How I Would Become a Millionaire on a Minimum Wage Job at WalmartI’m out of town at the moment, but I was inspired to create this show for you on how I would become a millionaire starting with a minimum-wage job at Walmart. I hope you find it thought provoking.

The point of today’s show is simply to illustrate how almost anyone can start in a simple way and grow to wealth. After all, if Doug McMillon can do it, you might be able to as well!

Joshua

Show notes:

Today, I present to you my plan for becoming wealthy on a minimum wage salary. This podcast was inspired by Matt Walsh’s blog article titled I’m spoiled and lazy but Walmart should pay me more money anyway!.

It got me thinking: what would I do if I were working at Walmart?

What advice would you give an eighteen year old working a minimum wage job?

This is an interesting thought experiment. But I do hope that someone who is currently working a minimum wage job will stumble on my show and be inspired to create wealth.

The Scenario

I’m assuming I’m talking to my friend Bob, an eighteen year old male. He’s single and he doesn’t have any children. Bob is moderately intelligent and at least a bit academically capable. Bob has no money and no debt. He doesn’t have any financial capital, but he has lots of human capital.

Bob also has three character qualities that are essential to success. First, he has the ability to work hard. It’s a skill I believe any one can develop. Second, Bob wants to build wealth. You have to prioritize wealth in order to build financial capital. You don’t just get rich. There is a bit of serendipity involved, but it’s also a product of certain decisions and habits. Third, Bob is willing to make sacrifices in the present in order to have a better future. All successful people have the ability to think on a longer term horizon.

I understand that this is a specific scenario, and the details would be different depending on your gender, family situation, and more. However, this system of thought can be applied to create a scenario of wealth in a different situation.

The Essential Soft Skills

Building wealth does take technical financial skills. However, you can’t start there. There are several soft skills are essential to building wealth.

Take Responsibility for Where You Are

You must take complete responsibility for your life. It doesn’t mean everything is your fault. I’m certain that there are a variety of circumstances that are outside of your control. However, you have to recognize where you are in order to move forward. If you don’t take responsibility for your life, who will?

Learn New Skills

If you’re earning minimum wage, it’s because your skills are not sufficient for you to earn a higher wage. Our educational system has probably failed you. There are many important skills you probably never learned.

You learned English composition in high school, but didn’t learn how to have a conversation. Check out Crucial Conversations and Crucial Confrontations for great books about this.

Relationship skills are essential. Are you sullen and unhappy or do you smile? Smiling is important for your own well-being and for making others happy.

Do you know how to dress for success? Start here to learn how. The specific recommendations are a bit dated, but the book is very effective at proving that the way you dress impacts your results.

Figure out where you are starting from and create a plan for skill development. If you don’t have a high school diploma, go get your GED. If you don’t speak English well, learn it. Walmart will pay for you to learn English as a part of your employee benefits package.

Get a Source of Hope and Inspiration

Take the example of Walmart’s CEO,  Doug Mcmillon. He started working in a distribution center during his summer breaks during college. After his getting his MBA, he began to work for Walmart on the corporate side and worked his way up to CEO.

No matter where you start, you can find a source of hope and inspiration to help bring you to a better place.

Cultivate Gratitude

Think about how awesome life is. Finances do not dictate how good your life is. Take Robin Williams, who recently committed suicide. He was a beloved actor with ample financial resources, and yet, he had great inner demons.

Don’t see yourself as a victim and as underprivileged. We live in a greater time than any other time in human history. Take the story of President Abraham Lincoln. He had a small number of books that he read by firelight. Today, books are free. You can go to the library and read thousands of books without paying anything.

Be grateful that no one is oppressing you. Today, there are so many people throughout this world that live in slavery and are severely oppressed by other human beings. If you’re listening to the podcast, I guarantee that you have more opportunity than billions of people around the world. And even if you are being oppressed, you still have deal with the situation you are in to move forward.

Always Do More Than What You Are Paid To Do

Always do more than what you are paid to do, and eventually you’ll be paid more for what you do.  Money is a system of accounting for value. Those with more money are providing more value. You can develop wealth by increasing your skills and adding value. It might not be right now, but eventually you will be paid more.

Financial Skills

There is no way to become wealthy without developing the skill of spending less than you earn and investing the difference wisely. That’s the law of wealth.

There are three parts:

  1. Earn more
  2. Spend less
  3. Invest the savings

You will have to increase the amount of value you provide to earn more.

Let’s dig into the numbers of Bob’s first year:

First Year of Expenses

Inflows

Salary $ 15,080.00

This is $7.25 an hour, 40 hours per week, and 52 weeks a year. Walmart does pay it’s employees more than minimum wage, but I’m going to assume minimum wage in these calculations. I’m assuming 52 weeks of working per year with no vacation, because you can’t afford to take time off!

Taxes (Income & FICA)

 

Total Taxes $  1,631.62
Income Tax (estimate) $     478.00
FICA – S.S. Tax (6.20% of first $113,700 of income) $     934.96
FICA – Medicare Tax (1.45% of all income) $     218.66


Savings and Investments

I make my savings and investments numbers at the top of the page to get in the habit of paying myself first. It gives me the opportunity to do something better for my future.

