Four Money Management Tips for Ph.D. Students
- Student Tips
Ph.D. students may be on their way to expertise in their chosen fields, but many still fall woefully short when it comes to money management skills. Why are finances such a stumbling point for grad students? For starters, while fellowships, stipends and other forms of graduate student support may cover tuition and basic living expenses, they don’t typically allow room for extras and incidentals. Factor in that many graduate students are continuing on to their advanced studies already saddled by undergraduate debt, and the challenge becomes not sinking even deeper into the hole.
Luckily, establishing smart financial habits can make all the difference. Let’s count down a few tips aimed at helping Ph.D. students learn to minimize costs and maximize savings during their time in graduate school.
1. Know Where Your Money is Coming From and Where It’s Going To
Don’t think of yourself as a “budget person”? Prepare to embrace a new way of thinking, if your goal it to graduate in the black. The ability to save money relies on one thing above all else: understanding what’s coming in and what’s going out. And there’s no better way to accomplish this than through budgeting.
While creating and sticking with a budget can be a significant process -- particularly for more free-wheeling finance types -- it can help you not only reign in your spending, but also gain a “big picture” perspective of how to save. Luckily, you don’t have to do it alone. Websites and apps like Mint, LearnVest, Slice and Pocket Budget help students just like you begin to be better budgeters by putting everything they need right at your fingertips. Particularly when money is tight, small expenses add up. This can be easy to overlook on a day-to-day basis, becomes much harder to ignore when integrated into a budget.
The best part? If you stick with budgeting, it can change both your financial picture and your mindset. Even many of the most budget-averse people eventually see the value -- and even (gasp!) some fun! -- in controlling their own finances as opposed to being controlled by them.
2. Become a Proactive Saver
When you’re living on a graduate student budget, it’s all too easy to push thoughts of savings into the future while simultaneously indulging smaller expenses which add up. Adopting a long-term mindset can help you avoid the common pitfall. An abundance of evidence points to the value of socking away money whenever you can. After all, the earlier you start saving, the more you’ll eventually accumulate.
One simple way to start saving? Have a small amount of money --even $50/month -- auto-deducted from your paycheck into a savings account. Chances are, you won’t miss it when it’s gone. Conversely, if you simply plan on transferring that money yourself if it’s leftover, the chances are high you’ll spend it instead.
3. Rethink the Whole Car Thing
Driving is often thought of as a freedom -- after all, hopping in your car often seems like the quickest, easiest way to get from here to there. But when it comes to your finances, car ownership -- particularly if you’re living in an area where parking is limited and/or expenses -- can ultimately be more inhibiting than liberating. Not only are cars expensive to buy and maintain, but then there’s the whole gas and parking issue.
From walking to biking to publish transportation, many cheaper options exist. And while they may take some getting used to, they come with plenty of benefits of their own. For example, walking lets you get up-close-and-personal with your local community; biking is great for staying in shape; and public transportation is environmentally-friendly.
4. Use Credit Sparingly
Credit cards have been the financial downfall of many a graduate student. And while the credit crunch has somewhat lessened access to easy credit for graduate students, overspending with credit cards is still a very real problem. Seek out cards with low or no-annual fees and always read the fine print when considering “special” offers. In many cases, what looks like a deal is really a trap.
Using credit wisely doesn’t just mean selecting the right credit card. It also means spending within your means, making monthly payments on time, and paying your full balance whenever possible. Can’t pay the full balance? Commit to at least paying more than the minimum to stop debt from snowballing.
According to the National Science Foundation’s annual survey of doctoral recipients, nearly a fifth of Ph.D. students graduate with something more than shiny new degrees: more than $30,000 in grad-school related debt. The good news? This also means that plenty of Ph.D. students do make it through without accumulating extra student debt. Following these four tips can help you complete your advanced degree not as a cautionary tale, but as a positive example of savvy financial planning.
Joanna worked in higher education administration for many years at a leading research institution before becoming a full-time freelance writer. She lives in the beautiful White Mountains region of New Hampshire with her family.