How to Be Happier Than a Millionaire on $20K a Year (Really)

Spending wisely can allow you to pursue a career you’ll love.

Posted Jul 08, 2014

 Eurgene Peretz/CC 2.0
Source: Eurgene Peretz/CC 2.0

(Note: I've updated the numbers to $25,000 a year to reflect inflation since I originally wrote the post.)

In our materialistic society, it seems impossible to live, let alone live well, on $25,000 a year—the amount you'd earn at $15 an hour—but it's more feasible than you might think.

And as absurd as it may sound, you may be happier doing that than are many millionaires because, to earn a big paycheck, you must often put in long hours, under great stress, doing work you might find soulless—bond trader and certain kinds of lawyer come to mind. In contrast, if you could indeed live on $25,000, you might be able to spend all those work hours doing something you'd really enjoy, perhaps helping people, being a writer, fixing boats, whatever.

But how can you live well on $25,000 a year? It's a matter of being a wise shopper on housing, furnishings, car, education, clothing, food, health care, and entertainment.

It's easier if you're single but let's make it tough: You're a couple and have a college-bound child.

Of course, you may quibble with the precise $25,000 number, saying, for example, that some unexpected expense would cost extra, but the point of this post is to suggest that you may not need a middle-class salary to "get by," thereby freeing you to do work you might enjoy more.


This is your biggest expense. Make the one-time effort to find a place that's too good a deal to be advertised and you'll save a fortune. I did that when I came to Berkeley, one of the nation's most expensive areas. I ended up paying $425 a month in today's dollars including utilities to share a mansion with an 86-year-old widow who didn't want to live alone.

Here's how to increase your chances of finding such a deal:

  • Go to neighborhoods in which you'd like to live and post flyers on telephone poles with a friendly picture of you and your family saying you're looking for a basement, attic, or backyard apartment or house share and can pay, say, $1,000 a month plus utilities. If you like, offer to do some child care, home maintenance, etc. in exchange for reduced rent. Have tear-off phone numbers on the bottom.
  • Make that request on local online community mailing lists.
  • Tell everyone you know what you're looking for and are willing to pay.

Don't be embarrassed to ask for low rent. There really are some people for whom the goal is not profit maximization but finding a nice renter. All you need is one.

Health care

With an income of $25,000 a year, you and your family may qualify for free or very low-cost health care with Medi-Cal and/or Obamacare.


We live in an ever more mobile society and moving furniture can be expensive. So, especially if you live near a residential college, you’ll find people selling furniture for a song. Check and local print and online publications for moving sales. Also check out flea markets and thrift stores (Salvation Army, hospital thrift stores, consignment stores, etc.). Everything from nice sofas to framed paintings can be gotten for pennies on the dollar.

The following require you to put aside the standard American materialistic ethos. There's no shame in buying the following way. Indeed, it's something to be proud of. You're not letting silly status force you into work you'd only tolerate. If anyone dislikes you because your car is older or you're not fashion-forward, they're not worthy of your time. How sad if you pursued a career you disliked merely so you could impress people with your fancier buying.


Usually, I’m not a brand-loyal person but I am to Toyota. Consumer Reports rates Toyota the long-term most reliable brand (Subaru and Honda are just a notch down) and my family and I have had a half-dozen Toyotas over our lifetimes and each has given us well over 200,000 trouble-free miles. So look for a 15-20-year old small Toyota (Yaris, Tercel, Corolla) with around 150,000 miles on it. You can usually get one in good running shape for less than $2,000. Just have a good mechanic check it out.

You'll save not only on the purchase price but on insurance and gas. And I've had essentially no maintenance or repair cost on any of my Toyotas except for oil changes every 7,500 miles. Keep the car until it's unreliable.

Just by buying cars that way, over your lifetime, you’ll save a fortune compared with the typical American who buys a new car every half-dozen years.


Even if your child could get into a selective college, community college is often the wisest choice for those first two years. Not only is it usually far less expensive, teaching quality tends to be better because teaching, not research, is the main criterion for hiring and promoting faculty. And residence-hall life is overrated—dumping kids away from home for the first time into a minimally-supervised dorm is not so desirable an environment, even if it were free, let alone for the $12,000-plus a year it typically costs. Assuming your home environment is reasonable, it's worth encouraging Junior to resist the peer pressure to go to an expensive college in favor of attending a community college and living at home. Another plus of that: It's often easier to transfer to a prestigious college after the first two years than to get into one straight out of high school.


My wife has found expensive designer clothes at consignment stores for pennies on the dollar—like-new clothing that rich people sell after wearing once or twice, or not at all because they gained or lost weight before they got around to wearing it. Used clothing stores, including thrift stores like Goodwill and Salvation Army, especially those located in higher-income areas, sell some quite nice clothes and shoes for pennies on the dollar.


The healthiest food is also cheap: fresh fruits and veggies, tuna fish, peanut butter, whole wheat bread, milk, etc. Great tasting wines are available for under $5. In fact, Consumer Reports top-rated both a Trader Joe's Charles Shaw red and white wine ($2.49 in most locales) above wines costing many times that.


Rather than frequently eating at restaurants, where that salad you could make at home for pennies could easily cost $10, invite people to your place for fresh-popped popcorn sprinkled with parmesan and garlic powder and drinks such as the aforementioned Two-Buck Chuck.

Some of the best entertainment is free or low-cost: TV, radio, books, CDs, and videos from the library and, on the Internet, an endless supply of amazing articles, videos, and audio. There are many sources of free and $10-20 a month internet access. Outdoors, there's basketball, softball, hiking, gardening if only at your community garden. etc.

Ready for a vacation? Why not a staycation, doing more of the above? In a previous Psychology Today post, I've made the case for staycations.

Need to get away? Often, a one- to three-hour drive will give you that fresh environment, and there's little gas cost and no airfare. Do a home swap and it may cost you little or nothing. Here's more on that.


So how's that all add up?

One-time expenses

  • Car $1500
  • Furnishings $1500

Monthly expenses

  • Rent: $1,000
  • Utilities: $150
  • Car (insurance, gas, oil changes) (assume 9,000 miles a year, 30 mpg at $2,50 a gallon): $100
  • Food: $300
  • Clothing: $125
  • Entertainment: $125
  • Miscellaneous: $100

Total: $1,900 a month x 12 = $22,800.

And now you're free to choose a career you might actually love.

Here is a five-minute video I wrote and acted in called, How You Can Live Better Than a Millionaire on $20,000 a Year ... Really!

My nine books are available, including The Best of Marty Nemko; reach me at