Originally published at: How much would minimum wage be if it kept up with inflation? – Personal Finance Club
I was working on another post, calculating how much money you need to have invested to be equivalent to working minimum wage for a year (About $148K) and it struck me how devastatingly small the minimum wage is. At $7.25/hour if you work 40 hours/week for 52 weeks a year, taking zero vacation days you make about $15,000/year before taxes. That’s about $1,250/month. That’s barely enough to cover rent for an average one bedroom apartment, not to mention necessities like utilities, transportation, clothes, eating, etc, making it basically impossible to survive.
There’s a lot of talk about inflation and minimum wage increases so I thought it would be helpful to put the $15/hour proposal into context. It’s not actually all that radical. It’s just above where we were at in 1968 after accounting for inflation. And the economy survived the 60s and 70s!
If you’re making minimum wage, no amount of frugality is going to fix your financial situation. You need to increase that income. I think the best way to do that is a long term mentality. Imagine your dream situation five years in the future. If that were to come true, what would you have to be doing today to take the first steps in that direction. A different job? A degree? Starting a business? Whatever it is, it won’t happen on its own. It starts with your decision to take small, incremental steps towards that goal. Don’t wait 5 years and still be right where you are!
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.