In this month’s column, we’re going to play a little game. The game is, “Can You Survive On Minimum Wage?” Since the holidays are right around the corner, the goal of today’s game is to save enough money for the holidays. It starts in January and ends in December.
Our protagonist, Blue, has just started a new job. Blue doesn’t have a family; this includes parents to help them out, but it also includes children they don’t have to pay for or support. They certainly don’t have a partner of any kind. Let’s imagine they just moved to a new city, or they’re like many adults these days, so they don’t have any friends or supportive community of any kind. They’re a bit like Robert DeNiro’s character in Taxi Driver. Because they’re young, though, probably around twenty-five or so, they don’t have any health problems. Because they never get sick or injured, they don’t have any surprising medical expenses. They work forty hours a week, and they work all holidays, but they don’t get holiday pay. They never work overtime, and they never take any days off. They don’t have any savings, but they also don’t have any debt. Blue’s car is paid off; it has average gas mileage; and it won’t have any issues this year.
Blue has just started a new job. As a handicap to our game, Blue has a few luxuries that most wage-slaves lack: Blue doesn’t pay taxes, and they get $15/hr instead of minimum wage. It would be a bit too difficult to survive on the federal minimum wage, and we want to give ourselves a good shot at victory. So, the holidays are around the corner. Let’s see if we can save enough money up throughout the year to survive and even get some gifts for our loved ones.
A little budgeting is in order before we begin. Your week’s pay is 40hrsx$15, and this equals $600. Assuming every month is four weeks, you get $2,400 a month. This amounts to $28,800 a year.
We’ll start off by looking for a place to live.
January
Average rent in America is $1,326 a month.[1] We don’t want to make it too hard on ourselves, or too easy on ourselves, so let’s assume Blue lives in a place where the rent is $1,300. It’s hard to find data on average studio apartment rent vs one bedroom rent vs single family home rent. The data that is available, though, either doesn’t include information on studio apartments,[2] or it is both dated and shows studio apartments with higher-than-average rates.[3] So, there’s no getting a cheaper option by downsizing.
As Blue begins applying to places, they notice that there are application fees. These fees cost around $70 a pop. They cannot apply until they receive their first paycheck. This will not arrive until the second pay period because Blue began work in the middle of a pay period. Their first paycheck, with the first half of their month’s pay ($1,200), is directly deposited into Blue’s bank account after the third week of work.
Because Blue doesn’t have friends in the area, or a family, and they’re single, they don’t have any recourse but to live in their car for two weeks. They also don’t have money for food, but, luckily enough, Blue is able to scrounge for enough food at their place of work, and through some co-workers paying for their meals.
February
Once Blue gets paid, they apply to a few apartments; Blue’s applications are rejected because they failed to meet their minimum qualifications for renting an apartment. Blue does not make at least three times the rent. Eventually, Blue applies for an apartment that accepts their application, and they are ready for you to move in at the beginning of next month, when Blue receives their second pay check. Blue has $990 left over from your apartment applications, and the $1,200 dollars that comes from next week’s check will cover the initial rent. Blue attempted to sign the paper, but then realized that they don’t have enough for the security deposit. This is $800 dollars due at move in. After pleading with the landlord, crying many tears, they decide to let the security deposit slide.
Blue remains homeless for another two weeks. They do not shower regularly, and it affects their performance at work. Blue is given several warnings, but they remain employed because a friendly co-worker hears of their situation and lets them shower at their house twice a week. The co-worker posts about it on Facebook, and Blue feel very embarrassed.
But Blue manages to make it to the next pay day with $770 after a few weeks of gas money, fast food, and grocery store meals. They end up with $1,970 after payday. It quickly transforms into $670 as they pay their first month’s rent.
They also decide they want to spend money on something to put in their apartment. They have no cooking equipment or furniture, and they don’t have many clothes. Their shoes are their only pair, and Blue doesn’t have shower equipment or materials. It’s $8 for a chair at Goodwill, $3 for a towel, $15 for a coffee table, $10 for a coffee maker, $5 for a trashcan, $10 for a rug, $2 for a shower-curtain, $3 for a hamper, and $10 for a set of plates. Blue decides to use the remaining $604 to buy a toothbrush ($2), toothpaste ($4), paper towels ($15), toilet paper ($15), a sleeping bag ($15), a blow-up-mattress ($15), a broom ($10), a vacuum ($50), and mop/bucket ($20). With $458, they spend $200 on gas money and food. Blue ends up with $258 by the end of the pay-period.
It is the third week of February, and Blue has $1,458 in their bank account. They spend another $200 on food and gas. They do not have a television, and they do not do anything for fun. When Blue gets home, they stare at the wall until they fall asleep. Blue goes to work as soon as they’re done making breakfast, and showering. Their hair is full of dandruff because they don’t have shampoo or conditioner, and they don’t really wash your body with soap. Blue doesn’t have soap. Their co-workers have noticed Blues BO at the end of the workday because they don’t have deodorant. They’ve been trying to save money by not spending it on hygienic matters, but they’ve decided it is time to rectify that. Added to their bi-weekly list is now a consistent group of necessities: toilet paper ($15), paper towels ($15), toothbrush ($2), toothpaste ($4), soap ($7), shampoo ($7), and conditioner ($7). So far, Blue’s biweekly payments are $257 for these, food, and gas.
Having already paid for food and gas this last two weeks, Blue spends the remaining $57 on these toiletries. Blue has $1,201.
