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15 Strategies To Help You Survive And Thrive On Minimum Wage

15 Strategies To Help You Survive And Thrive On Minimum Wage
Steve Gillman Dec 6, 2019
Want to Earn Some Extra Money?

The title above doesn’t contain the word “easy” or any of its permutations. That’s because surviving on minimum wage is not easy, and actually doing well on a low income is pretty difficult. But it is possible.

An Investopedia article on “How to Save $1 Million for Retirement Making Minimum Wage” gives the example of a janitor/gas station attendant who quietly amassed a nest egg of $8 million dollars by the time he died. Here’s the short version if you want to do something similar: Start early, save as much as possible, and invest in safe dividend-paying stocks.

Invest to make millions when you’re making minimum wage? You may be wondering how you can save twenty bucks at the end of the month after paying all the bills.

Fortunately there are many ways to make any income go further. That’s what this website is about, and the most obvious goal is to pay less for everything.

But there are some more specific strategies that will help you do well when you’re at or near the legal minimum wage and do not expect to make much more. They won’t all work for everyone, but at least some readers can survive, live well, and even build a better future while being paid no more than minimum wage.

To see how, let’s try…

Learning From Those Who Have Survived on Minimum Wage

As reported by Business Insider, Jason and Danielle Wagasky, and their two children, live well on an annual income of $14,000, which is less than a full-time minimum wage job. They use every frugal trick they can, like buying milk in quantity on sale and freezing it for future use. What else?

Car payment? None – they paid off their car loan quickly.

Credit card debt? None – they use a credit card only for emergencies.

Mortgage payment? They saved up enough to buy a foreclosed home for $28,000 cash, so they have no mortgage or rent payments.

Danielle blogs about it all on But even in the short description given you probably noticed one part of their success, which tops our list of strategies:

1. Avoid Non-Productive Debt

Debt can be good (productive) or bad (non-productive), so let’s look at a specific example of bad or non-productive debt: What happens when you borrow to buy a car? Well, you probably get a nicer car, but you might get these outcomes as well:

  • You tend to buy a bigger, more expensive car than if you paid cash.
  • You get a worse deal, because cash buyers have more negotiating power.
  • You pay more for insurance because you bought a more valuable car.
  • You pay for insurance you may not need, because the lender requires it.
  • You pay interest on the loan, possibly for years.

Debt does more than just make a purchase more expensive. It also adds stress to your life, which leads you into more bad decisions. And if those payments leave you short of cash at times, your debt leads to… more debt.

Debt can be good. If it’s for a business or investment it can mean you’ll make more money, so paying interest makes sense. It’s also good when it saves you more than it costs, like borrowing to buy a home that costs less (per month) than renting.

But most debt is bad debt — the kind that digs a hole you can spend years getting out of. If you’re currently in debt, see the following posts for help:

When my wife and I married in 2001 I was making less than $10,000 per year and she wasn’t working. We were well below the poverty line (around $12,000 at the time), but we lived well, and even traveled for weeks at a time, in part because we had no debt.

2. Move To Get Paid A Better Minimum Wage

The federal minimum wage is $7.25 per hour, but the legal minimum is determined by state law as well. Some states add nothing to the federal mandate, but others have legislated minimums as high as $10 to $12 per hour, and some cities are even higher (Washington, DC: $14/hour). The obvious possibility, if your job skills typically get you only the minimum, is to move where it’s higher.

Of course, higher wages can be eaten up by higher expenses, so you need to balance wages with the local cost of living. Since the most variable expense across the country is the cost of housing, you can simplify your analysis.

Here’s how: Once you have potential new hometowns in mind, multiply the minimum wage for each locale by 2080 hours (a year working full-time), and subtract your anticipated housing cost. The option that leaves you with the most money is best, at least from a financial perspective.

For example, let’s say you’re considering two towns. In one you’ll make $22,880 annually ($11 per hour times 2080 hours), and your likely rent will be $7,200 ($600 per month times 12 months). That leaves $15,680 for all other expenses ($22,880 minus $7,200).

In the other you’ll make $24,960 ($12/hour), but rent will cost $10,800 ($900/month). That leaves $14,160 for all the rest. The place where you make a dollar less per hour will actually leave you $1,500 better off annually.

You can add other expenses to the calculations to make them more accurate. But the cost of food and utilities doesn’t vary as much as housing, and income tax rates are largely irrelevant when you have a low income. Wages and housing costs are the most important factors.

