How to Budget and Save Money When You’re Making Minimum Wage

Finding extra money to put aside isn’t easy when you’re working a minimum wage job, but that doesn’t mean you can’t do it!

If you’re having a tough time living off minimum wage, you’re not alone. Adjusting for inflation, the federal minimum wage hit its high point in 1968. The $1.60 minimum wage of that era would be worth around $10.69 today, much higher than the current minimum wage of $7.25.

Unfortunately, while the minimum wage has not risen with inflation, the cost of rent, food, education, medical care, and pretty much everything else has.

And it’s not like teenagers are the only ones working minimum wage jobs, either. In fact, it’s just the opposite. As recently as 2015, less than half of those working for the federal minimum wage were between the ages of 16 to 24.

If you’re relying on the minimum-level wages to get by, odds are good that your finances are pretty tight. Maybe you’re relying on high-cost cash advances and payday loans to get you through till your next paycheck—and that’s putting you even further behind!

The best way to protect yourself from those predatory no credit check loans is to build up your savings, but saving money when you’re working for minimum wage isn’t easy! That’s why we asked some financial experts for their advice …

Spot your expenses.

The first part of getting any budget in order is knowing how much money you currently have coming in and how much you’ve got going out. As long as you’re keeping track of your paychecks, you know what you’ve got going in. But it can be easy for anyone to miss how much they’re spending if they aren’t paying close attention.

“Many of us have no idea what our expenses add up to every month,” advised Carla Dearing, CEO of online financial wellness service Sum180 (@mysum180). “When you know where your money goes, you are in control and can be thoughtful about aligning spending with priorities.

“Use an online money tracking service, like Mint or Quicken, to see all your financial accounts in one place and even create your first budget. Doing this, you will always know where you stand financially.

“Mint, for example, gives you complete access to your data through the website and your mobile device, whether you use iOS or Android. Better yet, Mint keeps an eye on your money for you. It even sends alerts to remind you to pay your bills or when you go over budget.”

And you’ll want to be extra careful to make sure you don’t miss anything.

“Audit your spending to eliminate hidden expenses,” Dearing suggested. “It’s one thing to identify and eliminate the expenses you know about, but what about the ones you don’t know about or notice?”

She offered two examples of hidden expenses that could be secretly sucking your bank account dry:

“If you haven’t done a serious credit card review in a while, you may be surprised to see how many charges are automatically showing up on your credit card every month and every year. They’re not necessarily fraudulent; they may be charges you legitimately signed up for long ago, and then never thought about again.

“Netflix; a gym membership from an old address; subscriptions to professional publications … You may not notice right away, but automatic charges like these all add up, especially over time. The expenses may be fine if you truly need and can afford them, but often it’s a case of out of sight, out of mind.”

Start cutting out expenses.

Once you’ve identified where your money is going, it’s time to start figuring out where you can make some cuts, if possible.

“You probably hear it everywhere but it is such a necessary step in your financial plan,” said Michael Outar, Savebly (@savebly) founder, of cutting down on your spending.

“First look at your ‘wants’ column you created, where can you cut costs here? Maybe it’s eating out, your Netflix subscription, Amazon Prime, new clothes, etc … These are all things you don’t need but want.

“To improve your financial situation you need to practice delayed gratification. Cut down on wants now so you can pay off your debts/expenses and save money for a rainy day.

“Next, find ways to cut down on those necessary expenses. For example, you have a credit card with high interest, of course, you have to pay it off, but try negotiating with the credit card company to lower the interest rate. Another example is car insurance: shop around to find a better deal.”

Dearing also gave us her take on cutting down: “Identify two or three regular monthly expenses that you can do without—then delete them. For one person, the eliminated expense may be premium cable and a too-generous data plan. For another, it may be online shopping and extra spending on eating out.

“Be creative so you don’t feel deprived. If you love to eat out, challenge yourself to make delicious meals at home six nights a week. Your one restaurant meal per week will feel more special and you’ll save a ton of money.”

And we don’t need to tell you how much of your paycheck goes to rent, but it’s worth bringing up anyway.

“Live with roommates and split costs when possible,” recommended Chad Rixse, founder of Far North Capital (@farnorthcapital) in Anchorage Alaska. “Keep rent costs in a favorable place by living with roommates and reduce everyday costs on food and household items by splitting the costs with them.”

