How To Live On 20K A Year (Possible Or Not?)

In essence, many full-time federal employees earn about $18,000 yearly. So, if you want to make $20,000 annually, you will need to earn more than the minimum wage of $9.61 per hour. Frankly, surviving on $20,000 a year is challenging because that is not even your net take home. Your monthly after-tax will come to something around $1,450. Using the 2019 national median rent figure, which is about $1,078 for a one-room apartment. It simply means you are done and out after paying rent. There will only be little left for groceries, healthcare, and other essential needs. We are not even talking about savings yet.

If you are earning $20,000 or lower and struggling to cope, you must know that you are not alone in this situation. Also, I must commend you, especially if you are still holding on to that job and waiting for something better. A recent study by the Brookings Institution revealed some alarming figures that we need to consider before moving on.

  • America’s unemployment rate is at a half-century low. It also has a job quality challenge that affects almost half the population. 
  • 44% of U.S. workers are employed in low-wage jobs that pay median annual wages of $18,000. Mostly workers between the age of 18 and 64.
  • Low-wage jobs are pervasive, representing between one-third to two-thirds of all the jobs in the country’s nearly 400 metropolitan areas.
  • Smaller cities in the South and West tend to have the highest share of these low-paying jobs. They include New Mexico, Las Cruces, North Carolina, and Jacksonville, where 6 in 10 workers are in low-wage jobs.

As part of their findings, Martha Ross and Nicole Bateman of the Brookings Institution explained that, contrary to general opinion, these workers are not teenagers or young adults.

More than 53 million Americans working in these low-wage jobs are adults in their prime working years between 25 to 55. They further elaborated that the median hourly wage is $10.22 per hour, which is above the Federal minimum wage of $7.25 an hour but still below the considerable living wage for many regions.

Earning and living on a low-income is challenging; however, there are ways you can make it work and still find something little to save. 

Cut Down on Rent

A young woman is happy after moving into a more affordable apartment with her dog.

Taking out a rent of any amount above $450 monthly will hurt your position badly, such that you may not survive the rest of the month. So what are your options?

You could look for a new affordable rent, possibly in a less expensive location. Also, you may consider having a roommate or renting out part of your space. 

If you earn less than $20,000 annually, you will likely qualify for government rental assistance from your local council. In addition, there are various supports available for you to choose from. 

Additionally, you can create a flier and post them in your neighborhood, telling people you need a basement, an attic, or even a garage to stay for a fee. You could throw in that you could do a few services for them in exchange for a place to stay.

You may even find families looking for someone to stay in their home and take care of their pets while they go on an extended vacation. Imagine a scenario where they will be away for a month or two, and you will even get paid for looking after their home and pets. That is a significant saving on rent, plus you have something extra on that.

I understand that housing is very sensitive and should be treated as a top priority because sometimes it involves more than one person, families may be affected.

Added to that is the fact that Rent might be the most significant expense on your monthly budget. 

Get Help With Your Bills

Utility bills are another critical part of your expenses that can stress and stretch you extensively if you don’t manage them properly. If you can go some extra miles, you may just get some relief on your bills.

For example, you could reach out to your utility providers, explain your situation to them, and ask if they have any type of help for low-income earners to cover your bills without defaulting. Several companies offer some kind of arrangement for struggling families. You may not know until you ask.

On your part, you could ensure that you block all leakages like water and gas leaks that can shoot up your bills if you are not paying attention.

Additionally, you could approach your landlord and work out a way to lower your cost. For instance, they can improve your insulation to reduce your cost of heating and cooling. 

You can be eligible for some sort of support through the Low Income Energy Assistance Program (LIHEAP) on the part of the Government.  

On Utilities, there’s always room to make some adjustments. If you look closely, you will find some cost you can cut or do without, even if it is a temporal cut. 

Consider Public Transportation

A young man is using public transportation to save money on car expenses.

Consider the cost of maintaining a car on a $20,000 annual salary; it can be a lot. Imagine if you got the vehicle is on a lease, you have to keep paying the lease monthly.

Added to that is the regular maintenance cost required to keep the car in good working condition. Also, let’s not forget the cost of insurance too. 

Even when you own your car outrightly, you still have to spend on Gasoline and repairs in addition to the previously mentioned expenses. According to AAA, it will cost you $773.5 ($9,282 annually) monthly to own and maintain a vehicle.

Take a look around you; there may be a good public transport system that works in the area where you live. Commuting by public transport system offers you a cheaper alternative and can save you hundreds of dollars monthly. 

