I Make $50K per Year. How Can I Survive?

Here's how to stretch a $50,000 income and cover all of your expenses with it.

On a national level, minimum wage is $7.25 per hour. In some places, it's higher. But for the most part, living on minimum wage is not easy. At $7.25 an hour, working 40 hours a week and 52 weeks a year, you're looking at annual earnings of $15,080 -- assuming you never take a day off.

But living on $50,000 a year is a very different story. If you're single, $50,000 is a pretty healthy salary in some parts of the country. On the other hand, if you're the sole breadwinner in a family of five, you may have a hard time on $50,000 annually. Either way, if $50,000 is where your salary stands, it pays to make the most of it. Here's how.

1. Reduce your housing costs

Housing is the typical person's largest monthly expense, so cutting that cost down as much as possible can help you stretch your income. You have a couple of choices in this regard.

Downsize

Moving to a smaller home can reduce your housing expenses considerably, assuming you're sticking to the same neighborhood. If you're renting a small house, consider an apartment. And if you're renting a one-bedroom, a studio may be more cost-effective. Of course, there is a cost associated with moving, but if you don’t have a lot of things to transport, you may be able to enlist the help of a friend with a pickup truck and do it for free. And while you’ll sometimes need to put down first month’s rent, last month’s rent, and a security deposit when you move to a new place, you may be able to negotiate so you’re only putting down two out of those three payments. And if you treated your current home respectfully, the security deposit you get back on your current home could repay you for your new one.

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Move someplace more affordable

A $50,000 salary won't get you very far in an expensive city like New York, Boston, or San Francisco, but there are parts of the country where you can live comfortably on that sum. In fact, The Ascent compiled research on this very topic and found that the mean annual salary in these cities is around $50,000 or less, yet the cost of living is relatively low:

• Kalamazoo, MI
• Champaign-Urbana, IL
• St. Louis, MO
• Dayton, OH

And these are just a few examples. Do some research to see what the cost of living looks like throughout the country to land on the right place to live. You can use additional resources like Niche to get intel on affordability as well as details on school rankings, diversity, and other factors that may be important to you.

That said, moving may not be an option for everyone. If you're tied to a certain city for job purposes, family obligations, or another reason, you may need to stay put. In that case, looking to downsize is a better bet.

Also, moving can be expensive -- you may not be in a position to bear the cost of transporting your belongings to a new home. On the other hand, if you're not particularly attached to your furniture, you could sell it, pack the rest of your stuff into your car, and move yourself. Sure, you'll need to buy new furniture, but you can do so affordably by purchasing used pieces or furniture you assemble yourself.

Of course, if you're going to move, you'll need to line up a job first and make sure its salary is comparable to what you're making now. If your goal in moving to a less expensive city is to get ahead financially, that won't happen if your earnings drop in the process.

2. Lower your remaining expenses

Though earning $50,000 a year puts you well above the poverty line, your budget may still be stretched tight on that income. That's why it pays to lower your non-housing expenses, too.

Transportation

If you need a car to get around, opting for used over new could save you a fortune. But if you can get by without a car, even better. It costs $773.50 a month on average to own a vehicle, according to AAA, so if you live someplace where a monthly train pass costs $150, you're already ahead -- even if you need to spring for the occasional rideshare for large grocery trips or other necessities. If going without a car isn't an option, finding people to carpool to work with can save you money on fuel costs.

Food

Restaurants typically charge a 300% markup on the items they serve, which means that if you mostly avoid them, you'll save money on food. You can also trim your grocery costs by shopping smartly. Plan your meals in advance and make lists so you don't wind up buying items you'll ultimately throw away. Buying in bulk is a strategy that can sometimes be a money-saver as well, but only if you stick to one basic rule: Only purchase bulk items you use regularly. It makes sense to buy a six-pack of your go-to breakfast cereal and save the money, but don't take a chance on new products you may not end up eating.

Utilities

Being smart about electricity, heat, and water usage can result in big savings if you’re responsible for those bills (in some rentals, landlords cover those costs). Make a point to turn off lights and adjust your thermostat when you're not home, and unplug appliances when they're not in use. If you turn down your thermostat 10 degrees in the winter when you're out or sleeping, and let it rise seven degrees in the summer when you're away or asleep, you could save $83 per year, according to the Department of Energy.

Similarly, don't use more water than necessary. Take quick showers, run your dishwasher only when it's full, and be sure to turn off faucets completely.

3. Make smart choices with your disposable income

A $50,000 annual income is not a fortune, but it's likely that you can put some of that money to use to improve your financial picture. Your first priority should be to build an emergency fund in case you encounter an unplanned expense that your regular paycheck can't cover. Aim for at least three months' worth of basic living expenses in a savings account -- or up to six months' worth, if you can swing it. (And don’t worry -- no one expects you to save that sum overnight. It may take a couple of years on a $50,000 salary.)

Once you're set with an emergency fund, save in a manner that lowers your tax burden. You can start by funding a traditional IRA so you have money set aside for retirement. Traditional IRA contributions lower your taxable income in the current tax year. If you contribute $500 now, then that's $500 you won't have to pay taxes on this year. You can leave the money untouched until your senior years, and you'll pay no income tax on it until you withdraw the money to cover your living expenses.

Also consider contributing to a flexible spending account or health savings account -- whichever you're eligible for. Both of these accounts let you contribute pre-tax income for medical costs, and since healthcare expenses are essential and unavoidable, you can at least save some money on taxes when paying for them. You need to sign up for a flexible spending account through your employer, but you can open a health savings account independently online.

Your $50,000 can go pretty far if you're strategic about how you spend it. And remember, while you may be earning $50,000 a year right now, there's a chance your income will climb over time, so if you learn to live on that $50,000, you'll be in a great spot when that happens.