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budgeting

How to Financially Manage Lump Sum Fellowship Income

July 14, 2025 by Jill Hoffman

In this mostly solo episode, Emily shares how to manage lump sum fellowship income with respect to your budget, cash flow, and bank account structure. Grad students and postdocs struggle to manage their money when they are paid less frequently than monthly, such as once per term or once per year. This lump sum income occurs for some fellowship recipients, though it’s not a common set-up. In the first half of this episode, Emily presents her suggested system for managing this type of income with respect to your bank account structure, budget, and cash flow. In the second half of this episode, Emily interviews Shalom Fadullon, a grad student at Northeastern who receives this type of income, on how she implemented Emily’s system in her financial life.

Links mentioned in the Episode

  • Host a PF for PhDs Seminar at Your Institution
  • Emily’s E-mail Address
  • PF for PhDs System for Managing Lump Sum Fellowship Income
  • SmartAsset Income Tax Calculator
  • PFforPhDs Quarterly Estimated Tax for Fellowship Recipients Workshop
  • PF for PhDs S7E15: How to Solve the Problem of Irregular Expenses
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub
How to Financially Manage Lump Sum Fellowship Income

Teaser

Anonymous: Lump sum income is really challenging. I have found in thinking about this, that the issue of lump sum income is pretty inextricable for me from the issue of variable and unpredictable income. Dealing with all of that together can feel really hard, like super defeating, honestly, especially at a lower income bracket, which you know, PhD students are, it just feels like really a grind to be honest.

Introduction

Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

This is Season 21, Episode 4, and today is a mostly solo episode from me on how to manage lump sum fellowship income with respect to your budget, cash flow, and bank account structure. I’ve found that grad students and postdocs struggle to manage their money when they are paid less frequently than monthly, such as once per term or once per year. This lump sum income occurs for some fellowship recipients, though it’s not a common set-up. In the first half of this episode, I’ll present my suggested system for managing this type of income with respect to your bank account structure, budget, and cash flow. In the second half of this episode, I’ll share my conversation with Shalom Fadullon, a grad student at Northeastern who receives this type of income, on how she implemented my system in her financial life.

By the way, if your university distributes some fellowships in lump sums, I’d bet that you’re not the only one wondering how to handle this type of income. I am now offering a live workshop that teaches this material and helps grad students and postdocs implement it in their financial lives. You can read more about it at PFforPhDs.com/financial-education/. Please email me at [email protected] if you’re interested in bringing this workshop to your university. You can find the show notes for this episode at PFforPhDs.com/s21e4/. Without further ado, here’s my episode on managing lump sum income.

Grad students and postdocs, by and large, do not like receiving lump sum income or once-per-term income. Research shows people prefer to be paid more frequently, like weekly over monthly, and so it follows that being paid once every three months or even once per year would be even less favorable. Grad students and postdocs are intimidated by the length of time this money is supposed to provide for, and it can become paralyzing! They are so afraid of running out of money before they receive their next paycheck that they underspend. It’s also natural to occupy the other end of the spectrum: they see a huge bank account balance and they’re tempted into a spending binge. And I’m sure there are cases when grad students do run out of money and have to survive on credit cards and personal favors until the next paycheck arrives. I definitely sympathize with feeling overwhelmed by the heavy responsibility of this frequency of income. I have to tell you, though, that I also see it as an opportunity.

The way paychecks work for employees is that you work and then you get paid after or near the end of the work period. In the case of a once-per-term fellowship, you’re being paid at or near the start of the period the money is associated with instead. Yes, you have to make the money last, but you get it up front, not at the end. That means you can pre-fund your financial goals and put big chunks of money aside for irregular expenses instead of saving up gradually from more frequent paychecks. In this episode, I’m sharing the system I recommend for managing once-per-term or lump sum fellowship income. This system was inspired by 1) this ability to fund financial goals up front, 2) how business owners, including myself, manage irregular income, and 3) how I managed my money when I was just starting out on my own and anxious about running out of money.

In the first half of this episode, I’ll explain the system. There are visuals and a template spreadsheet associated with this explanation. If you want to download these visuals and/or the template spreadsheet, go to PFforPhDs.com/lumpsum/. If you just want to see them, you can watch this episode on the show notes page at PFforPhDs.com/S21E4/ or on my YouTube channel. The second half of this episode contains excerpts from two interviews I conducted with Shalom Fadullon, a grad student at Northeastern who receives this type of income, on how she implemented my system in her financial life.

Part 1: My Recommended System

My proposed system for managing lump sum income has several components: your bank account structure, your cash flow, and your budget. I’ll explain each in turn.

1. Your bank account structure

Since one of the main paralyzing factors in receiving this income is that it comes in one big undifferentiated lump sum, our first step is going to be to divide it up into different bank accounts.

Separating the account that receives your lump sum of income from the account from which you do all your spending and making periodic transfers from the former to the latter is timeless advice from the self-employed. For example, my business bank account sees irregular income and irregular expenses, plus my business is seasonal, so the balance in that account can get quite high at certain times of year and be drawn down dramatically at others. I don’t want that irregularity and seasonality to affect my personal finances, so I pay myself a fixed salary once per month. The most fundamental way to improve your money management with lump sum income is to hold it in a separate account and regularly transfer smaller sums over to your normal account. This system goes beyond that, but that’s the principle from which it is derived.

An anonymous mailing list subscriber emphasized this principle in the following contribution to this episode: “My tip is to transfer most of the funds into a high yield savings account, then I will “pay” myself each month by dividing that lump sum by the number of months in a given semester. For example, in spring 2025, I received a lump sum of $12,000 in early January 2025. Since this money was to cover my living expenses from January to May (five months), I transferred $9,600 to my HYSA and left $2,400 of the total lump sum in my checking account. Finding a way to divide my lump sum into monthly income payments made my budget more manageable.”

Another anonymous mailing list subscriber used a slight variation on this strategy: “When I went on fellowship, I had everything deposited to a high yield savings account (Ally). I then figured out my monthly expenses and set up auto transfers to my checking account every two weeks, a little DIY payroll. I always earmarked a portion of the savings account for tax payment; the Ally accounts have “buckets” that you can designate within the account.”

Exactly! Even if you do nothing else as a result of listening to this episode, take that suggestion to keep the bulk of your lump sum in a high-yield savings account and simulate a salary with monthly transfers.

My system, however, uses a few more accounts.

I suggest housing all of the following accounts at the same bank for instantaneous transfers, as there will be a lot of transferring among the accounts. If you don’t want to open multiple accounts, you certainly don’t have to, but I do recommend it for transparency and to simplify your future decision-making.

Account #1 is a savings account nicknamed Overall Holding. This account should receive your lump sum of income. Money will be distributed from this account to the other accounts one time or on a recurring basis.