March
It’s the end of the first week of March, and rent is due soon after getting another paycheck. Blue briefly has $2,401 in the bank, rent takes $1,300, and Blue is left with $1,101. With this money, Blue goes to buy some clothes, so they have extra set for work. They buy some pants ($60), shirts ($40), socks ($10), underwear ($10), a cheap belt ($15), and brand-new shoes ($100). Blue decides to splurge on the shoes because they need them to last. By the time Blue gets to the end of the paycheck, they have $609. $1,200 is added, and they then have $1,809.
April
By the time the next paycheck hits, Blue has stuck by their budget: $1,552 sits in their bank account. This briefly turns into $2,752. Rent hits, and the bank account drops down to $1,452. At work, HR contacts Blue. They are letting them know that it is the last day to choose to receive health insurance through work. If Blue misses the deadline, they’ll have to wait until open enrollment in November. The options are a $400 a month premium, matched by your employer. It does not include vision or dental. Speaking of that, Blue needs to get both an eye exam and a checkup soon. Blue decides to wait on that; they deny taking the insurance because they cannot afford it. Healthcare.gov is too complicated for Blue to figure out before the deadline ends.
Two weeks pass; Blue has abided by their budget. Their bank has $1,195 before the paycheck hits. This gives them $2,395 at the end of the first week of April. They still don’t have a television, or any books, or any friends, and they spend your days walking around the neighborhood looking for people with whom to speak. One day, after coming home from work, Blue receives a letter in the mail. It’s from a car insurance company. Blue realizes they forgot to renew their insurance last year, and, if they get caught, they could be forced to pay a huge fine. Weary of their ability to pay such a fine, Blue decides to look for someone to insure their vehicle. The lowest they can get is $180 a month, or $1,080 every six months.[4] They decide to pay the $180 a month, and Blue makes their first payment before the next paycheck hits. Blue has $1,958 before the third week in April. When it hits, the bank has $3,158.
Blue decides that it is now time to buy a cell phone. Blue has not had one, and it has hampered their ability to communicate with your boss or fellow employees about the work schedule. After paying the initial contract fee of $85, Blue walks away with the newest cell phone on the market. It is $120 dollars a month, and it comes with some free streaming platforms. Blue is happy to have them. A smile, crawls across their face. Blue has $3,073. And they soon realize that they have neither a television or internet. Now that Blue has a phone, they can call the internet company. When Blue calls them to order some service for an internet package, they pester Blue over and over again to buy the package that includes cable; Blue holds their ground and gets an internet only contract for $50 a month. Blue makes their first payment that day. They have $3,023. Now Blue decides they need a television. Blue goes to the store and buys one for $100, dropping them to $2,923. They also need a device to connect to the internet, so they can watch some of the free streaming channels. Blue buys this ($30), and now they have $2,893.
May
When the first week of May arrives, so does the next paycheck. Blue has spent the normal amount on their recurring groceries, and the $2,893 has lost $257 and fallen to $2,636. So far, food, gas, and toiletries amount to $257 every two weeks. Every month, Blue needs to pay for car insurance, internet, and the phone bill. This amounts to $350. By doubling the bi-weekly groceries, Blue calculates their monthly expenses as this $514 plus the insurance, internet, and phone $350, plus rent $1,300. This is $2,164 every month Blue spends if they stick perfectly to their budget.
Because of the first paycheck in May, Blue’s account balloons from $2,636 to $3,836. At this point, Blue continues their asocial streak. They never meet anyone, or splurge on unnecessary purchases. They just hold pat at this rate. From here, Blue simply goes through each month, deducting $2,164 from their monthly income, and puts it aside to pay their bills. In this first case, their $3,836 becomes $1,672.
June
Since Blue’s monthly income is $2,400, they subtract the monthly bills $2,164 from this, and add this every month to Blue’s existing income, which is $1,672. The subtraction leaves $236, and this added to $1,672 gives Blue $1,908.
July
Blue’s $1,908 becomes $2,144.
August
Blue’s $2,144 becomes $2,380
September
Blue’s $2,380 becomes $2,616
November
Blue’s $2,616 becomes $2,852
December
Blue’s $2,852 becomes $3,088.
So, have we won? I think so. Seventeen percent of Americans plan on spending less than $250 dollars on holiday gifts this year.[5] One reason is massive inflation.[6] Another reason is families. However, our hypothetical character does not have one of those. The entirety of their holiday spending will be for themselves. At worst, Blue will enter the new year with $2,838. This gives them more than enough leeway to spend on what they want. Maybe they can finally get a computer, or a video game system. Maybe they can start spending on make-up, or expensive clothing. Maybe Blue could get another pair of shoes for themselves, or go to some bars for once. If they were smart, they would begin to invest in some stocks. Ideally, they would invest the entirety of their $250 into a new ROTH IRA or a 401k.
What about you? Do you agree with Blue’s decisions? Would you do things differently? Do you think you could survive in Blue’s scenario?
1. https://worldpopulationreview.com/state-rankings/average-rent-by-state
2. https://www.zumper.com/blog/rental-price-data/
3. https://www.rent.com/research/national-apartment-rent-price-analysis/
4. We’re assuming this person is fairly young, since they don’t have children or any existing savings. https://www.valuepenguin.com/25-year-old-car-insurance
6. https://jacobin.com/2022/09/yes-you-should-worry-about-inflation