Total Savings – Bob’s Contribution $3,900.00
Total Savings – Including Matches $4,380.00
Savings to build emergency fund (use a Roth IRA) $  1,200.00 Pay your bills if you get sick.
401(k) contribution (employee only) $            – Not eligible for first year
Invest in yourself fund $  1,200.00 Use this to increase your income. Take classes, buy books, etc.
HSA Contribution – Bob $     300.00
HSA Contribution – Walmart $     300.00 Employer match
Walmart Stock Purchase Plan – Bob $ 1,200.00 Can’t afford entire $1,800 match.
Walmart Stock Purchase Plan – Walmart $ 180.00 Employer match

You can become a millionaire! Investing $4,380 for 40 years with a return of 8% gives you a nest egg of $1,225,440.96.

Fixed Outflows

Total Fixed Outflows $ 5,400.00
Housing – Rent & Utilities $  4,800.00 Room for rent. Close to the library and to the Walmart. Includes utilities
Transportation – Auto $            – Can’t afford a car
Insurance – Health $     480.00 Least expensive plan
Insurance – Life/Disability $     120.00 Guess at Walmart plan

Variable Outflows

Total Variable Outflows $ 4,090.00
Housing – Telephone $     240.00 Republic Wireless
Transportation – Parking/Tolls/Bus/Train $     300.00
Household / Personal – Groceries/Personal Care $  2,400.00 Walmart Associate care card
One Time Expense – Bicycle $     300.00
Clothing $     200.00
One Time Expense – Computer $     500.00 Considering buying a cheaper Chromebook. Use library for free until you save up.
One Time Expense – Cell phone $     150.00

Total Outflows

Total Outflows $ 15,021.62

This can be done! It’s realistic. You’d have to decide to do it. You don’t have money to eat out, drink, or have expensive hobbies. You’re broke and you need to find a way to save to build wealth.

Second Year of Expenses

For the second year, I’m assuming no raise. If you’ve been working hard for a year, I’m sure your salary would have increased. But let’s assume the same $7.25 an hour for now. This year, you contribute to a 401(k) and begin college.

Inflows

Salary $ 15,080.00

Taxes (Income & FICA)

Total Taxes $  1,546.62
Income Tax (estimate) $     393.00
FICA – S.S. Tax (6.20% of first $113,700 of income) $     934.96
FICA – Medicare Tax (1.45% of all income) $     218.66

Savings and Investments

Total Savings – Bob’s Contribution $5,011.80
Total Savings – Including Matches $6,306.60
401(k) contribution – Bob $ 904.80
401(k) contribution – Walmart $904. 80 Employer match. This would take you 124 hours to earn!
HSA Contribution – Bob $     300.00
HSA Contribution – Walmart $     300.00 Employer match
Walmart Stock Purchase Plan – Bob $ 600.00 Can’t afford entire $1,800 match.
Walmart Stock Purchase Plan – Walmart $ 90.00 Employer match
College Tuition – Part Time $3,207.00 Half of $6,413, 15% discount. Assuming no scholarships. If not college, pursue a better paid career like a trade.

You can become a millionaire! Investing $6,307 for 40 years with a return of 10% gives you a nest egg of $3,070,379.63.

Fixed Outflows

Total Fixed Outflows $ 5,400.00
Housing – Rent & Utilities $  4,800.00 Room for rent. Close to the library and to the Walmart. Includes utilities.
Transportation – Auto $            – Can’t afford a car
Insurance – Health $     480.00 Least expensive plan
Insurance – Life/Disability $     120.00 Guess at Walmart plan

Variable Outflows

Total Variable Outflows $ 2,940.00
Housing – Telephone $     240.00 Republic Wireless
Transportation – Parking/Tolls/Bus/Train $     300.00
Household / Personal – Groceries/Personal Care $  2,400.00 Walmart Associate care card

Total Outflows

Total Outflows $ 14,898.42

Final Thoughts

This is possible. It’s not easy in any way, shape, or form. It comes down to choices. Build your skills so you can earn more than minimum wage.

You will be able to improve your life. As you grow your income, you can grow your lifestyle. Just increase it more slowly than your consumption expenses. For example, if you earn a 10% raise, increases your expenses by 5% and increase your savings by 5%.

In the next five years, you are going to go somewhere. The choice between continuing to work minimum wage, and the choice to stop making minimum wage is yours. If you aren’t qualified for anything else right now, that’s okay. We all start somewhere. But by focusing on growing your skills, you can grow your income and create wealth.

I did a show earlier this week on what we can learn from the 400 people who reported the highest income on their tax returns. In 2009, the lowest of those earners brought in 80 million bucks. I guarantee you that a majority of those 400 people worked an entry level job at some point in their life. The difference between staying in their entry level job and growing their income to that level was how much they invested in themselves and their skills.

If you are committed to wealth, you can do this. You have the choice to earn more, spend less, and grow your wealth.

That’s what I’d tell my friend Bob who’s working a minimum wage job at Walmart. What advice would you give an eighteen year old working retail?

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