Account #2 is a savings account nicknamed Tax Self-Withholding. This account is where you will set aside from each lump sum payment the fraction that you expect to pay in income tax. The money will stay in this account until it’s needed for an estimated tax payment or to pay your annual tax bill.

Account #3 is not really an account but a placeholder for wherever you might transfer your money to fulfill your financial goals. It might be a savings account if you’re trying to build up cash savings, such as an emergency fund. It might be a certain debt you’re trying to pay down. It might be a Roth IRA or other investment account. It could be multiple of these accounts if you’re working on multiple goals simultaneously.

Account #4 is a single savings account nicknamed Targeted Savings or a set of savings accounts for the same purpose. This is where you will hold money to pay for the irregular expenses that will arise in about the next year.

Account #5 is a checking account nicknamed Fixed and Necessary Variable Expenses. This checking account will receive periodic cash infusions from your Overall Holding savings account and will be used to pay your fixed expenses and your necessary variable expenses. Fixed expenses are expenses that are the same every single month, like your rent or mortgage, your internet bill, and your Netflix subscription. This account is for both necessary and discretionary fixed expenses. It’s also for variable necessary expenses like groceries and utilities if they’re billed according to consumption.

Account #6 is a checking account nicknamed Discretionary Variable Expenses. This checking account will receive periodic cash infusions from your Overall Holding savings account and will be used to pay your discretionary variable expenses. Discretionary variable expenses are expenses that are different every month and that are completely optional, such as eating out, entertainment, and shopping beyond baseline needs.

One final note about bank accounts. This system does not work if you’re paying fees such as account fees or low balance fees. Furthermore, it’s best if the savings accounts are high-yield savings accounts. Basically, your banking should be completely free and give you a relatively high interest rate on your savings. I often suggest to PhDs and PhDs-to-be that they use an internet-only bank to gain these benefits, but I don’t normally insist on it. For your situation, I’m going to strenuously recommend that you house your money in an internet-only bank with the benefits I just mentioned. I personally use Ally and have for about fifteen years, and other banks that fit the bill are CapitalOne360, SoFi, and Discover.

Before we move on from this section, I want to briefly address the use of credit cards. A single credit card could take the place of the Discretionary Variable Expenses checking account. I would just recommend that you keep an eye on the balance so that it doesn’t exceed the amount you budgeted for that category of expenses. If you put charges of multiple types on multiple cards and want to use the two checking account system, you could pay each card down manually from each checking account according to how much you spent from each category of expenses. For example, if you charged $300 for groceries and $100 for eating out to the same credit card, you could pay it off with $300 from your Fixed and Necessary Variable Expenses checking account and $100 from your Discretionary Variable Expenses checking account.

2. Your cash flow

Now I’m going to explain how money should flow through the account structure I just laid out. Before actually moving money from your Overall Holding savings account to any of the other accounts, you need to plan your spending for the upcoming term, i.e., budget. We’re going to address that in the third section. But just know that before you actually enact the cash flow I’m about to describe, you’re going to have firm numbers in place for how much to transfer.

Step 1: Receive your lump sum paycheck into your Overall Holding savings account. It’s more common to receive paychecks in a checking account, but I suggest that you switch your direct deposit into your Overall Holding savings account instead. If your university won’t deposit your paycheck to a savings account or you couldn’t get it set up in time, you can manually transfer the full amount of the deposit from your checking account to the Overall Holding savings account as soon as possible after receiving it.

Step 2: Plan how to distribute your paycheck. I’m going to address this budgeting step more fully in the next section. Just know that it has to be done before actually moving your money around.

The most ideal time for this step and the subsequent one to occur is after you’ve received the lump sum but before you actually start spending it. This follows from the principle I expounded upon in Season 21 Episode 2 about living on time, which is that all of the income you receive in one month goes toward funding your next month’s budget.

How this principle plays out for lump sum income is like this. Let’s say you are scheduled to receive your lump sum paychecks on August 15, January 15, and June 15. Your August 15 paycheck should pay for your September through January expenses. Your January 15 paycheck should pay for your February through June expenses. Your June 15 paycheck should pay for your July and August expenses, presuming that you’ll receive another paycheck of some type in August. This way, you have some margin or breathing room in between when you receive the paycheck and when it needs to start going out the door to pay for expenses.

Now, that’s an ideal circumstance. I would imagine that it’s much more common to need to start spending the lump sum immediately on bills and groceries and paying off credit cards, because most Americans do not live on time. If that’s how you’re operating now, you just have to account for that in your budgeting step. I will emphasize, though, that you should use this lump sum to catch yourself up to living on time as best as possible over this term so that you can start your next lump sum budgeting period in the more ideal fashion. So if you have to start spending your August 15 paycheck on August 15, still plan for it to last you through January so you don’t have to repeat the process on January 15. This will help you out a ton, especially if that paycheck doesn’t arrive on the date you expect it, which has happened to fellowship recipients.

Step 3: Enact one-time distributions.

Make one-time transfers from your Overall Holding savings account to your Tax Self-Withholding savings account, Targeted Savings savings account, and Financial Goals account or accounts.

Step 4: Set up monthly distributions.

Set up a monthly autodraft from your Overall Holding savings account to your Fixed and Necessary Variable Expenses checking account. I suggest that this be scheduled for late in each month, perhaps on the 25th, as it will fund your spending starting on the 1st.

Step 5: Set up weekly distributions.

Set up a weekly autodraft from your Overall Holding savings account to your Discretionary Variable Expenses checking account. I don’t have a firm suggestion on which day of the week to make this transfer. Personally, I would choose either a Sunday to set up the subsequent Monday to Sunday week or a Thursday to set up the Friday to Thursday week.

Step 6: Manually transfer from targeted savings to your checking accounts as needed.

The function of the Targeted Savings savings account or accounts is to pay for irregular expenses. When one of those expenses occurs or is about to occur, make a manual transfer from the appropriate Targeted Savings savings account bucket to either your Fixed and Necessary Variable Expenses checking account or your Discretionary Variable Expenses checking account, whichever one will pay for the expense.

3. Your budget

The planning or budgeting step is crucial for people who receive lump sums of income. People who receive this type of income have a great fear of running out of money before the next paycheck comes, because that paycheck is so far away. Budgeting and sticking to your budget are therefore vital for giving you confidence to spend. In fact, if you budget and hold yourself strictly accountable to that budget, you can dispense with the other aspects of this system. The accounts and cash flow are really just to support you in sticking to your budget.

