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Compound Interest

April 8, 2015 by Emily

Even though it’s doubtful that Einstein ever said that compound interest is the most powerful force in the universe, it’s indisputable that it is an incredible tool that can work for or against you.

Compound Interest for Investing

When compound interest works in your favor, an asset that you own earns a return and increases in value. Then that increased asset earns a return and increases by even more. The growth is exponential.

compound interest equation

 

As an example, see how a one-time investment of $5,500 will grow over time if invested with an average rate of return of 8%. After 30 years, the investment balance has grown to over $60,000, with over half of that growth occurring in the last 10 years.

investment one time

 

Investing on a regular basis is how Millennials are likely to provide for their own retirements now that pensions have all but disappeared and Social Security is uncertain. If you max out a 401(k) every year for 30 years with an 8% average rate of return, over 30 years you will have contributed $524,880 but your investment balance at the end will be $2,172,944.

investment continuous

 

You can create your own projects of the effect of compound interest using Illuminations.

GSF Reader Post: My Realistic Career Earnings Expectations Push Me to Save Aggressively

Compound Interest in Debt

Compound interest can work against you in the case of debt. When you owe a given amount at a certain interest rate, the amount you owe will also increase exponentially unless you make payments that more than keep up with the growth.

Compound Interest in Inflation Risk

One great reason to invest that most people don’t consider is inflation risk. The average historical inflation rate is around 3-4% per year. That means that every year your money goes 3-4% less far in terms of real purchasing power and the prices will double approximately every 20 years. If you don’t invest at a rate that at least keeps pace with inflation, the value of your money decreases with time. To build wealth through investing, you must earn a return that exceeds the average rate of inflation.

Filed Under: Protect and Grow Wealth Tagged With: investing, savings

Entertainment

April 7, 2015 by Emily

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Some young people can find themselves spending tens or hundreds of dollars on entertainment on a regular monthly basis, yet it is a truly discretionary expense. Your entertainment budget is therefore one you can rather easily expand or contract based on your values and your other expenses. Use these frugal practices to get the best of both worlds – lots of entertainment for free or low cost.

Further reading: Give Yourself a Raise: Find Inexpensive Entertainment on or near Campus

Local Events

Most cities host free or low-cost events throughout the year, and with a higher density of events in the summer. These events include concerts, outdoor movies, festivals, theater, sports, etc. Find a comprehensive calendar of events for your city and check it regularly for new additions. You can also ask other grad students what their favorite yearly free public events are.

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On-Campus

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One of the benefits of being a grad student is that your university and department provide free or subsidized entertainment options throughout the school year. From sports to theater to concerts to celebrations to happy hours to movies, you should be able to find something to do just about every week on campus if you like.

Graduate student organizations on campus also may host social events off-campus and subsidize the cost to attendees.

Student Discounts

Check for student discounts and free days at movie theaters, museums, performing arts centers, and other local establishments.

Television

Millennials are forgoing cable TV at an unprecedented rate in favor of alternative video delivery. If you do want to watch television, only buy as much as you’re really going to use and reevaluate frequently as new options come available.

  • Netflix/Hulu Plus/Amazon Prime: There are many options for subscription video services with slightly different catalogues. You probably don’t need more than one!
  • Single-network packages: The cable goliath is starting to fall. You can now purchase access to single channels or sports packages such as HBO Go and Sling TV.
  • Viewing parties: If you’re willing to leave your home, you can join other people to watch popular TV shows or sports for free. Find a friend with a similar obsession who is willing to let you crash or .
  • Bunny ears: Don’t forget that TV is still available for free over the air in very high digital quality. All you need is the one-time purchase of an antennae and you will have indefinite access to a number of stations.

Further Reading: How to Cancel Your Cable When You’re Addicted to a Show; Our Best (Pain-Free) Money-Saving Moves

Library

As a graduate student, you should have access to both your university library and your local public library. These days, you can check out a lot more than books from libraries. Instead of paying for Redbox or Netflix, you can get movies and TV shows for free from the library.

Further Reading: Why Are We Spending $155.76 with Netflix When Our Queue Is Available for Free?; 10 Library Freebies You Might Not have Known (or Forgot) About

Filed Under: Stretch that Stipend Tagged With: entertainment

Eating Out

March 22, 2015 by Emily

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To reduce your spending on eating out, you can either eat out less frequently or choose less expensive foods when you do. You choose the approach that is most consistent with your values.

