Recently, I had a conversation with a reader named Ted. Ted works a full time minimum wage job and still manages to live in his own apartment, but unsurprisingly, he feels like he’s not getting anywhere financially. He had a pretty valid complaint about Money360, that I write very little that applies to his financial situation.
Over time, we developed a financial plan for him that will help him get out of his situation. It seems rather harsh, particularly in the short term, but our goal is to set Ted up for a much more healthy financial life in the middle to long term.
Without further ado, here is a plan for the financial future on minimum wage in the United States.
Short Term 1 to 3 years
Live as cheaply as possible Take frugal to a whole new level. Live out of your car. Get creative with your food acquisition. Seek out free services from your local churches and public services. Do everything you can to minimize the amount you have to spend in a week.
Seek a higher paying job If you’re working minimum wage and have a good work record, you can probably move up from where you’re at. Make yourself presentable and look at local stores with a more upscale image; these places often pay significant more than a minimum wage. For example, my aunt has never worked a day in her life, but she cleaned herself up, walked into Home Depot at age fifty five, and walked out with a $10 an hour job. When you start this job, maintain a good work record and show that you’re capable of handling responsibility every chance you get. You don’t have to be the lightning-fast stocker, but jump in to fix problems when they pop up.
Take classes at your local community college Take courses in management if nothing else so that you can pave your way into middle management at your new place of employment. You can often get these classes for free if you demonstrate severe financial need (which you can easily do). Move towards getting a minimal management degree.
Save, save, save Put everything you can into savings. Use a bank like ING or HSBC that earns a good interest rate and manage your account at the library.
Intermediate Term 3 to 10 years
Finish your classes Get at least an associate’s degree in management from a local community college in parallel with your work. While the degree on paper isn’t exceptionally valuable, it is a good deal for the price, it demonstrates to your employer that you have some initiative.
Keep saving You’re going to want to build up a nice padding in your savings account. Keep saving 15 to 20% of what you make in there. By now, you should be able to breathe a little bit, but don’t give up the discipline.
Move up Once you have some time as a good employee and that degree in hand, go to the store’s top manager (or even the owner) and lay out your case for moving up. Keep demonstrating your organization skills and don’t let the matter rest (don’t be a nag, but every few weeks, ask the manager if there are any openings). If you do it regularly without being too heavy, they’ll begin to see you as a person who has worked hard and is trying to get ahead and you will eventually get a break.
Don’t slack off Even if you have a degree, keep taking classes. If you can afford it (and if you’ve been saving, you probably can), try to get into a program at a nearby four-year university that you can take part-time. Work towards a real degree. Keep working at your job, too, with a good work record and some clear initiatives.
After that, Ted should be set to go. He should be making 25-30K a year and is laying the foundation for strong future growth, he should have some cash in the bank. His standard of living is still pretty low, but now he’s got nowhere to go but up rather than just spinning in place.
What’s the key ingredient here? Hard work. If you spend your time sitting around complaining about how the man is holding you down, you’re never going to go anywhere. I used to feel much the same way, but now I realize that it is self-initiative that gets you ahead in America, not complaining and hoping that your ship will come in.