Another anonymous mailing list subscriber shared their perspective on the importance of budgeting when receiving lump sum income: “I highly recommend a Zero-Based Envelope Budget such as YNAB especially for people with lump sum income. The YNAB method of breaking large, infrequent and/or unpredictable expenses into small, consistent amounts is key; otherwise it is very easy to overspend early in the term then have a big unforeseen expense come up later in the term that you are not prepared for. Overall, breaking down big expenses, budgeting every dollar each month, and keeping account of over/under-spending (as the Envelope method does) gives clarity and confidence about what you can spend money on so you don’t run out before the next pay cycle. Plus, working towards getting “a month ahead” becomes harder with lump sum income but YNAB makes it easier to see your savings grow bit by bit.”

I created a template spreadsheet to assist you with this budgeting step, which you can download from PFforPhDs.com/lumpsum/. I’ll walk you briefly through the sections so you can see how they connect to your account structure and cash flow.

The first lines in this spreadsheet ask for the date of this term’s paycheck and next term’s paycheck. Remember that you should use this term’s paycheck to cover your expenses through the end of the month in which you receive your next paycheck. If there is some uncertainty about when your paychecks will arrive, use the last date in the feasible range.

The times at which you transition on and off of fellowship income are ones to pay particular attention to. There can sometimes be what feels like a lapse in pay, especially when going from fellowship income to employee income, again because employee income is typically paid after or at the end of your work period. For example, perhaps you receive a one-year fellowship that covers August through July, and after that you’ll receive employee income once per month. Perhaps those lump sums arrive near the beginning of August, the beginning of January, and beginning of June. Your first employee paycheck might not arrive until the end of August or beginning of September, meaning that your one-year fellowship actually has to pay for 13 months of expenses if you start using it in August. Or even if you’re paid bimonthly or biweekly as an employee, that first employee paycheck would arrive in mid-August and it will only be for half a month or two weeks of income. Keep these factors in mind when you decide how many months your lump sum income is supposed to pay for. You definitely don’t want to be caught paying for three months of expenses off of a two-month lump sum.

Up top, you enter your lump sum of income.

The orange section is for your estimated tax. If you are not having income tax withheld from your paychecks, you will need to set aside money to pay your future tax bills, whether they are quarterly estimated tax payments or an annual tax bill. If you are single and have a simple tax and income situation, I suggest using an income tax calculator such as from smartasset.com to estimate your annual tax bill. If you have a more complicated situation, you should fill out the Estimated Tax Worksheet on page 8 of IRS Form 1040-ES and the equivalent form from your state tax agency, if applicable. Once you’ve estimated your annual tax liability, you can fill into this section the appropriate fraction of that annual bill that needs to be paid from this particular paycheck. You can find lots more information about estimated tax inside my asynchronous workshop at PFforPhDs.com/qetax/.

The blue section is for your financial goals, and it refers to my eight-step financial framework. I won’t get into all the details of the framework, but basically, you should figure into this budget the amount of money you want to put toward your financial goals during this term. For example, if your goal is to invest 10% of your gross income into a Roth IRA, you would fill into the investing line 10% of your lump sum paycheck. This section has lines for investing, debt repayment above the minimum, and saving for an emergency fund. There is another line for creating account buffers. I do recommend placing a certain amount of money, perhaps $250 to 500, in each of your checking accounts to safeguard against overdrafting, just in case a bill comes in that is higher than what you budgeted. Try your best to maintain that buffer amount as your floor in your checking account, but know that it’s there for you if needed. You can consider it the first layer of your emergency fund.

The purple section is for your monthly expenses across several categories. You’ll enter a monthly spending number into each of the relevant line items. You’ll also enter the number of months that you want this budget to cover. The spreadsheet multiples these two numbers to generate the amount of money that you expect to spend on that expense during the term.

Some of these expenses are fixed monthly expenses, so they’re easy to look up and enter into the spreadsheet, such as your minimum debt payments, your rent or mortgage, certain utilities, and your subscriptions. Others are variable expenses, so they will change a bit month to month, such as groceries, gas, certain utilities, and eating out. If you have tracked data on these expenses, use those averages and round up a bit. If you haven’t tracked your expenses, do your best to estimate what you will or would like to spend. 

The green section is for your irregular expenses, which are expenses that occur less frequently than monthly. Irregular expenses are things like insurance premiums if paid less frequently than monthly, car maintenance and repairs, travel, and electronics purchases. There are two ways to capture the numbers associated with these expenses in the worksheet. The first is to convert the irregular expense to a monthly average. For example, if in the course of the last twelve months you spent $600 on clothes and you don’t expect your spending rate to change, you would enter $50 as a monthly estimate of that expense into the appropriate cell. Over the course of a five-month term, for example, you would expect to spend $250. So you would know to set aside $250 of your paycheck into a targeted savings bucket for clothes. This is great for a category that you spend in regularly but not monthly. The second type of irregular expense that the spreadsheet accounts for is a large one-time expense. Let’s say that you want to purchase flights to visit your family over winter break, and you expect to purchase the tickets in November. You can enter the estimated cost of the tickets into the appropriate cell in this section, and you would know to set aside that amount of money from your paycheck into a targeted savings bucket for this purpose. You can learn more about irregular expenses and targeted savings in Season 7 Episode 15.

That takes us to the bottom of the spreadsheet. You of course need to make sure that your budget balances before moving on from this step.

From this spreadsheet, you can glean the numbers you need to set up your manual and automated transfers.

The total of your estimated income tax payments will be transferred one time from your Overall Holding savings account to your Tax Self-Withholding savings account.

With respect to your financial goals, I suggest transferring over or otherwise establishing your account buffer amounts right away. Same goes for any savings you want to add to your emergency fund. For financial goals money that you won’t be able to easily get back, before contributing it to a tax-advantaged retirement account or paying the principal on a debt, evaluate how confident you are in your budget. If you’re super confident that you’re not going to exceed your budget, invest or pay down debt right away after receiving the paycheck. If you’re not so confident, keep it in a savings account until the end of the term and put it toward those specific goals at that time. Or if you’re in between, split the difference by investing or repaying debt gradually throughout the term. One note though is that if your financial goal is to pay down credit card debt, do your absolute best to pay it down earlier rather than later, because that high interest rate is super toxic to your finances.

The amount of money that you calculated that you will spend on irregular expenses during this term or that you need to save for future irregular expenses should be transferred to your targeted savings account or accounts. Be sure to keep track, either using buckets or a spreadsheet, of which balances are for which purposes. If you deplete a targeted savings bucket, either stop spending in that category or adjust your plan.

The money that you expect to spend on your monthly expenses stays in your Overall Holding savings account until it’s time to be spent.

