Updated on 12.20.06

Ted’s Dilemma: Planning For The Future On Minimum Wage

Trent Hamm

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 The Simple Dollar, 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, plus 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, plus 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.

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  1. Terry says:

    Okay, now I’ll jump in and ask a question:

    I am fiftyish, have a liberal arts degree, and earn my state minimum wage. I am also paying $100 per month toward repaying student loans in default.

    I work in a convenience store with effectively no internal advancement path. (One of the two managers would have to leave, and that is not expected for at least a decade – both have been here more than a decade and neither appears likely to go anywhere.)

    My credit is in the tank due to the student loans plus an extended illness several years ago during which I was in hospital two months and unable to work for a year after that. (As I had lost my income, I could not pay any bills, all of my creditors charged off my accounts, and I had to relocate to live with relatives until I could return to work.) As a result, getting a more desirable retain job is unlikely.

    Even if I returned to school and acquired a marketable skill, I suspect my age has already rendered me unemployable.

  2. Hey Terry,

    Too old? No, you are definitely not too old to get back on track. Go back to school and get a marketable trade (1-3yrs). If you’re not afraid to get your hands dirty, Alberta is DYING for labour, and they’ll hire just about anyone. I would say the average wage for a laborer up there is around $25-$30/hour. The opportunites are out there, you just have to get out of your comfort zone and go after it.


  3. Terry says:

    Well there is the little problem of money…because my student loans are in default (almost ten years to payoff) I cannot get any sort of federal financial aid, i.e. I can’t even borrow to go back to school.

  4. If you want the money bad enough, it will come. Do you have family that you can borrow from? Get a second job? Find a higher paying job somewhere else? Get your resume polished and start looking. Sorry to be so blunt Terry but it’s time to get out of your comfort zone.


  5. jake says:


    I am sorry if I do sound harsh, which is not my intent, but with your situation you have to examine what got you to where you are now.

    You say that a health issue caused you to lose your income but that was about 2-3 years ago. What were you doing before that? If you had been paying closely to your finances it shouldn’t have been that bad. You need to examine what you did wrong financially in the past and how you can improve it for the future.

    I am a student worker for helpdesk in my work place. My supervisor is one of the most brilliant minds when it comes to technology and computers. Guess what his degree was in? History.

    I know many people in similar situations. Where they were completely far from their major. You should broaden your horizon and look just beyond a “liberal arts” major.

    You’re 50ish, the average life expectancy these days for males is about 80 years old. You have close to 20-30 years ahead. That’s a lot of time.

    Someone once said “personal wealth is a marathon not a sprint.” No matter how old you are.

  6. Margaret says:

    If you are going into a trade, eg welding, you may not need financial aid. You are paid for you apprentiship (after all, all it is is a job where you are accumulating hours in your field), and then the school portion is only something like 2 months of the year. Apprentices (at least in the trades I know about) make more than minimum wage, and could save for their school portion.

    Good luck.

  7. katy says:

    this is my second pass at this article and I see so clearly how some people (i.e., FT) just don’t think. Terry is in a real bind. I hope things have gotten better for him – and all of us.

  8. Chas says:

    Sorry to hear about Terry’s situation. I’ve enjoyed all the recessions since 74. This will be my first with skills and a stable job.
    I really appreciate the article dealing with these limitations. Most stuff on the web talks to people I guess I can’t relate to with the 3.00 latte issues. The bottom line is hard work and sacrafice. It isn’t pretty and pretty out of style but, if you are not put off by hard work and it taking several years (like 3-5) it can work.
    Also reevaluating everything you have rather than feeling victimized by what is against you really is a great change of perspective. Been there done that. The article Desperate Nutrition reflects some of the levels and ingenuity and innovation needed to overcome in these types of situations.
    Thanks for dealing with my part of the Real World.

  9. rodgerlvu says:

    thanks. you are the most intelligent person i ever met…

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