How To Go from Poor to Middle Class

One of the great things about America is the ability for anyone who is willing to do what is needed to climb out of poverty.  Unlike in Vietnam, where those who were stripped of their land and their property after the war have no way of doing more than hunting and gathering for food, there are plenty of jobs available for those who want them.  There is also the opportunity to start a business for those with an idea and the willingness to put in the long hours.

A lot of people start in poverty.  Many people, after leaving their parent’s homes and starting out on their own, have little money to start.  Many people take jobs that pay little but provide the start needed to climb to something better.   While some have some event such as a medical condition that keeps them in poverty, many who stay in poverty make choices that keep them in poverty.  Today I thought I would chart the path for those who want to get out of poverty.

1.  Get a job, any job.  It is often said that you can’t live on minimum wage.  It is true that you can’t live like someone with a $100,000 per year income on minimum wage, but you can actually save and build wealth on a minimum wage income if you cut expenses to nothing.

2.  Minimize expenses.  A single person can rent an apartment for $300 a month (you could actually rent a room for less or live on less with a roommate).   You can eat for $200 per month if you cook in and cook inexpensive food like soups, rice, and beans.  Add another $50 per month for clothes and $100 per month for utilities (if they aren’t included with the rent).  You are now spending $7800 a year.  Let’s say you can live for an even $10,000 if you add a few other odd expenses.  On minimum wage, working 2080 hours per year (full-time), you would earn $15080 per year.  This leaves $5080 per year to save, or about $425 per month.  Over 10 years (between 18 and 28), this would grow to $100,000 if invested in mutual funds.  Enough money to pay cash for a house.  Once you’ve bought a house, take the money you were spending on rent and save for a car.  Then save and build wealth, increasing your income through your investments.

Noted what is not included here.  There is no car while you’re in your 20’s – you would walk or ride a bike.  There is no eating out.  There are no vacations.  There is little or no processed food – just simple, basic ingredients.  There is no cell phone (although you can probably get a free Obamaphone). These are the sacrifices that need to be made since your income level is so low.

3.  Do not have kids.  You cannot raise a family on minimum wage – there is no way.  But there will be plenty of time to raise a family when you are in your thirties, have some savings, and hopefully have climbed up a few rungs on the career ladder and aren’t making minimum wage anymore.  If you get married, make sure he or she works also and makes enough money to pay for him/herself.

4.  Live somewhere inexpensive.  You cannot live in New York City on minimum wage.  So don’t.  Live in a small town in a little apartment off of the town square where you work.  Live in a small city close to a shopping center and work so you can walk or ride a bike.  Do free things like read or take a hike for hobbies.

5.  Be a valuable employee and move up.  You can move up at minimum wage, but it is easier if you increase you income.  You do this by being a valuable employee and taking on more responsibility.  You need to do the basics by showing up on time and doing you job as efficiently as you can.  You need to make your customers happy.  You need to look for ways to can become a more valuable employee by taking on additional tasks and gaining education.

I’m sure I’ll get some comments saying I’m crazy,  That there is no way someone on minimum wage can even survive, let alone grow wealth.  I’ve shown a way to buy a house for cash in 10 years, however, which most people in the middle class don’t do in 40 years.   I also don’t include all of the government assistance like money for housing and money for food.  With this kind of assistance, even more money could be saved and invested.  It all comes down to making the right choices.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


  1. This post is kinda crazy! For one it’s like 6 percent of people that are working (according to MSNBC) that are at the minimum wage level so your number is way off. Have you met someone earning 15k a year fulltime? Everyone else is either unemployed or at a higher level.

    There is no cell phone (although you can probably get a free Obamaphone).

    That’s horrible advice as a phone is an obvious tool to make money and get out of poverty. Sure you may have to use a flip phone and pay per minute.

    There is no eating out. There are no vacations.

    It’s not realistic to think that people won’t take vacations ever. People need to unwind to keep from going crazy in this rat race of a world.

    Your other advice to cut costs and stuff is pretty sound. But I believe the most significant point is to don’t settle for what you’re earning now. There are plenty of ways to earn money outside of work or with side hustles and people need to be always thinking and trying.

    Everybody starts somewhere. Having a minimum wage job at 16 wasn’t a big deal for me. But when I was 18 and offered a slightly above minimum wage at the time, I was so angry and insulted I kept trying and landed a job making about double that per hour. And it just snowballs from there. I don’t know but I’d guess a good amount of people in low paying jobs for years are content with it. If you want more you have to try and can’t expect someone to give it to you!

    • You’re right that this is a crazy post. As I was writing it I was thinking that there would be no one who would have the kind of dedication I was describing who would also stay at minimum wage for ten years. If they were that diligent with their money management, they would also be diligent about their work and they would get promoted on up out of minimum wage. Unfortunately, people who would stay at minimum wage would make bad choices. They would have a child or two even though they couldn’t afford to feed them and didn’t have the time to raise them. They would get the smart phone with all the options even though it was $150 per month. They would go on vacation every time they had a few bucks saved up and probably get a timeshare along the way. They would go out to the bars each weekend and spend a coupel of hundred bucks a week on beer and the night life while they should be tracking every dime.

      My point is probably more that even if you only made minimum wage, if you made the right choices you could own a $100,000 house in ten years – something most people making $75,000 per year don’t do. It is also that with all of the programs out there, like Obamaphone, food stamps, section 8 housing assistance, and head start, people in poverty have a lot of tools that can help them climb out if they use them to climb instead of to rest.

  2. This post is dead-on IMO. There are many many tools/breaks that you get in poverty that can help get you out that weren’t included in here, PLUS who actually makes 15k full time, as the previous poster said, only 6% of workers and hopefully not for 10 years in a row as you could be always looking for a higher paying job, even if just slightly higher. Your post is very conservative in giving the person as little income as possible and STILL they were able to save up. To be more reasonable I think 30k/yr is a more reasonable amount for someone in their low to mid 20’s working full time. I say this because thats generally below the median income of most towns. (median income in my town is $80k+ so 30k is beyond reasonable for this kind of example). Making 30k would give this guy a car and a phone and a vacation and more food allowance and STILL would work.

    The point is it takes dedication no matter how much money you make. If you make 100k and live in a 500k house and drive 50k cars then you’re going to be in pseudo-poverty as well.

    Having this level of dedication also requires a lot of intelligence AND self-control, you need to have the smarts to make a plan, but the self-control to actually carry it out, knowing it will all be worth it.

    Literally anyone can become wealthy if you are willing to make some sacrifices.

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