The sum of what you expect to spend monthly on your minimum debt payments, your fixed monthly expenses, and your necessary variable expenses should be transferred in a monthly autodraft to your Fixed and Necessary Variable Expenses checking account. This is the account from which you should set up autopay for all your bills and recurring expenses, such as rent or mortgage, utilities, minimum debt payments, and subscriptions. You should use this account to pay for your groceries and other necessary variable expenses as well. By the end of each month, the balance in this account should be down to pretty close to or at your buffer amount, hopefully not below. Due to the nature of these expenses, they don’t vary much month-to-month, so you can expect to spend all or nearly all of what you transfer in each month.

The sum of what you expect to spend weekly on your discretionary variable expenses such as eating out, entertainment, coffee, personal care, etc. should be transferred in a weekly autodraft to your Discretionary Variable Expenses checking account. The spreadsheet doesn’t calculate this weekly number for you, so you should divide the total you expect to spend over the term by the number of weeks in the term. Whatever balance you see in this account above your buffer amount, you should feel free to spend, but it’s also fine to carry over some balance or let it build up week over week.

Part of the point of dividing up your money is to help you discern when it’s time to stop spending. If the balance in your Discretionary Variable Expenses checking account is down to your buffer amount, it’s time to stop spending. However, you know that within a week, the account will be refilled.

If this system seems overly complicated, I definitely understand, and you can modify it to better fit your lifestyle.

Modification A: You don’t have to make the special effort to budget and set up targeted savings accounts for irregular expenses. Instead, you can create your budget with a monthly line item for miscellaneous expenses, as long as the amount of that line item exceeds the sum of the irregular expenses that you anticipate incurring during any given month.

Modification B: You don’t need two checking accounts. You can use one with either only monthly or monthly plus weekly transfers from your Overall Holding savings account. This will closely simulate a person who receives a monthly paycheck.

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Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2025-2026 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, medical school, postdoc office, or postdoc association? My workshops are usually slated as professional development or personal wellness. Orientations, postdoc appreciation week, or close to the start of the academic year would be a perfect time for tax education or general personal finance content. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Part 2: Testing out my system with Shalom Fadullon

Emily: This first interview section was recorded in December 2024. This was the first time we met to discuss how to manage lump sum fellowship income.

Shalom: My name’s Shalom. I’m a third year, uh, chemical engineering PhD student at Northeastern University. Um, and I was fortunate enough to win the NSF GRFP this most recent cycle. So, um, I just, this just kind of started in September of this year and I’m planning on being it for the next three years. So looking forward, kind of figuring out like, okay, what does that, what does that look like now? So the way that it works at Northeastern, if you’re on any type of external fellowship, um, at least my department, um, you’re paid in one lump sum at the beginning of that semester. So over the summer it’s the same uh, thing. Our semesters are broken up into kind of like five months, five months and then two months for the summer. Um, so it’s a different amount of money, but it’s the same thing where you’re paid at the beginning of that two month period.

Emily: You know, when you emailed me with this question, like what were you concerned about, what, what problems had arisen that you think, you know, different budgeting might help with?

Shalom: Right, so my main uh, like kind of disconnect is this like thing where like your expenses, my expenses are kind of on this like monthly cycle where I pay rent every month, I pay my utilities every month and so all of a sudden these like payments and these expenses don’t really line up. Um, so like in my mind it’s like this very jagged graph of things happening and then so kind of having a harder time keeping track of like actually how much money I’m spending per month has been hard because instead of having like that monthly timeline, it’s now four, five months. Um, and then also kind of that like payday temptation. So hadn’t been paid in a long time, got that big, big pay bump or whatever that looks like it, but in reality the actual sum of money hasn’t changed. Um, it’s just from when you’re receiving it. So the temptation to spend money towards like that paycheck time is actually a lot harder, I found.

Emily: Shalom explained her existing account structure, which already had a lot of the elements that I recommend.

Shalom: A direct deposit into a high yield savings account. So um, that kind of just like automatically happens. And then I do just most of my purchases on a credit card and I pay that off every month. So again, like the monthly expenses kind of lining up. And then I also take some money out for like a retirement kind of like Roth I like IRA situation. Um, and that’s, yeah, that’s pretty much how that’s set up.

Emily: So the, the paycheck goes into the savings account first. Have you been keeping it there or did you move it to checking or did you split it? Like where’s the money been residing?

Shalom: Yeah, I mostly put it in um, it mostly just kind of stays in that savings account and then when I need to pay my credit card bill, that’s pretty much what I use it to do.

Emily: Okay. And you also have presumably some bills that you don’t pay on a credit card like your rent and maybe some other utilities or something. Do you then, do you transfer from savings to checking like in advance of those payments hitting? Okay. Yeah, I think you’re, it sounds organized, you’re like definitely partway to like what I would recommend, I’m just going to recommend and we’ll talk through it about, ’cause you don’t have to take my recommendations, right. It could be too much or whatever <laugh>, but kind of layering on a little bit more structure to this. Um, and also there’s sort of two components. There’s like this account structure which can help keep you on track to know that you’re not overspending or underspending over this long period of time. Um, and then there’s the budgeting aspect which is like actually planning because again it is a very long period of time. Like am I able to spend on discretionary things without jeopardizing, you know, my February rent payment or whatever it is. Right, right. Um, do you do any kind of budgeting right now?

Shalom: Yeah, I have um, roughly I try to do the like 30, 20, 50 rule. I don’t have like um, I dunno limits setup or anything within the account. So it’s kind of just like um, an Excel spreadsheet that I do and I’ll update it at the end of the month. But um, I have stopped updating it because my like income stream has changed so much. So

Emily: Like for a larger purchase, like a flight or like a vacation, something discretionary, maybe even shopping spree. Right, how do you decide if you can afford it?

Shalom: Yeah, that’s a great question. Um, so I kind of look at, again, I look at my credit card statement and I kind of say how much have I spent on similar things this month? So something like restaurants or going out to eat. Um, and then based on that amount of money, um, I’ll say okay, do I have enough money left to also purchase this? But it’s kind of very like hand wavy if that makes sense.

Emily: I feel like that would work really well with that two week budgeting cycle.

Shalom: Right.

Emily: But I dunno how you do it with these like larger amounts of money <laugh>. Yeah. Okay. At this point in our conversation, I proposed to Shalom the structure I explained in the first part of this episode.

Shalom: I mean I really like the idea of kind of having that account for the discretionary variable expenses because um, I feel like with the big um, like some payment it’s really hard to keep track of things like oh I bought a coffee, I bought a whatever. Um, so that’s really nice to kind of be able to track that more closely and see like, okay, how much am I putting in weekly? Like am I going over that, am I going under that whatever. Um, and I also like the idea of having kind of the two separate accounts for the necessary and variable expenses. I think like you mentioned, um, it might just get a little more complicated with the credit card kind of um payments, but I think it’s definitely like again there’s totally ways around that to make it not super complicated

Emily: After that, Shalom and I went through the budgeting spreadsheet that you can download from PFforPhDs.com/lumpsum/, and I sent her on her way to implement this system! We next spoke in mid-March 2025 about how the system implementation went. We next spoke in mid-March 2025 about how the system implementation went. After our last conversation and like the resources that I sent you and all that stuff, in theory you were supposed to try out <laugh> the system I was recommending. So please let me know like what changes did you make and did they work for you, have you made any adaptations?

