How a Recent College Grad Lives on a Minimum Wage Income

Eric Nilsson, 24, graduated from college last year and is working full time at a book shop until a better job comes along. Since his job only pays minimum wage, he has learned how to adapt to living on minimum wage income.

Minimum wage is the smallest hourly rate than an employee can be paid, a wage which is mandated by federal law. The current minimum wage rate is presently $7.25 an hour, which works out to a monthly income of $1276. After taxes, this figure drops to about $1100 a month. How is Eric managing to get by on such meager earnings? He says careful decision making and creative thinking is his big secret.

What a minimum wage budget looks like

For Eric and 3.6 million other American workers earning minimum wage, housing costs take the biggest bite out of a monthly income, followed by groceries. In Boise, Idaho where the average studio apartment runs $700/mo in combined rent and utilities, Eric shares the cost of a 3 bedroom home with two coworkers, paying $365/mo in rent and utilities. To save even more, he sought out a house which provided free cable, supplied a washer & dryer, and was close to downtown where he spends much of his free time.

The remaining $735 of his paycheck breaks down into the follow monthly expenses:

--$250 for groceries, grooming needs, and cleaning supplies
--$100 for coffee shop visits, dates, and going out with friends
--$35 car insurance
--$75 health insurance premiums (for an HMO plan through work)
--$20 for haircuts
--$60 for gasoline (inadequate public transport makes owning a car a necessity)
--$50 credit card payment
--$35 for clothes, shoes, etc
--$35 misc household needs
--$25 gym membership
--$50 to savings

Making choices

There are huge gaps in Eric's budget. There is no room in his budget for items such as furnishings and basic household goods, doctor visits, an unexpected emergency, or expensive car repairs. Eric doesn't see that as a problem. "In case of an emergency, I can cut back on going out or clothes to cover the cost, or even pick up an odd job. As far as having 'stuff,' it' really all about making choices, deciding how badly I really need something and then thinking creatively to get the things I do need," he says. "I'm always looking for the best bargain and the cheapest deal. I do a lot of battering, too."

To get the most out of his $1100 month paycheck, Eric shops dollar stores, Freecycle.com and consignment shops for basic household items. Clothes are bought at discount outlets or thrift stores. Furniture, curtains, and rugs are hand-me-downs bartered from family and friends. For recreation, Eric takes advantage of free concerts, mountain bike & hiking trails, Frisbee golf courses, and other free or low cost activities. A regular vacation is out of the question though he notes "I can always go camping if I need to get away."

While Eric is managing fine for the moment on minimum wage, he acknowledges that he can't get ahead on this kind of income. A newer car, his own apartment, or even getting married are out of the question unless he takes on a second job or finds one that pays more than what he's making now. With the unemployment rate projected to remain above 9% throughout 2011, a better paying job for recent graduates like Eric and millions of other minimum wage earners could easily be a year away

More articles by this contributor:
Ten Ways to Cut Food Expenses and Increase Your Savings.
How to save money easily without changing your lifestyle.
Consumer tips for avoiding credit card fees.

resources:
http://www.livingwage.geog.psu.edu/
http://www.bls.gov/cps/minwage2009.htm