Further Reading: How to Cut Your Food Spending – Scaling Back on Eating Out

Eat Out Less Frequently

If you are in the habit of eating out alone for convenience, it is simple to replace those meals with ones you prepare at home. On campus, you can still eat with your peers even if you brown bag your lunch. You could try to replace social eating out with hanging out with your friends in less expensive venues from time to time, or skip dinner and join them for the next activity.

Further Reading: Get Rich With: The Secret Food ‘Stash

Spend Less When Eating Out

When you have influence over where you eat out, choose less expensive restaurants. When ordering, pay attention to prices and consider ordering less expensive entrees or replacing an entree with an appetizer, soup, or salad. Skip or order fewer appetizers, drinks, and desserts. Take your leftovers home to replace a second meal. You could also choose to frequent restaurants that offer student discounts or accept coupons or discount gift certificates.

Further Reading: Sometimes I Don’t Eat. Is that Rude?; 10 Ways to Save Money Eating Out at Restaurants

Filed Under: Stretch that Stipend Tagged With: food, frugality

Cooking and Meal Planning

March 22, 2015 by Emily

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Often, grad students are inexperienced with cooking and think that they don’t have time for it. The student who eats out frequently for convenience and buys prepared foods from the grocery store has great potential to reduce his spending on food by starting to cook and prepare his own foods. Students already experienced with cooking but looking to take it to the next level may find additional savings with batch cooking and meal planning.

Further reading: Give Yourself a Raise: Prepare Your Own Food Even with a Busy Schedule

As a beginner cook, you should start slowly with learning various techniques and recipes so as not to become overwhelmed. Try to master only one recipe at a time and choose simple recipes that involve a small number of ingredients and no difficult techniques. Cooking doesn’t always have to involve elaborate dishes or adding heat. To make this process seem less intimidating, think of it as food preparation or food assembly rather than cooking, e.g., salads, sandwiches. You also don’t have to eat something different for every meal out of the week. Having a few recipes that you rotate through for each of breakfast, lunch, and dinner, can take the pressure off of masting new recipes while still giving you some variety.

Further reading: 5 Tips for Saving Money on Weekday Lunches; 5 Ingredient Recipes; 39 Beginner Cooking Tips for Kitchen Scaredy Cats, Bargain Breakfasts

Batch cooking can be a major time-saver for busy students. Batch cooking is when you cook more than one meal at a time, which enables you to eat leftovers on subsequent days and spend a comparatively small amount of time reheating the food. You will likely have to be amenable to eating the same or similar meals multiple days in a row if you are cooking just for yourself. Freezer cooking is a form of batch cooking in which you freeze the meals you have prepared to be eaten weeks later. Batch cooking is also a frugal choice because you can spend less money on food by buying in bulk and using the ingredients you buy fully, and you will be less tempted to eat out for convenience if you have food already made.

Further reading: Eliminate Eating Out for Convenience with Batch Cooking; Best List of Easy and Delicious Freezer Meals

Meal planning can be valuable for reducing impulse purchases and waste. To meal plan, you simply decide what you will eat for each meal during a week or month, assemble a shopping list with only the food you need for the plan, and buy and eat that food. When you meal plan, you can make sure that you are buying exactly the right amounts and types of foods so that extra ingredients neither build up nor go to waste. Meal planning and batch cooking work very well in concert.

Further reading: Meal Planning: The Definitive Guide to Planning Your Meals Stress-Free;

Filed Under: Stretch that Stipend Tagged With: food, frugality

Buying Groceries

March 22, 2015 by Emily

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How to spend less money on groceries is one of the most well-trod frugal subjects, so there is an abundance of resources available online to help you. In general, the more value you add in the cooking process, the less you will need to spend on the food itself. Many students enter graduate school without knowing how to cook, but it is a skill that will help reduce the amount you spend on food enormously.

Further Reading:

  • How to Cut Your Food Spending – Reducing Grocery Costs
  • How to Save Money on Groceries: The Ultimate Guide to Grocery Shopping
  • 6 Ways to Save at the Grocery Store without Coupons
  • 50 Tips for Grocery Shopping
  • Dominate the Supermarket and Save Big
  • Grocery Shopping With Your Middle Finger

Retailer Selection

There is a wide range of prices available at different types of retailers on the same or similar food items. Specialty grocery stores like Whole Foods are likely to be more expensive than discount, warehouse, or ethnic grocers. You can even buy from local farmers or check online retailers for low bulk prices. If you are willing to devote the time, keeping a price book will help you determine which groceries to buy at which stores at certain times.

