Yahoo Finance Minimum Wage in California in 2024: Can You Make Ends Meet?
California is the second most expensive state in the U.S. (first place goes to Hawaii). The steep price-tag that comes with living in the Golden State is owed to a few factors including desirability due both to the state’s mild climate and vast job opportunities, high tax rates and elevated grocery prices compared to the national average.
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And then there’s the issue of pay. Generally, wages in California are higher than what you find in more affordable states. According to ZipRecruiter, the average salary in California is $62,007 a year, or $30 an hour.
But that’s only the average; some people make far more and some, unfortunately, make far less. Consider minimum wage workers living in the Golden State: They make $16 per hour, which is the third-highest minimum wage in the country (second place goes to Washington at $16.28 and first place goes to District of Columbia).
It’s great that California has a higher minimum wage than, say, the more expensive state of Hawaii ($14 per hour), but let’s be real: how can someone get by on $16 an hour (which, if you work 40 hours a week would bring in $2,560 a month or $30,720 a year – before taxes) in a state where the annual average cost of living is $53,082 a year, according to data from the Bureau of Economic Analysis?
Additionally, how can you cover not only your basic living expenses, but also save for retirement, invest and build an emergency fund?
It isn’t easy, but people in California can and do build some sense of financial stability, even when living on minimum wage. Here are some tips to help you stretch an extremely low income.
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Create a Realistic but Unforgiving Budget
Everyone, no matter what income tier they fall into, has to create a budget in order to best manage their money. Still, some people with means may slack here because they don’t have to really worry about money.
But people living on minimum wage in as expensive a state as California cannot go without crafting a realistic but unforgiving budget. You need to aggressively identify needs versus wants, and trim costs on even the little things, like subscription services and anything else that seems innocent but adds up over time.
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Save $5 Every Week
We all need savings for emergencies and, separately, for our retirement. If you’re scraping by on minimum wage, you may feel it’s impossible to set aside any money for savings, but this isn’t true.
If your budget is honest, you can start small and stash just $5 a week into a high-yield savings account and get an APY over 5%. There is absolutely no reason not to do this; your money literally makes more money without you doing a thing.
Take Advantage of Government Benefits
Though the U.S. doesn’t offer as many government benefits to its residents as, say, Denmark, Sweden or Norway, it does offer some to help people who are living on very low income.
California is particularly generous in this department. Its residents can look into the following programs or organizations:
Medicaid and, if you have kids, the Children’s Health Insurance Program (CHIP)
SNAP (food stamps)
BenefitsCal
CalFresh
California Association of Food Banks
Free summer lunch Programs for kids
School meals
Free or reduced-price breakfast and lunch at public schools when in session.
Women, Infants and Children (WIC) Program
Affordable healthcare offered through Covered California
California Lifeline Phone Program, which offers financial support for home and cell phone usage
California’s Low Cost Auto (CLCA) Insurance Program
California Public Utilities Commission (CPUC)
Housing and Urban Development
Department of Community Services and Development
California Public Utilities Commission (CPUC)
California Mortgage Relief
California Area Agencies on Aging
Take Advantage of California Tax Breaks
Not only should you be taking advantage of federal tax breaks such as the Earned Income Tax Credit, Child Tax Credit or Child and Dependent Care Credit, you should be avidly seeking out California-specific tax breaks.
Here are some you may qualify for:
Traditional IRA Deduction on state income taxes
California standard deduction
Deductible home mortgage interest
Deductible healthcare expenses
Personal casualty and theft loss
Moving expenses
Employee expenses and miscellaneous itemized deductions
The California Child and Dependent Care Expenses Credit
Nonrefundable renter’s credit
Senior head of household credit
Adjust Your Living Situation
Unless your work demands it, you don’t need to live in Los Angeles, San Francisco or another famously expensive city in California. Instead, check out more affordable cities like Clearlake, Bakersfield or Clovis.
If possible, you should also downsize. If that’s not a financially feasible option, consider getting a roommate for any space you can spare.
Give Up Driving
According to data from AAA, the average cost to own a car in California is $12,182 per year (this includes the cost of gas, maintenance, insurance, depreciation and other factors).
Opt for public transit whenever possible instead of bearing the financial brunt of car ownership. Or, if you’re physically able and will do it safely, break out the bicycle. Just don’t forget your helmet and pads.
Take On a Side Hustle
You may already be exhausted from your main job, but taking on additional work can make a world of difference for those living on minimum wage.
And you have more options than ever when it comes to side hustles, many of which you can do from the comfort of your own home.
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This article originally appeared on GOBankingRates.com: Minimum Wage in California in 2024: Can You Make Ends Meet?
