Undoubtedly, graduate school is a major financial investment, but it doesn’t necessarily have to be a financial rabbit hole.
In addition to strengthening your academic, research, and career skills, your time in grad school presents an excellent opportunity to practice healthy financial habits, even on a limited income. With discipline, strategic planning, and a good understanding of your financial needs, you can graduate with both a degree and a sound footing for your future financial life. Read below for some of our suggestions on how to take charge of your finances while in graduate school.
Whether receiving a stipend, taking out student loans, or holding down a job to finance graduate school, budgeting is key to maintaining financial stability.
To decide what to include in your graduate school budget, list all of your financial responsibilities: rent, groceries, gas or transportation costs, etc. Have a realistic view of what these items cost and how this compares to your income. You may have to make adjustments month to month, but this allows you more control in case anything unexpected comes up.
You don’t have to deprive yourself of little luxuries but do use your limited expendable income more wisely. For example, if you enjoy eating at restaurants, give yourself a weekly allowance and hold yourself to only paying for meals or coffee with cash, which you can keep better track of physically. Once you spend the money for that week, stick to making your lunches and coffee at home. It may be difficult at first, but once you get used to it, the habit is easier to continue.
Having a good credit history is necessary when you want to rent an apartment or for major purchases. Some employers may also conduct credit checks on applicants before they are hired. Getting a credit card that you can use for groceries, gas, and emergencies is an excellent place to start. There are a number of companies that offer cards for students with limited credit. Look for a card with no annual fee and a low interest rate. It is also important to research and be aware of any fees or penalties associated with late payments.
One of the most important things with a credit card is to make sure that you can always pay the balance in full every month. Going into credit card debt may seem like an easy short-term solution, but it has long-term consequences that will not benefit you. If you are struggling to make payments on time, take a hard look at your monthly spending habits and consider switching to a debit card to keep yourself out of debt. This will keep you from spending money you don’t have.
You can check your credit score once every 12 months through a service called annualcreditreport.com. These reports help you keep track of your financial health and can alert you if someone has attempted to steal your identity.
If you have undergraduate loans, you generally do not have to pay them back while you are enrolled in graduate school. The clock usually begins 6 months after you graduate or have been out of school. “Out of sight, out of mind,” though, shouldn’t be your approach to dealing with them.
Even if you do not plan to take out loans for graduate school, your undergraduate loans will be collecting interest. It is okay if you cannot make payments while in school, but when you can, do try to pay down interest. If it becomes too challenging, contact your loan servicer and ask them to defer your payments while you are still enrolled in school.
There are some great resources out there to help you navigate and manage your loans. Personal Finance for PhDs provides helpful, practical advice, including an article about paying down your loans. You can also contact your loan servicer or the Department of Education to discuss your federal loans and the best method of repayment for you and your specific situation.
Be wary of companies who contact you directly and try to sell you a repayment plan. You shouldn’t have to pay additional money for assistance with loan repayment, and some companies take advantage of students who are not aware of their rights.
If you have time, part-time work is a great option to boost your income and help you with loan repayment or saving for the future. When job hunting, think about the schedule, what the job entails, and if you have to use any of your own resources. For instance, “sharing” jobs like Uber or Lyft may provide you the flexibility to set your own schedule, but you do have to use your own car. Maintenance fees, gas prices, and insurance premiums can quickly add up. Explore other jobs — like childcare, pet-sitting, and tutoring — that can help you bring in some cash while giving you the freedom to set your own schedule.
More traditionally, positions in retail or as a server are usually easier to find, but reception jobs may fit better with an evening or afternoon class schedule. You can also look for jobs that align with your personal interests, so you can earn money while doing something you enjoy, like fitness instruction or private music lessons.
Graduate school comes with plenty of challenges, and while money can be a major one, it doesn’t have to be. In spite of a limited income, good financial management can be exercised through smart habits while you are a student and help you keep your finances on track for both your present and future.