Shalom: Yeah, sure. So um, we talked the last time we talked you recommended having these like separate pots essentially for things like essentials where it was like rent and food and utilities, kind of these like known quantities every single month. Um, there’s a pot for like discretionary spending, so like coffee and trips or whatever. Um, and then I think you also had a separate one for time like investments like Roth IRA, like things like that. And then um, a separate bin for taxes, like where you would set aside money for taxes. Um, in my specific bank. So I use Capital One, um, they make you open a new account for every bin you want. Um, so I just wanted to kind of keep it as simple as I could while following um, your advice. So I ended up opening one for like needs, one for wants and then one for, I had one for emergency fund and then one for um, investments. So I have five, that’s five total. Um, and it was actually really eyeopening because I used to just take um, all of my expenses out of like the account that I deposited money in and obviously when you’re getting these different amounts that don’t match up with like your monthly credit card cycle or your monthly rent cycle, um, I genuinely did not have a good grasp on how much I was spending and so it actually ended up being that I was spending more money um, than I thought and I just couldn’t see it because again, like the monthly balance wasn’t lining up with when I was getting deposits.

Emily: Yeah, that’s already like a really good insight. So kind of like dividing your money up <laugh> allowed you to see Yeah, the actual cash flow. So I think um, one of the other aspects of the system that you didn’t mention so far was I believe having your paycheck deposited into a savings account, right? Is that what we talked about? And then distributed to one or more checking accounts. So did you make any shifts in that or like where is your paycheck going and then literally like where is it flowing? Yeah, like from that first spot.

Shalom: So I did change that as well. So now I have my paycheck being deposited into a high-yield savings account. Um, and then from that high yield savings account, once I get that deposit I’ll put money towards um, my budget for like food rent, which I have like a rough number that I do the same amount every month and then um, things that I want or like extra funds. Um, and I think for me the most eye-opening thing was being able to track those like you know, eating out and clothes and whatever. Um, a little bit more closely because I had just been reconciling them with my credit card statement but I hadn’t actually seen what that was doing like overall big picture with kind of like long-term savings goals And so this was really helpful to be able to see that.

Emily: Let’s talk about the um, non monthly aspects of the system. So you mentioned for example there’s um, a way of you either holding for or transferring out money towards like investing or other sort of long-term goals. Um, if you have an emergency fund that theoretically should be like separate from the rest of this money. Um, and then the targeted savings was another thing we talked about. So saving up for those either necessary or discretionary expenses but that are sort of larger and that occur less frequently than monthly. So how have you been doing with like those aspects of the system and has that helped you think about your goals or your spending differently?

Shalom: Yeah, yeah that’s a good question. I actually hadn’t set up the targeted savings bin um, just because I wasn’t really sure how much I would wanna contribute per month or like what that might look like. Um, I think like a good idea would probably be to transfer, like saving up for a trip into that pot because right now I just have it in my like discretionary fund. Um, and I think like if I’m not taking a trip every month, then that is kind of inflating that bin maybe more than it needs to be. Um, so that’s something that I definitely like to do.

Emily: So it sounds like you’ve implemented the system like pretty close, like pretty faithfully to what I suggested, but now that you’ve tried it out, would you make any modifications to it going forward? So are we done with our discussion?

Shalom: I think so. Like I said, this has been really, really helpful. Um, like I said, I thought I was doing an okay job and I really saw, saw like a big difference um, in how I was doing this next pay period. So

Emily: Yeah, well I hope it continues to work for you for the next few years. However long this frequency is. I was really glad to hear that my suggestions, at least some of them, worked well for Shalom. And if you receive lump sum income, please let me know if you try out any or all of these elements and how it goes for you. I want to conclude here with a contribution from an anonymous podcast listener. I’ve actually worked with the most simple case of lump sum income in this episode, which is a predictable lump sum over the long term. This listener shared their perspective on the difficulty of receiving irregular lump sums of income in the following audio clip: 

Anonymous: Lump sum income is really challenging. I have found in thinking about this that the issue of lump sum income is pretty inextricable for me from the issue of variable and unpredictable income. I’m a social sciences PhD, others in my program and other social sciences programs, humanities programs that I know have funding structures that are volatile, like quite unpredictable. We have maybe a baseline guaranteed income either from a fellowship for a given year or guaranteed teaching spots or something like that. I’m in a PhD in a very high cost of living area, one of the highest in the US. So that kind of baseline income is pretty difficult to live on, would pose a really significant financial strain. Folks like me are in the position of kind of constantly applying for supplemental income, whether that’s additional teaching positions over the summer or maybe you have a fellowship that allows you to teach one term out of the year to supplement the fellowship and so you’re in a situation throughout the year where you have a lot of uncertainty around what your actual income in a given year is going to be. I think that this informs how I experience an issue that’s maybe more in inherent in lump sum income, which is you wind up having to basically pay yourself monthly out of that income, which requires having a medium to long range sense of what your overall income actually is beyond a particular grant payment or lump fellowship payment or whatever it is. For folks that I know this is, these two things are super interlinked. The variability trying to project through that variability plan to the best of your ability accordingly and then a lot monthly payments for yourself based on that projection. The tip that I would give to people in this situation is I think that dealing with this tricky intersection of lump sum payments that are not taxed at dispersal and are uncertain and variable within throughout the year and across different years, um, dealing with all of that together can feel really hard, like super defeating honestly, especially at a lower income bracket which you know PhD students are, it just feels like really a grind to be honest. I think that it’s easy to kind of drop into a mode of why even try to plan around this. This is so difficult to plan around. This is set up to be almost impossible to project accurately around and like set up systems around. Like why even try and I’m not even making that much money anyway so I’ll just like do the best I can without thinking about it. I think it’s really easy to get into that mode and I see a lot of my friends in that kind of like survival mode. The tip would be support yourself around that and to try not to fall into that.

Emily: Lump sum income plus irregularity is definitely a next level challenge for your budgeting and financial planning, so my next challenge will be trying to speak to this situation. I echo what this contributor said to do your best to not feel defeated by this scenario, which honestly would stump the most experienced budgeters. Give yourself a lot of credit for managing as well as you are with a highly unpredictable income. That’s all for this episode! Thank you to Shalom for being my guinea pig for this system and thank you to those who shared their experiences and advice regarding lump sum fellowship income!

