Living Alone On 12 Dollars An Hour – Is It Possible? (Ways To Make The Best Of $25,000 Annual Income)

Living alone on 12 dollars an hour can be done right by making smart decisions and cutting back on unnecessary costs. The best way to start is to look at your bank statement and see where and how you’re spending your money. The next thing would be to cut costs on the four fronts, including food, clothing, rent, and transportation. Even if you don’t realize there’re ways to replace or switch to things that can even be good for your health and save you money while living a comfortable life. 

Living on your own comes with its list of advantages and the sense of freedom you couldn’t exercise before if you lived with your parents.

But the reality is even more daunting when you have to pay for your utility, rent, grocery bills which are just some essential expenditures you have to handle to survive.

The federal minimum wage in the United States is $7.25 per hour, though the minimum wage varies from state to state.

The higher your hourly wage, the more luxurious life you can live. But how to manage to live alone when you earn 12 dollars hourly wage? Is it possible?

Surviving on 12 dollars hourly wage

When it comes to determining how to live off a salary where your wage per hour is $12, there’s no sure answer but only estimates.

These estimates are also based on:

  • Your age
  • The state you live in
  • Your student loan
  • To some extent, your ethnicity, and upbringing
  • Your quality of life

If someone wants, they could spend their money on branded clothes and going to fancy restaurants but lose the ability to have any savings.

When it comes to living a good life, you can make it happen with an annual income of $24,960, where the approximate monthly income is $2,200.

It all comes down to making small changes in your routine, be it where you purchase groceries from, where you get your clothes, and how you travel, which can make a big difference by the end of the month.

You can even have your savings and be able to pay your student loans while looking for opportunities to increase your wage per hour.

1. Homemade meals for the win

A young man is having his homemade lunch at his work desk to save money

Tackling the essential thing every human needs to survive is food. Getting that lunch each day from the nearest café does more harm than benefit.

I get that it could be a hassle in the morning to fix lunch for yourself, but it’s so worth it if you want to live on a budget.

And I’m not shaming you into giving up those lattes or sandwiches either but make the switch as much as possible.

Indulging in once in a while is great, but everyday spending can lead to over-expenditure. 

But buying fresh groceries from the market isn’t just good for your health but also your pockets. This is the biggest saving tip that can make a world of difference. 

Going to the nearest farmer’s market to get fresh vegetables and fruits for the week instead of expensive frozen fruits is a good way to start. Limit your snacks and rely more on snacking on veggies and fruits. 

Bringing your own lunch to the office can make a more significant difference. And if you’re busy during the week, then prepping your meals or part of meals during the weekend is good too!

2. Relentless rent

Well, food is something you can tackle and not eat out as much, but what about the rent? How do you negotiate rent?

Living on a budget where you make $12 an hour greatly depends on which state you live in.

Living in big cities will obviously pressure you to spend more on things than living in other states. 

A study conducted by Credit Karma has listed the top five expensive states to live in as of 2022, which includes Hawaii, California, Massachusetts, New Jersey, and Connecticut.

The least expensive states have Mississippi as the least expensive, followed by Arkansas, Alabama, Oklahoma, and Ohio.

Of course, not just rent but non-housing costs of living like utilities, healthcare, transportation, and groceries play a significant role. So, the state you currently live in has a lot to do with the rent you’re paying.

If you live in an expensive state due to your current job, the best thing would be to move to the city’s outskirts where you can find a bigger space at a lesser cost.

Of course, this would mean a longer commute, but if you’re working remotely, that makes it much more manageable. 

If you prefer living in the city, closer to where you work (because you hate commuting for long hours and love the ease of having all the necessities nearby), you can choose a smaller space since you live independently or share the space with a couple of friends and divide the rent and utility costs. 

Nine states, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, have no income tax.

3. Commute cost

Two young guys are waiting for the train to come, they're commuting to work to save money

While buying a second-hand car seems like a bright idea, the vehicle’s maintenance will surely cut your pocket, even if it’s in the smallest possible way.

Here are some of the ways to help you live a budget-friendly life:

  1. Switching to public transportation like buses or the subway is a budget-friendly way to commute to work.
  2. If you’re not a fan of public transport because of the sheer amount of public present on them, you can bike your way to your work. If you live within a few miles of your work, investing in a bike is a one-time thing with a lesser maintenance charge than a car. You can save nearly $6000 a year by leaving your car in the garage and riding to work instead.
  3. Carpooling is great for saving those dollars but also very environmentally friendly. You can either ask a colleague who lives nearby you for carpooling or offer your colleague carpooling for a few dollars if you use your own car. This way, you are covering your costs!
  4. Many credit card companies are tied to a low-cost gas station and offer rewards when you get gas from them. This can end up saving you 3% of the total cost.
  5. Many employers also provide the commuter benefit, a golden opportunity waiting to be seized. You can save 30% to 40% on public transit!