Plan ahead.

It isn’t easy to plan for the future when you’re living paycheck to paycheck. But even just a little planning can make a difference.

“Schedule due dates for financial obligations around paydays,” Rixse told us. “While rent typically has little flexibility in when it can be paid, most other monthly financial obligations will allow you to change the date they’re due. Try to schedule as much of these around paydays to ease cash flow and minimize potential cash crunches.”

Rixse also explained the benefits of short-term planning when it comes to restocking on food:

“Plan ahead for the grocery store: If you’re buying groceries on the fly, it’s much harder to stick to a specific budget, and much easier to overspend. Plan your meals for the week ahead of time and have a list prepared before heading to the grocery store. Buy in bulk and go for frozen foods when possible without sacrificing quality.”

Quoth the saving.

How are you supposed to even think about saving when you’re barely getting by? Well, it’s not easy, but the less you’re getting paid, the more important it is to have savings. It’s an unfair contradiction.

“If you are earning a low wage, don’t let it discourage you from saving,” urged Money Elevation Coach Roslyn Lash (@RosLash). “Temporarily ignore the suggestions about saving a minimum of 20 percent. It is more important that you save something, and no amount is too small.

“When I was in college I received a $7.50 stipend per week. I saved .50 per week. It wasn’t a lot of money nor was it an uncomfortable amount to set aside, but those cents accumulated and it helped to develop a habit of saving. It gave me a sense of pride.”

Try to get get the numbers up

Getting a new job isn’t the easiest thing in the world—especially when you’re working a minimum wage job with inflexible hours that make your job search even harder. But if you’re really struggling, it’s worth looking into all your possible options to bring your income up.

“Saving money is great but when you are making minimum wage there is only so many ways to cut costs,” suggested Outar. “You need to find ways to make more money, ask for a raise at your job, get a new job, take on some gigs for more income, etc … Also, make simple changes like opening a high-yield saving account to get some interest on your money.”

Living on minimum wage is difficult, even before you start considering all of the unexpected occurrences that could happen. But if you can start getting a handle on your budget, you can hopefully get a good upward spiral going—and kiss those predatory bad credit loans goodbye!

If you’re looking to earn more money—either through a side hustle or by getting a better job—check out these other posts and articles from OppLoans:

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Carla Dearing is CEO of Sum180 (@mysum180), an online financial wellness service designed to be simple and affordable. She is also CEO and Managing Director of IMC, a marketing services agency. Previously, Carla held senior executive positions with at the University of Louisville, Community Foundations of America and Investors Capital Services. Earlier, she worked at Morgan Stanley and American National Bank & Trust Company. She holds an MBA from The University of Chicago Booth School of Business and a BA from the University of Michigan, Phi Beta Kappa.
Roslyn Lash (@RosLash), the Money Elevation Coach, is an Accredited Financial CounselorⓇ, Real Estate Investor, and the Author of The 7 Fruits of Budgeting. She works virtually with single women helping them to gain clarity around their finances, reduce debt, and increase their net worth so that they can live a more abundant life. Her advice has been featured in national publications such as USA Today, Forbes, TIME, Huffington Post, Los Angeles Times, and a host of other media outlets.
Michael Outar is the founder of Savebly (@savebly), a blog about personal finance and personal development. He took control of his money and paid off $24,000 in student loans before 24 years old! Michael believes that if you make simple lifestyle changes you can drastically improve your financial life and he wants to show you how.
Chad Rixse was born and raised in Anchorage, Alaska until the age of 18. He then spent the next 11 years in Seattle where he graduated from the University of Washington and got his start in the financial services industry. Chad has since moved back to Anchorage to found Far North Capital (@farnorthcapital) and continue pursuing his lifelong passion for helping others. He finds the positive difference he’s able to make in people’s lives the most rewarding aspect of his work. Outside of work, Chad loves enjoying all that Alaska has to offer. In the summer, he loves to camp, hike, fish, and golf. In the winter, he downhill skis and gets to the rock gym a few times per week. Chad is also active in the Anchorage Chamber of Commerce’s Young Professionals Group.

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