Further Reading: Is a Costco Membership Worth The Cost?

Stick to Your List

Create a grocery list before heading out to any retailers and stick to it once you’re there. You can cultivate your list throughout your week using an app such as Our Groceries. A complete and firm grocery list gives the simultaneous advantages of eliminating impulse purchases, minimizing food waste at home, and preventing last-minute trips to the store for forgotten items.

Buying Less Processed

You are likely to stretch your dollar further by buying fresh base ingredients and constructing your own dishes. The classic suggestion here is to “shop the perimeter” of the grocery store, which generally tends to include the produce, meat, dairy, and bakery sections, and to buy few items from the interior of the store, which is where the more expensive products are housed.

Coupons

Couponing has been recently popularized by shows like “Extreme Couponing,” which has resulted in both heightened interest and criticism. The more organized and comprehensive your couponing system, the more savings you can potentially realize. However, some are critical that couponing is time-consuming and does not facilitate buying healthy, non-branded items.

Substituting Out Expensive Food

Depending on your dietary preferences, you may try to substitute lower-cost foods for higher-cost foods. Normalize the cost of the food you eat by the calories, macronutrients, and/or micronutrients you receive from it. One common suggestion in this vein is to eat less meat because meat is quite expensive; instead, seek our lower-priced sources of protein.

Filed Under: Stretch that Stipend Tagged With: food, frugality

Free Food

March 22, 2015 by Emily

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It is often possible for grad students to feed themselves for free for at least a couple meals per week, should they want to defray costs in that area. Grad students who are food insecure also have university- or government-sponsored options to feed themselves for free.

Further reading: 10 Ways to Legally Score Free Food; How to Eat for Free – 12 Ways to Score Free Meals

University and Departmental Events

Universities offer free food frequently at events to incentivize attendance or to show attendees appreciation, such as at seminar series, workshops, and conferences. Opportunities will be most plentiful for first-year students and near the start of the school year. If you plan to attend such an event, the free food can often replace a meal on that day. If there are leftovers, ask if you can take a second box or plate for a meal later in the day. It is also possible to create meals from the leftover food from catered events that you didn’t attend, if it is made available to non-attendees. Being on the right email listserv or having the right personal connection can alert you to these opportunities before the free food is nabbed by other students.

Restaurants

Many restaurants offer free or partially free meals for promotional reasons, such as for your birthday or for signing up for a mailing list.

Further reading: How to Get Free Food at 156 Restaurants without Getting Arrested; 400+ Restaurants that Offer Free Birthday Food

Food Pantries

If you are food insecure, there may be an on-campus food pantry from which you can take food for free. Your city likely has food pantries available to the public as well.

Further reading:

  • Food Pantries
  • Food Pantries on the Rise at College Campuses as Tuitions Increase
  • Colleges Launch Food Pantries to Help Low-Income Students
  • Hunger Among College Students: Food Pantries Expand on Pittsburgh Campus

Food Stamps

Some graduate students may be able to apply for the Supplemental Nutrition Assistance Program (SNAP) if they meet the citizenship, work, and income qualifications. This program provides a certain amount of money each month into an account that you access with a specialized debit card. The money can be used toward eligible food in grocery stores and other retailers. Each state runs its own program, so you will have to check directly with your state to determine your eligibility.

Further reading: Can Graduate Students Get Food Stamps?

Dumpster Diving/Freeganism

You can also score free food by dumpster diving, if you are adventurous and it is legal where you live. This form of dumpster diving is when you recover perfectly good food that has been discarded, generally by grocery stores and institutions. About 50% of food in America is wasted. Most people who dumpster dive do so as part of the larger food rescue movement, but a side benefit is that you can feed yourself partially or completely (freeganism) without paying any money. Of course, you have to have a certain constitution to employ this method, and it is advantageous to learn from an experienced mentor.

Further reading: The Food Waste Fiasco: You Have to See It to Believe It

Filed Under: Stretch that Stipend Tagged With: food, frugality

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