Financial Advice for Graduate Students
Information compiled by the GradSchools.com team - last updated August 2010
Money is a major issue for graduate students, and good financial habits are essential to cutting costs, managing money, and making funds last. More than a few grad students enter postgraduate education with undergraduate debt, and financial management becomes of paramount importance.
Good financial habits in grad school depend upon the student's ability to identify which costs are necessary and which can be avoided, put off, or rationalized away. When standing in the aisle of the store, ask yourself questions about the product in your hand, such as: Do I need to buy this now? Can I find less-expensive options? Can I live without this? Much of cutting grad school costs involves differentiating between what you need, and what you want. You may feel like you really want something, but if you don't purchase it, will you seriously miss it a few weeks down the road? It can be helpful to make a list of direct and indirect graduate school expenses.
Direct expenses include: tuition, fees, transportation, books, supplies, and loans. While you will definitely need that textbook for your biology course, you may be able to avoid paying full price by getting it at a used bookstore or searching on a site like Half.com.
Indirect expenses include: living expenses, personal expenses, and child care. While many of the indirect expenses may prove to be necessities, they are the best place to look for expenses that may be on the frivolous side. Just see if you can't find a way to rationalize why buying the newest video game or DVD might not be the wisest choice.
Budgeting in graduate school
If you want to establish good financial habits while in school, you must create an expense budget. If you've never been the budget-type-of-person; you need to change that. Write down a list of the necessities and figure out what you will need on a weekly and monthly basis. Factor in: rent, bills, school supplies, meals, transportation, entertainment (cable costs, movie tickets, concerts...) and any other expenses that you will incur. It can also be helpful to set dollar limits for your expenses, that way, if you're having an expensive month, you know that you just cannot afford to get pretzel bites and a large Coke when you go to see the next "Die Hard" film.
You must think ahead and come to grips with the fact that you may experience a loss of income while you're a graduate student. Budgeting can be made easier if you can pre-pay for things like rent and utilities; contact your landlord and utility companies to see if this is possible. Set up a plan to pay bills, and dedicate yourself to following that plan. You can also purchase pre-paid phone cards to keep those bills under control.
Effective budgeting involves a great deal of organization when it comes to record-keeping; it also involves planning to some extent for the unexpected. Having a little wiggle-room in your budget each month, if possible, can really reduce your worries. What if your pants split 20 minutes before you're scheduled to defend your dissertation? You'll be glad you left yourself some emergency money.
Banking in graduate school
Good financial habits in graduate school also depend on establishing excellent banking practices. It is advisable to transfer your financial aid from your savings to a checking account in monthly increments. Managing your bank account responsibly involves opting for low and no-fee checking accounts, as well as recording all transactions.
Graduate students should plan out ATM withdrawals by taking out what they need for a specific period of time and putting the ATM card away. Direct deposit for paychecks can be of great help and students should look into direct deposit for their bills. Each month, compare your checkbook with your monthly bank statement to ensure you are balanced, and to spot the occasional banking mistake.
Credit cards are the source of many graduate students' money troubles, as well as their debt. These cards should be used with extreme care. Students should be sure to make their monthly payments on time, and to pay more than the minimum required payment. Choose a credit card with a low or no-annual fee plan and read the fine print. Be alert for the traps set by special credit card offers. Don't choose a card based on that free cell phone - you will pay for it in the end through poor credit card rates.
Cutting costs in graduate school
As a graduate student, any chance you get to cut costs should be examined and taken. Check for resources and freebies provided through your school. Look for part-time jobs, work-study assignments, or tutoring jobs to bring in more money. Shop around for the best deals when buying just about anything, but particularly textbooks. Most college bookstores offer a certain number of used texts, websites such as Amazon.com provide customers with discounts as well as used texts, and many college towns have bookstores that specialize in textbooks purchased from students at the close of previous semesters.
If you are really having trouble with living expenses, consider taking in a roommate. Students can also choose to live at home with their parents if possible, and bearable. Rather than buying a new car, buy a used one or opt for public transportation. Clip coupons and keep your eye out for student discounts. If you pay for your own utilities, turn lights off when you leave a room and turn your thermostat down when you're going to be away for hours; It's estimated that you save about 5 percent off your electric bill for every degree you lower your thermostat. Instead of eating out, stay home and cook. You might also share home-cooked meals with your graduate student friends, as a way for all of you to save some money.
Your days as a graduate student may not be prosperous - and you may get devastatingly sick of Ramen Noodles - but it's only for a few years. Remember, graduate school is supposed to ultimately increase your earning potential; the last thing you want is to be repaying student loans long after graduation, and to that point, every dollar counts. Even if you have to budget, even if you have to slum it for a while, in the long run, it's worth it.
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