However, if the public transportation system in your area is inadequate, you may need to consider ridesharing. Check the cost versus the cost of using your car. Also, consider taking a walk if the distance you cover is not far. Although, it also depends on the time of the day, the weather, your health, and traffic. 

Finally, suppose you enjoy working from home, and you’re sure of delivering effectively. In that case, you may ask your employer to allow you to work virtually. If they are reluctant, ask them to consider some days during the week to work from home.

From experience, you may need to throw in a few extra hours in your bargain to get what you want. This strategy will no doubt trim your budget by a lot. 

Save Money on Food

A young couple is eating at home to save money.

With an annual take-home of $20,000 or less, you should not be a frequent guest at restaurants, fancy or not. Restaurants are naturally expensive because they have several bills to pay, all of which go into the cost of every meal they serve.

Instead, you can save money by settling for healthier home-cooked meals. You will be saving money that can be put to other used or saved.

Another way you can save on food is to stop the waste from your home. According to the U.S. Department of Agriculture, an average American wastes about one pound of food daily. This may sound ignorable but think about it carefully.

How often does unfinished milk go bad in your home? How about other leftovers? How often do you find yourself dumping unfinished foods the next day?

This is an expensive habit you cannot have on your paycheck. You have to learn to portion your meals before cooking and where there’s a leftover, ensure they are properly stored away for another time. 

Again, there are supports all over the place. Take time to check if you qualify for the Supplementary Nutrition Assistance Program (SNAP). You can also check for the nearest food bank in your area to get some groceries to support what you can buy with your money.

Food banks are always willing to help people struggling with groceries. I must quickly say, it will be unfair to get food or groceries from food banks and end up wasting them because you could not check wastage in your home. 

Here are some ideas to help you save on food and avoid waste:

  • Look out for sales. Most grocery stores have a segment within or outside the store where they sell almost expiring items at nearly giveaway prices.
  • Cut down on snacks and sodas. They can turn out to be expensive habits later, plus they have little nutritional value. 
  • Buy food items that are in season. They’ll cost you less and last you longer if you store them properly.
  • Check your fridge as often as possible and ensure nothing is wasting by putting items close to expiring forward for easy access.
  • Work with a weekly menu. Make a list of only the things you need; that way, you will avoid overbuying when you visit the store. 

Pay Your Debts and Avoid New Loans

A young man is working hard to pay off all his bills to eventually eliminate all his debt.

Understandably, debts are sometimes unavoidable. It’s a vicious circle, no matter the size of your take home.

However, when you understand and differentiate “good” from “bad” loans, you will better control how to pay off your debts and maintain a good credit score

By all means, avoid these types of debts:

High-Interest Credit Card Debts

Credit card debts are one of the easiest and most accessible debts, but you need to be careful with them because lenders can charge expensive interest fees on card debts.

Avoid credit cards debts as much as possible, especially the high interest-paying ones. Unfortunately, people have been stuck with these types of debts for many years. 

Payday Loans, Title Loans, and Quick Loans

Often these loans are accessible without reference to your credit score or any form of credit check. They look easy, but they can be predatory and cost as much as 400% in interest payments.

When your monthly paycheck is less than $1,500 monthly, and you’re struggling to make ends meet due to unexpected expenses like vehicle repairs, medical bills, etc. here are a few options that may work for you instead of the High-Interest Loans:

Personal Loans

With a good credit score, you will have easy access to personal loans that cost very little in interest charges. The interest rates can be around 6%, and you can use the loan for personal purposes.

However, if your credit score is not impressive, lenders might charge you a higher interest rate. So spend some time shopping around for the best rates for your loans, ask all the questions you have, and more before you decide on which loan best suits you.

You may also consider taking some personal loans here and there to stay afloat but be conscious of the cost of these loans. Avoid getting carried away by quick loans and instant credits. 

0% APR Credit Cards

Most card-issuing companies offer 0% APR cards. They have suspended interest for a short period, from a few months to more than a year.

After some time, the interest will go up. Check to see if you qualify for these cards and the rates, and ensure you pay off before the interest kick starts. 

Medical Payments Plans

A medical bill for a patient with a stethoscope on top.

Some medical institutions allow you to pay in small installments, especially if you struggle with urgent care and hospital bills. In some instances, these institutions will charge little to zero interest on what you owe them. All you need to do is call and find out what is available for low-wage earners.

Additionally, you and your family may qualify for a group health care plan with your employer and under the Obama Health Care Plan.

Deferred Payments

If you face hard times, speak with your landlord, utility companies, and vehicle servicing companies and ask for deferred payment. It simply means you don’t have the capacity to pay now, but you will undoubtedly pay when your finances improve. 

