The federal minimum wage of $7.25 an hour has been stuck at that number since 2009. As part of an economic stimulus plan, President Biden proposed raising that figure gradually to $15 by the year 2025. Ultimately, the Senate vetoed the increase for now, stating it would be too difficult on small businesses already struggling to stay afloat during the pandemic. Some states will be raising the minimum wage slightly for workers who don’t receive tips. New Mexico is increasing this number by $1.50 per hour and Virginia is raising it by $2.25 per hour. A handful of other states will increase it by one dollar. If you live in one of these places, depending on the cost of living in your neighborhood, this change could make a difference. But, for many Americans who were counting on the minimum wage going up to $15 over the next four years, they may be scrambling to reassess their finances since the senate said no.
For many, budgeting in a way that has you saving money each month feels like an impossible game to win – like that last level of a video game you just can’t break through. Even if you do figure out a budget that leaves room for putting something aside, there are always those unexpected expenses that come through and take it all away, like a flat tire, a plumbing issue, or a dental filling. When does it stop? We decided to speak to a financial expert about some moves people can make in light of the fact that minimum wage won’t be increasing – at least not by much, and not for a while. We spoke with award-winning financial educator Sharita Humphrey (pictured below) about this hot topic.
What should you be spending on housing?
What your housing budget should look like varies a little bit depending on if you’re a renter or a homeowner, because the money homeowners put towards a mortgage is (ideally) appreciating, and they’ll get it back when they sell. “Budgets are not created equal because everyone has different incomes, goals, and lifestyles. The recommended percentage on your housing expenses should not exceed 30 percent of your gross income,” Humphrey says. “This percentage does include your utilities if you’re not a homeowner yet and if you are this same percentage applies. Yes, 30 percent of your gross income is a guideline that should be considered because it can help you [keep] from overextending yourself financially.”