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A budget plan is simply your way of identifying how much you earn and deciding where it will go each month. When you set this plan in place, you can control where you will spend it.
The beauty about having this plan is you can see the activities of your finances. Through this plan, you will be aware of your current financial condition. It can help you make the right decisions about your financial life. When you have to decide to buy something, you can smartly decide if you can afford it or not.
In fact, even if you experience a wage increase, you need to continue following a budget. An article in the NYTimes.com revealed that the local government is thinking about increasing the minimum wage of fastfood workers to $15/hour. This is a huge increase from the current $8.75/hour minimum wage. But while that is true, it still requires budgeting tips to make it easier for you to survive on it.
Sample budget plan of a minimum wage earner
So what does a budget plan look like when you only earn the minimum wage? We found an interesting budget done by an author writing for ApartmentTherapy.com. This particular budget was written back in 2014 and was based on a minimum wage of $7.25 an hour. This is the wage of approximately 1.6 million Americans.
According to the article, these are mere estimates. You still need to factor in where you live - since the cost of living varies from State to State. Here is a sample budget of a minimum wage earner. You may be able to get budgeting tips by looking at this example.Income
For the income, assuming that the worker is working 40 hours a week, they will earn $290. This is $15,080 a year. Both are before income taxes. When you factor in taxes, the minimum wage employee takes home $13,572 a year. This is $1,131 a month.Expenses
Now here is a list of basic expenses that you can afford to pay off with a minimum wage:
- $73/month for electricity - this is based on the rate in Idaho that has the cheapest rate.
- $700/month for rent - this is based on the rate in Louisville.
- $20/month for water
- $44/ month for health insurance - most states allow minimum wage earners to qualify for Medicaid.
- $70 for a monthly pass - estimate based on the price of different states.
This list of expenses is already $907 a month. It only covers the basic utilities and the lodging arrangements. It only leaves you with $224 for the food. That leaves you with a budget of $7.4 a day for food. But then again, what will you do about other expenses like what you need around the house (cleaning products, etc). It also does not cover the gas costs that is used to help regulate the heat inside a home. You do not have room for your savings. If something bad happens, you might be plunged in debt all of a sudden.
Obviously, this budget needs a lot of improvement. You need to implement budgeting tips that will help you free some money for your other expenses.
Well this is how your budget can help you stay out of debt. Thanks to your budget, you can now identify what you can possibly do in order to free up more money for other expenses. For instance, you know that the biggest amount spent here is on your rent. If you need more money for food, you obviously need to lower your rental amount. That $700 is too much. What you need to do is to look for a house that you can rent for only $500 or less. Going down to $500 will free up $200 for additional spending. You can also opt to get a roommate so your housing cost will go down to $350 a month. That frees up $350 for your budget.
You see how a budget plan will help you fix your financial situation? When your finances is laid out like this, you will know understand what your next steps are. What you need to understand is that it is not always necessary that you get a second job. Look at your expenses first to see how you can make ends meet.
Tips to help you budget despite a low income
When you are earning a minimum wage, you are forced to do what you can to make ends meet. One article published on TheGuardian.com told the story of someone who earns a minimum wage in a fastfood restaurant. She gets paid $7.40 an hour and she said that no matter how many hours she works, she never made more than $15,000 a year. This is regardless of the position that she holds in the restaurant - whether it is as a cook or cashier. What she does to help make ends meet is to work two jobs and to live with her mother. This allows her to survive despite the minimum salary she is earning.
Now if you want to survive on a minimum wage, you need to implement certain budgeting tips. To be clear, these are tips that will help you stay within your limited income. Here are some of our suggestions.
- Live in a rural area. We all know that the closer you live in the metro, the more expensive things get. Live in a small town so you can find a home for rent for $300 or less. That way, you can live alone even if you only earn the minimum wage.
- Plan your meals. There are so many benefits to doing this. You can list the products that you need to buy and decide which of them you will buy in bulk. It is also possible for you to take advantage of leftovers. Think about this so you can maximize the savings you can get from your food costs.
- Let go of your car. This is something you can live without. Opt to live near your work and just walk or bike to get there. You will save a lot of money in the process.
- Save your loose change. Even with the best budgeting tips, it is extremely difficult to save when you only earn the minimum wage. But that does not mean it is impossible. Try to divert your attention from the amount - just save whatever you can. If you set a $10 budget for yourself each day - save whatever is left - even if you only have pennies.
- Use coupons. These can be a great way for you to get discounts on the usual products that you buy. It can be a bit tedious but any amount you save can really help you stick to your budget.
- Know where to buy products. You want to get them cheap but make sure you are not sacrificing quality. Buy where you can get the best value for your money. Since you are planning your meals, it should be easy to schedule when and where you will buy what you need.
- Be on the look out for what people throw out. There are treasures in what people consider as junk. Some people find great furniture by getting the stuff that people throw in the streets.
- Opt for free entertainment. We all need to relax and indulge in activities that make us happy. You deserve it. But if you can get it for free, then you do not have to compromise your budget just to relax.
- Take care of yourself. Although a lot of minimum wage earners are forced to work two jobs, it is very important that they do not do it at the expense of their health. The cost to get medical treatments can be very high. Prevention will go a long way in terms of savings. So put your health first.
- Learn to do things on your own. You will save a lot if you learn to cut your own hair, do your own nails and even sew your own clothes. Even if you are earning the minimum, you do not have to look like one. Sometimes, one of the skills that you will learn might even help you earn extra - if you can master it enough.
Follow these budgeting tips so you can live a happy life despite a low-income household.