Outro

Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers (Part 1)

October 21, 2024 by Jill Hoffman Leave a Comment

In this episode, Emily interviews Elle Rathbun, a 5th-year PhD candidate at UCLA. Elle shares her financial origin story of growing up in a low-income family, becoming a QuestBridge scholar during undergrad, and working for two years before matriculating at UCLA. During those years, Elle developed her financial acuity and prepared financially for grad school, including investing for retirement and saving up cash. This energy carried forward into grad school, where within her department Elle started a group to chat about money and created resources to help her peers navigate the financial aspects of their fellowship and UCLA’s bureaucracy. Tune in to the next episode for part two of the conversation!

Links mentioned in the Episode

  • PF for PhDs 15 Minute Introductory Calls
  • Host a PF for PhDs Tax Seminar at Your Institution
  • PF for PhDs Subscribe to Mailing List 
  • PF for PhDs Podcast Hub
This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers

Teaser

Elle (00:00): I think a lot of undergraduates and techs and PhD students are like, oh, I’m not making money yet, um, to any real degree. Like, I’ll just wait. Um, and I think that’s one of the worst things you can do is to wait. Um, and I think even if you have five extra dollars to put into a Roth IRA, I think that is worth doing.

Introduction

Emily (00:25): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (00:54): This is Season 19, Episode 5, and today my guest is Elle Rathbun, a 5th-year PhD candidate at UCLA. Elle shares her financial origin story of growing up in a low-income family, becoming a QuestBridge scholar during undergrad, and working for two years before matriculating at UCLA. During those years, Elle developed her financial acuity and prepared financially for grad school, including investing for retirement and saving up cash. This energy carried forward into grad school, where within her department Elle started a group to chat about money and created resources to help her peers navigate the financial aspects of their fellowship and UCLA’s bureaucracy. Tune in to the next episode for part two of the conversation!

Emily (01:41): This fall, I’m opening my calendar for 15-minute introductory calls! This is a chance for you and me to meet one-on-one. I want to hear your current financial questions and challenges. If I can provide some quick value by answering a question or pointing you to a resource I absolutely will. These calls are a way for me to keep a pulse on what’s going on financially in our community so that I can address whatever comes up through my seminars for universities and the free content I create. I would love to meet you, so please sign up today at PFforPhDs.com/intro/. You can find the show notes for this episode at PFforPhDs.com/s19e5/. Without further ado, here’s part 1 of my interview with Elle Rathbun.

Will You Please Introduce Yourself Further?

Emily (02:40): I am delighted to have joining me on the podcast today, Elle Rathbun, who is a, an entering fifth year PhD candidate at UCLA and Elle and I actually met last spring when I was giving an in-person seminar at UCLA, and she was there because she was part of the financial wellness office, so she was there with a booth so the students in attendance could get some extra resources after my presentation was done. And she came up to me after the presentation introduced herself, which I love it when people do that. So podcast listeners, if you ever have the opportunity, please, please introduce yourself. We had an amazing conversation right then and there, and I immediately invited her on the podcast. So we’re gonna have a really good time today learning about Elle’s story, how she came to work for the financial wellness office, everything she’s done in her personal finances, in between. So Elle, I’m absolutely delighted to have you on the podcast today, and would you please introduce yourself a little bit further for the listeners?

Elle (03:30): Absolutely. Thank you so much, Emily. I am so excited to be here. First of all, I am a long time listener, even before I started graduate school. This is really something that, um, this podcast kicked off my, my interest in personal finance as a PhD student. Um, and so yes, I was, uh, raised in Durango, Colorado, so a very small rural mountain town. Um, and my parents always sort of, um, struggled to keep things afloat in terms of, in terms of finances. Um, and so I was able to get the QuestBridge Match scholarship to the University of Chicago for my undergraduate degree. So that meant that I got a full ride, uh, uh, to to University of Chicago where I majored in neuroscience and biological sciences. Um, and I was really, really grateful for, for that opportunity. Then I stayed at the university, uh, for two years in a biophysics lab. So I was a tech there. Um, and that sort of is really when, uh, things started coming together for me in terms of what I wanted to do academically, but also when it came to personal finances. And, um, and then I ended up at UCLA’s graduate program in neuroscience. Um, and that’s where I am now.

QuestBridge

Emily (04:39): Okay, fantastic. Now I wanna talk more about your, um, interest in personal finance, your passion for the subject. And you mentioned this QuestBridge program, so maybe we should start there. Can you tell us more about that program?

Elle (04:51): Absolutely. I’m happy to. So QuestBridge is a phenomenal nationwide program that basically helps match high achieving low income students with some phenomenal, uh, undergraduate universities. So I think at the time I applied, I, we had 35 partner colleges and now we’re way above that. Um, and essentially what it is, is it’s an application on its own. You apply as a high school senior before in the fall, um, and then the people at QuestBridge look through those applications, figure out who qualifies, uh, both financially and academically, and then helps match those students to a partner college. And it’s a phenomenal program. You rank which colleges you would want to go to, and the deal is whichever one you rank the highest that accepts you, you have to go there, but you get a full ride. And so for me, that also included a stipend for housing and included money for books and for travel, um, and for food and board. And so it was just, it was a phenomenal experience. Um, and it allows me to not have the burden of student loans, which I have come to learn more about. Um, and it’s, there are thou- now thousands of, of QuestBridge alumni, um, and I’m continuing to work with them, uh, in terms of guide, sort of guiding Questees for, um, preparing for graduate school, whether that’s law school or medical school or PhD programs, um, and sort of things that people from, especially from low income backgrounds, don’t necessarily know or not are not, uh, privy to, especially since so many of them are children of immigrants, first generation students, college students, um, et cetera.

Emily (06:27): What an incredible program. I had no idea that it was both, you know, the, the tuition and fees and everything and all that plus the stipend and your living expenses. I mean, it’s a very analogous situation to, um, being in a funded graduate program, really. And so that’s a very interesting kind of like, um, twist on this in that you had some experience prior to starting graduate school with managing that kind of budget, right? The stipend kind of budget. Um, it’s just incredible that you had that opportunity and that you’re giving back now to like, you know, help shepherd, you know, other people interested in the path that you’ve taken, uh, along that same route. Okay, awesome. So college, no student loan debt. Um, great. And talk to us a little bit about that, um, interim time period before you started graduate school and like what was going on with your finances, and it sounds like you started listening to this podcast, maybe looking at other resources too during that time. Tell us that story.