Walking is the last and most straightforward option to commute to work.

If you’re willing to wake up early, then it’s good for your pocket and your health as you get in those steps needed for the day!

4. Overwhelming student debt

Money with a diploma representing student loan debt graduates worry about after completing their education

Student debt is a crisis that cripples you and sits there just waiting to snatch a part of your income every month before you can even think about doing something about it. 

But paying off debt doesn’t have to be this difficult. To pay the debt quickly, you need to lay out some steps and create a proper plan unique to your situation.

Part one of this plan is to put an emergency fund aside for about 3-6 months’ expenses.

This is necessary, so you don’t use your credit card when emergencies come up.

You can make this emergency fund by using the options:

  • Splitting your direct deposit
  • Using the automatic transfer of funds
  • Using a high-yield savings account

After you have your emergency fund handled, the next step would be open to managing your debt. 

This requires you to see your finances and how and where you’re spending all that money every month.

Of course, with the tips above, you’ll definitely be saving more if you try to cut your costs on each of those things.

Writing down your debts from highest to lowest and calculating the minimum payment on each is an excellent way to start.

Then move on to calculating your total minimum payments to give you an idea of how much you need to pay every month to keep current. 

You can start paying extra on the credit line with the highest interest rate and keep paying the minimum on the rest.

Once you’ve tackled the debt with the highest rate, you can move to the next one and pay it all off

Another way to make sure all your money in the bank is actually converting to something more is by moving them into a high yield savings account, and it helps you earn 50x the amount of interest. 

5. Combing through bank statements

It can be pretty dull, but try making checking out your credit card bill more enjoyable at the end of each month. 

Remember that subscription of that online streaming service that you started off on a 30-day free trial and has now been making a hole in your pocket for months when you don’t even use it anymore.

It’s vital to see where your money is going and what things need to be cut to save more of your money.

Sometimes there’s even a fraudulent activity on your card without you knowing about it, or you might have been charged wrongly.

You wouldn’t know this stuff if you don’t go through the statement diligently every month. 

6. Doing more of what you like

A young girl is working on her personal finance goals at her favorite cafe

For me, going to a café every week to have a cup of hot coffee with cake and read my book in peace gives me a bucket full of joy.

It’s like a form of therapy where I can indulge and forget all my issues. 

Doing what gives you a sense of happiness and mental relief from the day-to-day hustle and bustle is something you should never give up on.

Cutting back on unnecessary stuff is indeed essential but not on things that are important to you in a way that increases your quality of life. 

For you, it could be traveling from one city to another just exploring whenever you get a chance or buying lots of plants for your house.

Either way, this gives you happiness, and cutting back on these activities will only decrease your happiness index.

Cut back on things that aren’t that necessary to you.

Like shopping for branded clothes is something you don’t care about, choosing to get your clothes from thrift shops is a great way to save your money.


What’s the 50 30 20 budget rule?

Senator Elizabeth Warren was the one who came up with the 20/20/30 budget rule that’s helpful for individuals to manage their money and save up for emergency or retirement. 

It’s as simple as spending up to 50% of your after-tax income on needs. Then, the remaining half is divided between 20% savings and debt repayment and the remaining 30% on things you want. 

Americans are known to be bad on savings, and as a result, the whole nation suffers from high levels of debt. As of 2020, Americans have $14.9 trillion in total debt, including $765 billion in credit card debt.

This 50/20/30 rule can help people better manage their income and live comfortably. 

What is the difference between passive and active income?

Active income implies accomplishing tasks in return for money and is defined as your job.

While passive income lets money work for you where you’re putting no or minimal effort to get this income.

There’re different ways to earn passive income, including collecting rent, selling courses or e-books, affiliate marketing, dividend stocks, etc. 

To summarise

Living on a $12 hourly wage can seem difficult, especially if you live in a big city or have student debt, or both! 

But making some intelligent decisions on your expenses can help you save money on things you didn’t even know you could save on, increasing your monthly savings. 

The primary fours, including food, rent, transportation, and clothing, can be well managed. 

Be aware of where your money is going, and that’s step one of tackling things by combing through your credit card statement sheet.

The next is to divide the expenses into these four categories and decide how and where to cut unnecessary costs!

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