If you happen to have skills as a bartender, waiter, or in other tipped positions, look at the minimum wage rates for tipped employees in various states. Those range from $2.13 per hour (federal rate) to $12 per hour. Making $12 per hour plus tips can make for a decent income, even after accounting for higher living expenses.

3. Stay With Family As Long As Possible

I was making $3.40 per hour in 1984 — 5 cents over minimum wage at the time. But I still managed to save up $5,000 for a down payment on a home. How? By living with my parents (I was 20 years old at the time), who charged just $100 per month. It helped that the rent included food.

If you’re young, single and working at or near minimum wage, one of the surest ways to keep your expenses low and to get ahead financially is to take advantage of any family who will let you live with them for free or at a low cost.

Of course, to really make that work, long term, you have to use the next strategy…

4. Save Part Of Every Paycheck

Having money in the bank at all times improves your situation in several ways, especially when your income is low. For starters, it makes it possible to invest for a better future.

It also alleviates a lot of stress, and allows for better decision-making. For example, a major medical expense or car repair can be a financial emergency that leaves you scrambling for help and possibly going into debt… unless you have savings to cover the expense. In that case it’s not a big deal.

So save as much as you can. It’s usually best to keep savings in a separate account, so you’re not tempted to dip into the money unnecessarily.

Of course, once you have some savings, what you do with them makes a big difference in your financial situation. Investing for the future or retirement is one obvious idea, but before you do that consider the next suggestion…

5. Use Your Assets To Reduce Your Expenses

When I was young I saved up $5,000 working at or near minimum wage because I had a simple goal: Buy a cheap home that cost less than rent every month. My first mortgage payment was just $257 per month, which was less than the $400 I would have paid to rent the place instead of buying it (and I paid off that small mortgage in a few short years).

Buying a home is (or can be) one of the biggest “save-money investments.” Unlike investments that generate income or capital gains, these save you money — enough to justify the cost. Here are some other save-money investments you might consider:

  • Replace light bulbs with LED bulbs to cut your electric bill.
  • Insulate the attic.
  • Pay cash for a car instead of borrowing for one.
  • Buy an energy-efficient freezer so you can stock up on sale foods.
  • Spend money to move closer to work to save on commuting costs.
  • Invest in a move to a town where housing and other costs are lower.

6. Don’t Have Kids

Okay, the Wagasky family (above) makes minimum wage work for four, but really, how many people can pull that off? If your work skills earn you minimum wage (or near there) consider waiting to have kids until you have a predictably-better paycheck.

Nothing is more expensive than children. I’m certain my wife and I wouldn’t have had the good life we’ve had (when we were in poverty or making six figures) if we had kids.

Pets are expensive too. We recently spent over $2,000 on one of our cats, which brings us to the next important strategy…

7. Keep “Life Overhead” To A Minimum

Keeping expenses lower than your income is always a good idea, but it’s especially important when living on a limited income. And there’s a particular category of expenses that really count. I refer to them collectively as “life overhead,” which consists of fixed expenses that can’t be easily and quickly discontinued. This includes things like:

  • Debt Payments
  • Rent
  • Mortgage Payments
  • Car Payments
  • Homeowner’s Insurance
  • Auto Insurance
  • Utilities
  • Phone Contract Payments
  • Contract Payments For Anything
  • Children
  • Pets

The idea is simple enough: Fixed expenses weigh you down financially, and the lighter the burden the better off — and safer — you are.

Early in our marriage my wife and I traveled the country for months, while our income was still below the poverty level. Yet we would never — then, now, or even when we made good money — borrow to buy a car. We don’t even sign phone contracts (we have cheap pay-by-the-minute plans).

What’s the difference? We had the money for travel saved up. And currently, we can stop habits like eating out or going to the movies any time we need to. A car payment or phone contract, on the other hand, means adding a fixed expense that isn’t easily reduced or eliminated if income drops or goes away (jobs can be lost).

Life is less stressful, and the future is brighter, when life overhead is low.

8. Find A Like-Minded Partner

You’ll probably fail to get ahead financially, band even struggle to avoid bankruptcy if you try to live on a minimum wage income with a partner who has expensive tastes.

On the other hand, a life partner who shares your frugal values can reduce your per-person expenses dramatically. After all, only one home is needed for two people, and possibly only one car as well. Other bills are also cut in half, at least on a per-person basis.

