This post was previously published on my old blog on October 27th 2011
Andrea at So Over Debt and Jackie at Money Crush posted what their hypothetical budgets would be on a minimum wage salary so I figured that I would do the exercise as well to give everyone a Canadian perspective.
Minimum wage in my province is 9.65 which, with a 40h week and 50w per year, would gross me a salary of 19 300$ per year. The government would also kick in another 815$ per year in sales tax refunds. If I had a child, I would get another 290$ per month (3 480$ per year) but, since I have no idea what expenses would come with being a mother, I will omit that money.
The 815$ from the government is tax-free but the 19 300$ has a 14% marginal tax rate (1 588$). In addition, the provincial government will take 5.025% to put towards my pension (1 013.25$) and I will need to make unemployment contributions of 4.95% (955.35). I will also need to make contributions towards my health care (300$/yr).
My grand total after all the deductions would be: 16 258.40$ per year or 1 354.87$ per month.
| Expenses | Budgeted | |
| Rent | 600 | 600$ is about the average rent in this city for a decent apartment in a sketchy neighbourhood |
| Utilities | 100 | I would budget about 100$ per month for heat/electricity (it could be more if the apartment is poorly insulated – it could be less if the apartment is like my last one and has no heaters). |
| Transit pass | 75 | No cars in this household… |
| Internet | 65 | Internet access is extremely pricey in Canada |
| Groceries | 200 | I might be a bit overboard in this category but personally, I’m a foodie so I would rather sacrifice in other areas of my life than give up the food that I like |
| Personal care | 50 | Soap, shampoo, toiletries, the occasional treat |
| Savings (10%) | 135 | I have saved my entire life and, like food, would rather cut back in other categories than stop saving |
| Cell phone | 75 | I’m in a three-year contract so my choices would be to a) pay 75$ per month, b) Stop paying and destroy my credit score or c) pay a fine of 490$ |
| Total: | 1300 | I would have 54.87$ leftover every month |
In all honesty, I think that being poor in Canada is much, much easier than being poor in the US. First of all, while we don’t have food stamps (to my knowledge), everyone who is low- and middle-income receives a tax rebate each month. I think that, when everyone is receiving a form of government assistance that is disguised as a “tax rebate”, it makes people less hesitant to rely on the government in times of need.
The two major reasons that my budget works are that a) our minimum wage is almost 10$ per hour and b) we have almost-free health care. In my scenario, if I had to pay for any dental work (which is only covered by the government if you are receiving welfare) or eye care, my budget for the money would be shot and I would probably have to go into debt or use my savings. As I would only be saving 135$ per month, I predict that my savings account would stay pretty much stagnant month to month as little expenses would be considered emergencies with such a low income.
My budget is perhaps a little unrealistic since, as a single person, I would probably rent an all-inclusive room at about 400$ per month vs having an apartment all to myself.
My final thought on this exercise is how foolish some people are. I understand that there may be circumstances beyond your control but here are a few pieces of information for my American friends:
1- In this province, we only study up until grade 11 for our high school diploma and we still have the highest drop-out rate in North America
2- In this province, all trade programs as well as the first two/three years (depending on the program) of post-secondary education are free. These two/three year programs lead to a college degree in anything you’d like – languages, science, veterinary assistant, music, computer science etc.
3- In this province, university education costs 2 100$ per year
All of this to say that my province has really garnered itself a sense of entitlement. We expect that we will get jobs at 10$ per hour and have extra money thrown in by the government. We expect that our health care will be free. We expect that we need to put no effort into our personal self-improvement to keep up a decent standard of living.
In short, not only is it possible to live on a minimum wage salary in Québec, the lack of further education (or in some cases, basic education) in this province has led to a society that is full of minimum wage workers in every neighbourhood – and no one’s saying a thing.
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Hmm. Interesting. I don’t think this would be doable in Vancouver (transit passes are $150, for instance. A $600 apartment is impossible to find). It might be with a little parental help and a roommate a couple hours away from downtown, though. I used to live off of $1300 or so. It was tough but I did it!
Great exercise!
One thing on the calculation, though: You should average it over 52 weeks, rather than 50. Even though a minimum wage employer might offer “unpaid” time off for two weeks, they’re also required to give an employee vacation pay of at least 4%, which is the equivalent of about two weeks pay. So even though it doesn’t seem like it, it is a paid vacation.