Consolidate Your Debts

You can put all your debts together and then arrange them in order of priority as you start paying them off gradually. When you combine debt in this manner, you take a loan from a financial institution, credit union, or internet lender.

You will make use of the loan proceeds to repay some or all your current debts, based on how big your loan balance is and how much you owe.

If you find yourself in the vicious circle of debt, and you’re struggling to break out. You may find help with agencies like the National Foundation for Credit Counselling. They provide critical resources and can connect you to counselors who can help you.  

Suspend All Vacations

I’m big on vacations and take quite a number every year but none when I earn less than $20,000 annually.

Vacations are expensive and cost you more than you planned. The cost of an average holiday by an individual can be around $1,000. Imagine if you have to take two or more in a year while still struggling with low wages. 

My recommendation is that you suspend all vacations fr now and focus on improving your financial position. If you are used to traveling far for your holidays, why not try something different; take time to check around; you are likely to find cheaper getaway locations or fun sites to unwind.

Avoid Some Bad Habits

Do you know those bad habits that everyone has been telling you to stop for the sake of your health? Well, I’m adding another reason to that. Bad habits are hurting your pocket.

I’m talking about alcohol, drugs, smokes, and other unhealthy habits that cost you more. Have you ever considered how much you spend on those wild adventures and habits? What about how much you can save on them if you can slow down. 

You might just be fine if you earned $20,000 annually and cut down on these bad habits. I admit that you might struggle to get off them at first, but you need to be determined and seek help on the best replacements for these habits that punch holes in your pockets.

Work Harder and Improve Your Income

A young man is working hard to improve his financial situation.

This is where you need to think and work out what more you need to improve your financial position.

Sometimes, it might not be enough to cut down on your expenses and regulate your bad habit. You might need to work to bring in more income. Are there freelancing gigs you can do, or maybe you do best as a handyman? 

Let the people in your community know what you can do, attach your fees, print some flyers, and share them in the area where you live. You will be shocked how many people need your service and are willing to pay for them.

The other day I saw how much people make just walking other people’s dogs, and it was fascinating. Check DollarBreak to find out ways you can generate extra income online. 

Set Saving Goals

You might find it amusing to see saving goals as part of the things you need to do while earning less than $20,000 yearly. But, here’s the deal: if you cannot save money when your income is low, you will struggle very hard to save anything when you start earning a lot more. 

Set a target for yourself, how much do you want to save monthly, and follow through. Start with something tiny and move it up from there. At some point, all I could keep was a mare $50 monthly, but I made sure I never missed setting that money aside every month.

Eventually, that was the foundation of my investment portfolio when I started. Moreover, when you have savings, it gives you some sort of satisfaction emotionally.

Keep Your Eyes on the Big Picture

To stay afloat on a low wage of $20,000 per year, you need to keep your eyes on the ball at all times. Whatever you need to do to achieve it, you need to understand why you are doing it, which is, you want to survive with that amount for now.

So, even if you have to spend more time with your family or take on extra jobs, just have the big picture and make the most of it financially.

Buying Basic Item

Earning less than $20,000 annually is not the worse situation you can find yourself in. It would help if you were willing to make some adjustments to meet some basic needs. Here are a few suggestions.


You can find some expensive designer clothes at consignment stores across America for a small price, in some cases for pennies.

They are clothes worn by celebrities briefly for some occasions, and they would no longer need them, so they give them to thrift stores like the Salvation Army and Goodwill. If you are lucky, you can find these shops in high-income areas for really good prices.


Consider changing the kids to a good quality public school within your community. A little research with help you find something affordable that offers quality education.

I place a premium on education, so I would suggest this should be a very temporal arrangement. However, if your kids are doing very well and the school is great, maybe they can continue there. 

If you find something within the area where you live, that will be great. Then, you will not have to pay too much to get them home after school.

Bottom Line

My family knows me very well that when it comes to wastages, I frown at them. This is because I understand what those little waste here and there can come to at the end of the month.

When I’m looking for something to eat, my first choice is not to cook; instead, I check the fridge for any preserved food that can come in handy. There were some of the adjustments I made when I was earning less than 20K a year. 

There are many wastages in our homes. We only need to look closely to find them from water to gas and even electricity and phone bills. Once we make these adjustments, surviving on 20K per year will no longer sound like “Mission Impossible” to you. 

If you following these suggestions, you wouldn’t even have to mooch on anyone and can bet you will even be able to save.

One secret of saving is putting away the first one and resisting the urge to take it out before committing the next. If you can control yourself, you will be better for it in the long run. 

I’m aware there are people out there who are surviving even on lesser amounts than the 20k benchmark. I would love to hear and learn from you. Let’s talk!

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