Career Advice Professional Development

How to find a living wage that is right for you

Emily Dawson
By: Emily Dawson
Sep 15, 2020 • 7 min read

How to find a living wage that is right for you

So you’re entering the workforce, or it’s your first time living on your own, and you have to pay the bills. From gas to insurance to rent, there are many expenses to take into account when you are negotiating salary. This guide will help you figure out what amount of money will allow you to live comfortably. Find out how to discover your perfect living wage! 

living wage

What area are you living in?

First, you have to decide where you are living and the average salary in that area. There are many websites out there that can help you gather all of this information. You’ll be looking for a number that you can base your asking salary around. You’ll also want to look up the average salary for the position that you have been offered.

Ex- $50,000/yr

What type of building are you living in?

If you are renting an apartment or buying a house, there will be monthly payments. You’ll need to look up the average rent for the area or the average cost of a home. If you are buying a home, you’ll need to pay a mortgage every month, so regardless of the type of building you are living in, you will have monthly payments. Since jobs are basing their pay per year, you’ll want to base all of your calculations on 12 months.

Ex- $1,500/mo x 12mo= $18,000/yr

living wage

Utilities

If your place of living doesn’t include utilities in the rent, you’ll have to budget them separately. Not only will you have to take into account your monthly rent payment but also the water/sewage bill, the internet and cable bill, the electric bill, and any other payment that is required. If you are living in an apartment complex, you might have to pay for trash service, security, or package delivery.

Ex- Water/sewage- $50/mo x 12mo= $600

    Electric- $50/mo x 12mo= $600

    Cable/Internet- $50/mo x 12mo= $600

    Valet Trash- $12/mo x 12mo= $144

Utilities Total: $600 + $600 + $600 + $144= $1,944/yr

Insurance

When you are living on your own, you’ll need to pay for your insurance. If you are 26 years old or older, you can no longer be on your parent’s health insurance. For car owners, you’ll need to pay car insurance. If you are renting an apartment or a home, you’ll want renter’s insurance. There are other insurances you’ll want as well, like life insurance, but that is something you can think about later in life. These are all monthly payments that add up, and you’ll need to take into account when you are budgeting your expenses.

Ex- Health Insurance- $400/mo x 12mo= $4,800/yr

    Car Insurance- $75/mo x 12mo= $900/yr

    Renter’s Insurance- $20/mo x 12mo= $240/yr

Transportation

One thing you will need to take into account is your commute. You’ll need to take into account how often you fill up your gas tank and how many times out of the year. And if you don’t live in an area where the way of transportation is not by car but rather the metro, you’ll need to figure out how much it costs every time you use the metro and how many times a day, per week, per month, per year.

Ex- If I spend $22.00 on a full tank of gas every two weeks, there are 52 weeks in a year. I’d divide that total by half to see how much it is weekly, then multiply it by 52 for my annual spending.

 $22/2= 11x52wk= $572/yr

Groceries

You got to eat to survive! This is a little trickier to figure out until you go out and spend money on groceries. My recommendation would be to track your weekly spending on food. This includes every time you go through a drive-through and go out to dinner with friends, etc. Next time you to your local grocery store, save the receipt!

Ex- $150/wk x 52/wk= $7,800/yr

living wage

Cell Phone

Unless you intend to give up that second appendage that you’re holding in your hand or is sitting in your back pocket, you should be prepared to pay the bill for your cell phone. Depending on your plan with your cell phone provider, you will likely pay under $100 for your cell phone every month. This is for one person.

Ex- $70/mo x 12mo= $840/yr

Overview

You will have other things that you spend money on, like buying clothes, video games, going to the movies, etc. Just make sure that you have leftover money for those luxuries. You’ll want to add up all of these numbers to see how much it costs to live and then add a little more for emergencies and luxuries. Once you have that number, that’s your living wage, your asking salary.

If we add up all of these example yearly numbers…

Rent= $18,000

Utilities= $1,944

Health Insurance= $4,800

Car Insurance= $900

Renter’s Insurance= $240

Transportation= $572

Groceries= $7,800

Cell Phone= $840

Total= $35,096

living wage

Add in Extras

You’ll want to add in the extras in the end. Remember, whatever number you come up, in the end, is your absolute minimum. Especially if it is much lower than the average salary for someone who is working the same position somewhere else, you’ll want to negotiate. You can check out our other posts on how to negotiate your salary! Hopefully, this guide helped you get a good start on figuring out your living wage.

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