Financial Journey From Childhood To Grad School

Elle (07:12): Um, I started working when I was very young. I started, uh, selling rocks by the train, uh, in Silverton, Colorado. So if you’ve ever visited Silverton, um, or took the drain from Durango to Silverton and saw kids selling rocks, I used to be one of those kids. Um, and so it was very sort of my personal finance story started very young. I I always thought about money, not necessarily always with a negative connotation or a positive connotation. It was just a reality. Um, and I knew how many rocks I had to sell in order to buy the grilled cheese sandwich that I needed, that I wanted at the end of the day. And so, um, when I entered college, I had some savings from the rocks, from working in multiple restaurants, um, in my parents’ shop, et cetera. Um, and so you’re Yeah, exactly right. That was sort of my emergency fund going into undergrad where a lot of things were paid for, but I had some flexibility and I knew I had to be very careful with that stipend. So coming out of undergrad, I was able to, I had about, I was, my net worth was about the same as going into undergrad. Um, and then I realized, okay, I need to start saving money. One of my reasons for staying in Chicago, um, for those two years before my PhD was because I knew the lay of the land. I knew that it was affordable. I knew I could get cheaper housing here than I could in LA for instance, or New York or Boston. And so, but I knew that in order to be stable and to feel, uh, like I had flexibility, um, and to be able to help my family if they needed it, I needed to really get my stuff together, um, and, and understand where I was, where I wanted to go, and how I could get there. Um, especially before starting, uh, graduate school. And so I started listening to this podcast. Um, I think this is the main podcast that I’ve just continued listening to. Um, and I think I fangirled out when I met you <laugh>, um, just because I’ve listened to like almost every episode. Um, and, uh, but I also start, I listened a little bit to Dave Ramsey, uh, which I think is fine for people with credit card debt, but that wasn’t necessarily my case. Um, the Dough Roller Money podcast Money Girl, um, I read Beth Kobliner, uh, Get a Financial Life, um, in your twenties and thirties, um, and then sort of just hodgepodged a lot of podcasts, resources, pamphlets, booklets, webinars, um, and, and try to figure out, okay, what do I need to prioritize? What do I need to do? And when can I apply to graduate school? Because applying to graduate school isn’t necessarily cheap. Um, and so, so that was sort of what, what came to be over those, over those two years.

Emily (09:48): So it sounds like you, um, knew that you were probably headed to graduate school at the, even coming out of undergrad, right? But you wanted to take some time to get your feet under you, figure out where you wanna do that. Exactly. I have the same story for my, you know, between undergrad and grad school kind of time period. Um, were you intentionally then working on like building up savings to have maybe a more robust emergency fund? Were you working on investing because maybe you knew that would be more difficult, you know, once you started graduate school? Like what, what sort of goals did you set during that time period?

Elle (10:16): At first, I was just like, okay, just figure out where I am, like, figure out how many credit cards I have, figure out how much I have in savings, figure out what those savings are for, um, how much I feel a need for a comfortable emergency fund. Um, so the first goal was just to understand where I was. And then the second goal was me looking at my benefits and being like, what is a 403B? I have never heard of that. I’ve heard of a 401k. Um, and that’s sort of it. And so it became pretty apparent that I needed to educate myself further because I knew, okay, if this is taking a good sum of my paycheck, I wanna know what that’s going into. Um, and also in my junior year, senior year, one of my, uh, older friends who worked at the university told me, just open a Roth IRA, just trust me. You won’t regret it, just open it, throw a couple dollars in, um, and, and then educate yourself on it. And so I had done that as well. And, but I had, I had put it in there, um, but didn’t invest it, uh, just was sort of sitting in that, in that cash account. And so that was my, my second goal. So after I understood where I sort of was coming from and what I had, um, I wanted to learn more about invest investing. Um, and so a lot of my youth was, uh, I was told, don’t invest. That’s fake money. Like the stock market isn’t real money. Um, and so I sort of had to reeducate myself, um, in, uh, sort of the risks, but also the benefits of investing in the stock market and the bond market, um, and what a retirement account was, why it existed, um, advantages of, of those and, and tax laws and things like that. And so, um, so that was my next step was to just sort of understand and start investing.

Resources For Learning How To Invest

Emily (11:58): You’ve already listed a few different resources, like podcasts that you listen to. Was there anything that you found, well, is there anything you would recommend to the listeners who are at a similar stage and wanna learn what investing is and how to do it and what a Roth IRA is and what a 403B is and all of that? Any books or, or any resource that you enjoyed?

Elle (12:15): Yeah, I think that Get a Financial Life book was a game changer for me in reading that. Um, and also this podcast and Money Girl, I think, um, oh, I forget the host’s name currently, but, um, the, the host does a phenomenal job breaking down everything. Um, and also, uh, if you can by Bill Bernstein, um, just sort of it, because that especially takes, really takes into account like not everyone can do this, um, but a lot of people can do at least a little bit. And that’s where to start. It’s so important to start building that habit. So once you can contribute more to a retirement account, you already know what that is and how to do it. Um, and also just your local hr,

Emily (12:55): I’m really glad to hear these resources, some of which are new to me, like the Bill Bernstein book that you just mentioned. Um, I’m gonna check those out because I found that a lot of the maybe most popular personal finance, or maybe now it’s financial independence material is much more geared for high income earners who have a different set of financial things to deal with than lower income earners. Um, I’m not at all surprised that you mentioned Dave Ramsey because even though his philosophy is maybe at odds with mine or other people’s at certain points, he does try to speak to people who are lower income at times. And so yeah, I’m just, I’m really glad to hear these resources and, and yeah, to have you speak to this because it’s a different set of things that you need to handle when you’re not quite in graduate school yet or, or in graduate school than you would, you know, later in your career.

Financial Goals Before Applying to Grad School

Elle (13:42): Yeah, absolutely. And I think, um, that, that’s something to, to keep in mind as well for, for listeners, for people who I coached, which we’ll get into later. Um, but in terms of just building the habit, um, right, I think a lot of undergraduates and techs and PhD students are like, oh, I’m not making money yet, um, to any real degree, like, I’ll just wait. Um, and I think that’s one of the worst things you can do is to wait. Um, and I think even if you have five extra dollars to put into a Roth IRA, I think that is worth doing. Um, just to, to figure out what it is. I had, I think I had $500 sitting, sitting in my Roth IRA for like two years before I figured out what that actually was. Um, and, and then as soon as I realized, oh, okay, I need to invest this, um, that sort of just took off flying. And so that was, that then became my main goal because I didn’t know when I was going to start a PhD program. I didn’t even know, even know what PhD program I was going to apply to. Um, I was deciding between, uh, neuroscience or biological sciences or even biochemistry. Um, and so while figuring out all my academic stuff, um, I decided, okay, I will apply to graduate school when I am comfortable, uh, with the idea of maxing out my Roth IRA for five years. Um, and so I didn’t necessarily need to have all of that money in cash right away, but I needed to have a plan to max out my Roth IRA for five years. Um, and that’s, that was sort of my, my threshold for, for applying to graduate school.

