month car payment. What would
       your hourly wage have to be to earn $100 more than your expenses? (assume there is a 30% effective tax rate;
       take your total wages for 80 hours and multiply by .7 to get your take home pay; make sure you multiply by 2 for
       the monthly total)
   3. What are the needs that she does not list in her expenses? Would you be able to live without these?
   4. What are the problems with driving without car insurance?
   5. Write a half-page explanation of what you learned from this article about budgeting and real life economics.

				
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