Can you ever get ahead with a low income?

I was asked this question by a woman after a presentation a few weeks ago. The question didn’t stump me, I knew the answer immediately, and I also knew she wouldn’t like the answer.

No, you really can’t get ahead if you have a low income.

Let me explain.

“Getting ahead” is the operative part of this question. Getting ahead suggests not only maintaining financial obligations, but planning ahead and being prepared for future financial necessities. I’ve hesitated to write this post for years. The conversation about living wage, minimum wage, and poverty is a much bigger conversation than a simple financial analysis. But, it’s important to at least consider what the options are for those in these income situations. My goal for this post is to specifically answer the question, what income does a person in Indianapolis, IN have to make in order to be financially solvent? Here we go.

Before we go much further, we should get familiar with the differences between minimum wage, poverty wage, and living wage. You’re familiar with minimum wage. In Indiana, it’s $7.25/hr. Minimum wage is relatively cut and dry. It’s a law. And many employers utilize this law to set their company’s minimum wage. Poverty wage is a calculation which determines the amount of money a person must earn in order to afford very basic shelter and low cost food, priced at around $1.25 per day. In Indiana, poverty wage is $5.00/hr, as determined by a Massachusetts Institute of Technology (MIT) project called The Living Wage Calculator. It can be found at

Which brings us to living wage. A living wage is described as the amount of money it takes to afford decent clothing, shelter, and nutrition. According to MIT, living wage for one adult with no kids in Indiana is $9.74/hr. The living wage jumps to $20.36 when a one adult household also has one child. The huge increase in the living wage calculation is due to child care costs and the other expenses associated with raising a child, such as regular medical care. (courtesy of Indy Star)

Indianapolis is an affordable city to live in. It regularly ranks itself as a reasonable place to find decent housing at a good price. That being said, a person working full time at minimum wage would still have to spend roughly 86% of their monthly take-home pay on rent. This immediately rules out this income level as viable for financial solvency.

What about $10/hr?

Monthly net income for a $10/hour earner is roughly $1,125.79, after tax. We’ll assume rent and utilities at $450 per month. Say healthcare expenses are in the realm of $166 per month, this includes the cost of health insurance. $250 per month for food gives a person a budget of about $8 per day. With about $260 left in the budget, transportation starts to come into focus. Unless this person uses public transportation, walks, or bikes, getting to and from work becomes cost prohibitive. How can you afford gas, insurance, maintenance, or even a car payment with just $260? You can’t.

Let’s not forget this person has no money leftover for savings, debt reduction, emergencies, personal care, or the costs associated with raising a child. A lone adult can barely survive on $10 per hour in Indianapolis. (courtesy of Indy Star)

When you make $10/hr you have zero margin of error. Every decision has to be on point to prevent any financial pitfalls. As your income grows so does your margin of error because as our income increases we increase our obligations. The question then becomes, how do we prevent ourselves from expanding our lifestyle too far, once income has grown?

2 thoughts on “Can you ever get ahead with a low income?

  1. I agree that if you stay within the box you created, it is very hard to get out of that box. At one point in my life, I lived out of my car or in the small camping trailer at a friends house. I made minimum wage but I didn’t just work one job. I knew if I was going to break out of it, i would need to work multiple jobs. Later on, I joined the military and that put me on a different playing field. After I got out of the military, I went to a University where I received my degree. Now, i own my own business and employ 15 people.

    If one thinks inside the box, they will never be able to escape it.

  2. I believe life is about choices. One can choose to be poor or not. As Mike notes below, you can choose to work one job and barely make ends meet or you can choose to work more than one job, at least for a time, until your situation improves. I worked two jobs and went to school so I could get a promotion and not need to work two jobs. Additionally I never thought that I was done after only 40 hours. I spoke to my daughter once when she was struggling a bit financially about working some overtime at her job as it was available. Her response, “Dad I have to have some time off on the weekends!” As I said, Choices!

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