And two incomes can make all the difference in quality of life. For example, here in Tucson, Arizona, a couple who both work full-time at minimum wage ($12 per hour as of January, 2020), will bring home about $50,000 annually– not so bad, right?

And this is a town where they can find a decent two-bedroom apartment for $650 per month or $7,800 annually, which brings us to our next suggestion…

9. Be Especially Careful About Housing Choices

If you have a mortgage, pay it off as quickly as possible. If you’re considering buying a home, be sure you’re ready, and run the numbers to be sure it’s cheaper than renting. Also, consider saving up to buy a home for cash.

You might also consider buying a mobile home. My first home was a mobile on land, which more than doubled in value in the time I owned it (paid $19,500; sold it for $45,000), and generated tens of thousands of dollars from room rentals.

If you’re a renter for the foreseeable future, start by looking at the cheapest places, and work your way up only as far as necessary to find a home that meets your important criteria. See my post on ways to save money on rent for more ideas.

In general, be really careful about the biggest fixed expense you’re likely to have in life; the roof over your head. See my post on 45 cheap housing options for more ideas.

10. Regularly Look For Ways To Cut Costs

Set aside some time at least once per-month to look at your current expenses and find ways to reduce them. Remember to pay special attention to the fixed expenses.

If you do find a way to reduce an expense, divert the money saved into your savings account and/or investments. In that way, the more you reduce your expenses, the brighter your future looks.

11. Take Advantage Of Low-Income-Based Help

If your income is low enough you might qualify for various welfare programs.Even if you don’t qualify, or don’t want traditional welfare, take advantage of any other help or discounts offered to those with low income. For example, my wife and I get dental care at 50% off at a nearby clinic because our household income is currently below $32,500 annually.

Keep in mind that for every dollar of help you get you can divert a dollar of income to savings and investments for the future.

12. Regularly Look For Ways To Make More Money

Working a minimum wage job doesn’t mean you can’t have other sources of income. Every month or so sit down and investigate potential side gigs you can do, or put in an occasional overtime shift.

For more income ideas see my list of “115 Ways To Make Money Without Leaving Home.” This extra income can be saved and/or invested. Even better, use it to start a small business, so you can get beyond minimum wage.

13. Avoid Temptations

You might understand that you’re on a very limited income and should avoid expensive luxuries (or even cheap luxuries in excess), yet still have a hard time overcoming temptations. One solution is to avoid being tempted in the first place.

In other words, don’t go to the mall if you really can’t enjoy it without spending too much. Don’t eat free food samples at Whole Foods if you find that, instead of being cheap entertainment, the habit just leads to expensive purchases.

If the potential temptation is not in front of you, you’re less likely to succumb.

14. Choose Your Friends And Acquaintances Wisely

You might think it’s shallow to choose friends according to income level or lifestyle, but it’s very practical. Let me explain…

My wife and I have never spent $60 on a meal out. See my post, “52 Tips and Tricks For Eating Out For Less” to see how we routinely spend less than $20 total for a dinner out. But we know many people who routinely spend over $100 for a lunch or dinner for two. That’s just normal for them, and they presumably can afford the habit.

Now, if we spent much time with such friends, what would we do? Ask them to pay when we meet for drinks and a meal? Not going to happen. Unfortunately, if we did go out with such friends we would invariably have to spend more than we want to (or convince them that picnics are the way to go).

That’s the reality. Some people will lead you to spend more than you can afford — whether they mean to or not. It’s best to limit how you interact with people who make a lot more money than you. It may be great to know them (and learn from them), but avoid getting too chummy if it means trying to keep up with their lifestyle.

15. Invest For The Future

Once you’ve learned to pay the bills and live well on minimum wage, and you’ve accumulated some savings, it’s time to invest for the future. You can start small using the information in the following posts:

When you have a substantial amount to invest you’ll probably want to put your money to work in the stock market. The bad news? An investment calculator shows that if you invest $150 per month at an average return of 7%, it will take you 40 years to have $200,000 — which is still not enough for a comfortable retirement.

If you increase those monthly contributions over the years you’ll grow that nest egg a lot bigger (and faster). So once you learn to do well on minimum wage, why not learn how to make more money to invest, whether from better jobs, side gigs, or a small business?

On the other hand, if you can survive and even thrive on minimum wage for all those years, and save/invest $150 per month, maybe retiring on a social security check will be fine, especially with $200,000 in investments to help you out in the tough times.

If you live well at or near minimum wage, tell us how you do it … and keep on frugaling!

Steve Gillman

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