That said, I’m not sure this budget is at all realistic, because you haven’t budgeted for any kind of emergency, or for any kind of fun. Are you planning on just sitting at home twiddling your thumbs for eternity? It’s one thing to live on a bare-boned budget while you’re a student, or temporarily while you get settled, but it’s another to do it forever. Not to mention that the cost of living goes up faster than the raise in minimum wage, so just because it works this year, doesn’t mean your budget will balance next year.
Hmm, you raise an interesting point. I’ve been living on almost nothing for the past 2-3 years and it really does get me down sometimes.
Interesting – I had no idea that Quebec was winning “highest drop out rate.”
In other news, I would really like to see a study on the effects of the recently rapidly increased minimum wage in BC, for minimum wage earners. It has already led to very noticeable inflation, mostly in areas where minimum wage employees spend their money, such as bars. Plus the grocery store uses minimum wage labour, most of the restaurants, etc. Most min wage earners spend their money in other places that employ min wage earners… hello inflation!
These things are also doable where I live, especially as there is no transit, plus internet is a tad cheaper. Most bedrooms in a house rent for $500 where I live, some with, some without utilities.
I’ve never thought about that before! I’m sure that the bars/groceries are benefitting from the minimum wage increase
Once again, I’m jealous of all you Canadians. We definitely get the short end of the stick with government assistance here. I heard that you guys also have some programs for pregnant women or something? I should really look into moving there
I think I have to do this soon… except it will not be a minimum wage budget. It will be my student loan budget.. sigh.
Haha – are you referring to being able to take up to a year off of work and claim Employment Insurance, for parental leave (male or female)?
Yeah — I was looking for a link to send her and when I read up on all of the benefits we have I was shocked!
Wow very interesting! Where I live, it would be doable, as long as you were only providing for yourself. However, school would not be affordable at all.
Interesting point: “not only is it possible to live on a minimum wage salary in Québec, the lack of further education (or in some cases, basic education) in this province has led to a society that is full of minimum wage workers in every neighbourhood”
And I didn’t realize QC had the highest drop out rate. That’s ridiculous considering post-secondary is so accessible. Alberta’s rate is high too, but I think it’s just because oil work entices so many young men. You don’t have to have any sort of education to make six-figures here.
Not a bad budget! Our minimum in MB is $10/hr, so the budgets would work out similar, but tuition is WAY higher (I think we’re looking at ~$5,000 for our son’s first year in 2 years). Rent on a cheap apartment is about the same, etc.
I could do it if I were single, but can’t fathom how people raise a family on minimum wage.
That is so funny about the “decent apt in a sketchy neighborhood”. That is exactly the same living situation I have – okay place, sketchy *excuse me, up and coming* neighborhood. I live in Miami and minimum wage here is about $7.50, there is NO way I could live on that without having to give up my car and not ever being able to go out to eat or travel to visit my bf that lives in a different state. I think if I was in a minimum wage situation I would have to quickly find a second job or a better paying job.
I was just thinking about this the other day. I don’t know how folks in Toronto do it and our minimum wage is $10.25/hour.
Having just learned recently that university is $2100 in QC has made me wonder what the students are really protesting.
[...] is that I had the idea of writing about minimum wage from Michelle while she got it from Vanessa at Vanessa’s Money… who got it from Andrea at So Over Debt and Jackie at Money Crush! I guess it’s a proof that [...]
That’s a very do-able budget. For me, I would spend less on food and put $50 a month away for savings or emergencies. I would also consider shared accommodation in a student-centric area that included my internet and utilities. But overall, I think you nailed it – a minimum wage budget is totally possible. And after working at your min wage job for a year, you should be able to get a promotion or new job.
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Re, promotion/new job: Exactly! Most people here however, are minimum-wagers for life. So sad.
I was inspired by the minimum wage post as well. In turn I asked my aunt and uncle who have been minimum wage earners for the past four years to share their budget.
[...] Vanessa posted about what her minimum wage budget would be, and I thought it was a very interesting subject. Minimum wage varies from city to city, but it is a very low amount of money to be making per hour, and to try to survive off of it is hard. [...]