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minimum wage

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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.


Sharita Humphrey

Source: Sharita Humphrey / Sharita Humphrey

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.”

minimum wage

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The 50/30/20 rule

Maybe you’ve heard of this rule in the past but weren’t quite sure what it was. As Humphrey explains, it’s “50% Needs/ 30% Wants/20% Financial Goals.”

She adds, “The 50/30/20 rule can be adjusted but is a great budgeting resource that anyone can follow and will help you to budget better now and in the future.” But what are needs versus wants versus financial goals? Many people mistake a want for a need. Your needs are simple: they are the things you need to survive. A roof over your head (rent/mortgage), food (groceries – not meals out with friends, delivery, etc), health insurance, and things like that.

minimum wage

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Identifying needs vs wants vs goals

In differentiating needs from wants, you can see things already become complicated because food can fall in the need and want category. Groceries are a need. Dinner at a Michelin-star restaurant is a want. Think of it this way: if you don’t need it to survive, or you don’t need this version of it to survive (i.e., sushi delivery versus groceries), it’s a want. Entertainment, beauty upkeep, travel, clothes that aren’t for work – those are all wants. Your financial goals are about saving. With that at 20 percent, if you were to make $5,000 a month for example, you’d be putting away $1,000 of that each month to meet the 20 percent rule. If you struggle to do that, you may need to further assess needs versus wants. For example, a car can be a need if you use it to get to work. But if you’re unable to save money by having a car, and you could get to work by taking the bus or a train for less, you may need to move the car to the want category and remove it.

minimum wage

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Finding affordable alternatives

Since we do talk in the last slide about finding the most affordable version of a need, we asked Humphrey how individuals can do just that. If you aren’t saving money and already spending on just your needs as it is, then you may have to lower those costs. “When looking to save on your regular cost of living expenses be sure that you look for inexpensive alternatives,” she says. “If you’re a renter maybe you can look for more affordable housing by searching on or If you’re a homeowner, look into refinancing as it will save you money each month, especially since the interest rates are at a historical low. is a website to help you search for low rates on services and products, especially when it comes to insurance and credit card rates.”

minimum wage

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Identify your weak points

We asked Humphrey what a person can do if they tend to spend more than they planned to and aren’t sure why. Humphrey says, “A person can better identify their spending weak points by taking a look at their bank and credit statements for the last 60 to 90 days and compare them to their budget. It’s important to print your credit and bank statements so that you can clearly see areas where you may have overspent in a category like eating out or even shopping, especially online,” she says. “We often use our debit and credit cards and our spending becomes out of sight, out of mind. That’s why it’s imperative that you identify where and the times that you tend to spend more than you should.”

minimum wage

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Humphrey’s tips for tracking spending

“A great way to track your spending is by using software like or YNAB (You Need A Budget). If you’re a person who wants to track your spending daily, this free-spending tracker will help you to start on course and allow you to immediately identify your spending patterns or weaknesses,” Humphrey says. We list additional apps to help you grow and save money here. In most cases, you can link these to your checking account and all credit cards to easily collect data on your spending habits in one place. Many will also track and report trends and give you additional tips based on how you already spend money.

minimum wage

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How to shift your mindset

If you’re scraping by, barely putting aside savings each month, it’s easy to get into a defeated mindset. “A great way to shift your money mindset when you’re not making the money you desire is to write down your goals and to place them where you can see them every day. Writing down your financial goals is a way to hold yourself accountable and to empower yourself to stay on track,” Humphrey says. “Another great way to shift your money mindset is to identify a talent or skill set that you have that you can monetize or can become a side hustle. This will help you to create momentum on creating another stream of income and will continue to motivate you, which will help to develop a stronger money mindset.”

minimum wage

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When you need a little help

Let’s be real for a second. For some minimum wage workers, no amount of scrimping and saving alone will lead to a substantial safety net. Delusions won’t be helpful on that front. But Humphrey suggests some tools that can actually be of assistance. “Every dollar saved is building your financial safety net,” she says. “One step that someone making minimum wage can take to grow their small savings is to consider opening a Self Credit Builder account. Self is a great way to build positive credit while building savings, and they have flexible pricing options. Another great way to grow your small savings is to sign up for Saver Life. Saver Life is a nonprofit that offers cash rewards and prizes for saving for a rainy day. Opening an IDA account with your local nonprofit is a great way to save and many offer a one-to-one savings match.” You can learn more about what an IDA is here.

minimum wage

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Apps that pay you to shop

Another way to earn a bit more when spending less simply isn’t an option is to be rewarded for the purchases you already make. Humphrey says, “Saving money on each line item on your budget is key so that you’re about to put that money back in your budget and bank account. Online shopping rebates or apps like Ratuken can help you [get] cash back on your online and in-store purchases. The Fetch Rewards app is great for grocery planning and tracking, but the best feature is that you can earn gift cards and prizes for your grocery purchases.” You may also consider looking into cashback cards with rotating five percent cashback periods on needs categories like groceries and gas.

minimum wage

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A few more tips

“Receipt Hog is another great cashback app for retail, grocery, and even gas purchases,” Humphrey says. “Couponing is another way to save on many categories in your budget so definitely sign up for online coupons from your favorite stores or retailers. For those of you who are into fitness or starting your fitness journey, Sweat Coin is great to earn coins to purchase fitness-related items for just walking or running.” She touches on something we’ve discussed before, which is that leading a healthier lifestyle can naturally help you spend less money. Cooking at home, for example, is not only better for your body than eating out but also easier on your budget. Power walking, for example, is a free thing to do with friends versus going shopping. Just saying!

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