Emily (15:13): Hmm. That’s a really interesting goal. I mean, I definitely see the merits of it, of course. Um, now I’m wondering when you were applying to graduate school, how much you had the stipend and the cost of living, um, in mind since it had been such a focus for you over the past couple of years?

Elle (15:26): Very much in mind, um, the first, the first job was to get into graduate school. And so, um, so I sort of, I, when I applied, I didn’t consider it. I think I had looked at what graduate housing options were in all of those areas, but, um, I knew I didn’t necessarily have to go, uh, even if I applied. And then once it came time to decide, um, I was basically, it, it, it got narrowed down eventually to just two options. One was UCLA, which is, um, in a very high cost of living area, um, but it would be new to me. And they offered me basically a recruitment, um, scholarship, which was a large enough sum of money to make me feel comfortable matriculating in this program. But the other option was to stay at UChicago. Um, and there I had cheap slash uh, cheap housing essentially. Um, I was living in a house where I would be taking care of the dogs and I didn’t necessarily have to pay rent. Um, and so, but I, so that would mean that I could essentially keep the majority of my stipend and continue saving. And so in that regard, I decided that UCLA was the better career move, um, and even the overall better financial move, I could make more connections. I would have more opportunities, and I would be studying precisely what I wanted to study. Whereas UChicago, which just wasn’t as good of an academic fit.

Emily (16:47): I think that’s the ideal position to be in when you are, um, applying to graduate school and you are keeping an eye on the personal finance side of things is just the decision is not gonna be completely determined by the finances, but you least need to set some kind of bar of, like, anything above this bar I’m gonna be able to say yes to, and I can decide based on the academics or whatever other factors are important to you. But you just know that anything below that bar is, is really just not a viable option. And a lot of times you don’t really, even though it’s great to check out what the stipends are, what the, you know, what the base stipends are, what the cost of living is, et cetera, in advance, a lot of times you don’t know until you get into admission season exactly what they’re going to offer you. Because like you said, with UCLA, they could come up with an extra scholarship or fellowship that you weren’t aware that they were going to offer you. And that can completely change the calculus of the situation.

Elle (17:32): Oh, absolutely. I had, I had my mock budgets of whether I stayed or at U Chicago, whether I continued living in that house or whether I came to UCLA and lived in graduate housing versus with, without roommates. I had all the mock budgets just because, um, it’s, it’s a commitment. It’s like a five plus year commitment, um, for, especially for the biological sciences. Um, and so I knew that like, okay, this is a financial decision as much as it is a educational and, uh, career decision.

Current Housing Situation

Emily (18:03): And I’m really glad to hear that you had those different like scenarios modeled out too, because sometimes, okay, so I don’t know. So are you living in graduate housing now?

Elle (18:12): No, I, I started, uh, because I matriculated in 2020 and then, um, and so I lived my first year here in graduate housing and then I moved to a, a private rental.

Emily (18:23): Okay. Was that the plan all along or was there a possibility that you could have stayed in graduate housing?

Elle (18:28): UCLA offers three years of graduate housing. Um, and then after that it’s really hard to stay in it unless you move to family housing. And so, um, I think my plan was always like, okay, start in, uh, graduate housing, um, and then maybe go live with friends, sort of get a lay of the land <laugh> after Covid is over and, and then, um, move somewhere cheaper because graduate housing is in West la. Um, but that’s not necessarily where I needed to stay. So currently I live in Studio City, in the Valley.

Current Financial Goals

Emily (18:56): Okay. So we’ve talked about kind of the lead up, you know, your decision to go to UCLA now that you’ve been in graduate school for four years. Um, what kinds of goals have you been working on? You mentioned the Roth IRA earlier. Have you been able to do that? Anything else? Just let us know how your finances have been going

Elle (19:11): In graduate school. Yes, I’ve been keeping up with the, the Roth IRA, I’ve been learning more about different retirement, um, options. Um, and I’ve sort of stuck with the same strategy, just index funds, putting extra savings into, uh, different account types and, um, keeping up with my budget, I budget with YNAB or you need a budget, which is a phenomenal budgeting service. Um, and just sort of making sure that my finances and how I spend my money align with my goals and my priorities. So that absolutely includes, uh, investing for retirement, but also, um, I am also investing in, uh, a taxable account just for an eventual down payment on a home. And, um, making sure to spend, spend, uh, enough money on, on funds, so things like travel and seeing different sites in la. Um, and then I also, on the non-money side of things, um, sort of just created a lot of resources for myself and for others where I could sort of track my net worth because that is very motivating to me just to be able to see progress over time. Um, but also getting things in order. Like I, uh, I signed up for life insurance term life insurance, uh, when I was a first year graduate student, just because I am sort of my family’s overall retirement plan. And so if anything were to happen to me, I would want to make sure that they, um, are at least somewhat stable financially. And so, um, so sort of putting that into place, getting a feel for, um, what’s su- what is sustainable in terms of credit cards. I’m big on credit card bonuses and rewards. Um, and so that’s something else that I’ve sort of made sure that I was good to go, um, and, and to sign up for more credit cards, um, while still maintaining a good, uh, credit score and, but being, being able to take advantage of, of that, that as well.

Emily (21:10): So exciting. I love all of those. Um, I love that there’s a variety of goals in different areas, right? It’s not just about increasing the net worth, it’s also about increasing your own financial, um, education you could say, or just your, um, acuity and also like some budgeting stuff. I love that you mentioned Y-, uh, YNAB you need a budget and you know, the credit card stuff. I’m curious, um, about how your spending is overall. ’cause you mentioned that you, you wanna spend on fun things on discretionary items. You may have heard me mention on the podcast before, like the balanced money formula. It’s probably something you’re familiar with. Um, I’m curious how your overall budget conforms or doesn’t conform with the balanced money formula, because it can be so challenging to achieve that on a grad student stipend in a high cost of living area. So go ahead and have you made that comparison before?

Current Budgeting Process

Elle (22:00): Not explicitly. So I think the sort of, the way I approach things, especially in YNAB is the, I still stick with the whole pay yourself first thing. So, um, I, um, have a specific set amount that I put aside for the Roth IRA that’s just determined by the federal maximum, um, every month. And then, and I always, I save up throughout the year and then deposit it right at the beginning of the year. So I try to get it in there as, as soon as possible just so I can forget about it, um, and not have to like, keep such an eye on it or figure out when I want to, to invest it or not. And so, so that’s my strategy for that. And then I also have specific amounts for, um, a home down payment and a car down payment. Those aren’t necessarily massive funds, but they are goals of mine. And so I just make sure that every month I put in, um, that set amount. And um, and then after that I figure out, okay, like how, how am I doing, uh, and where are my finances? And then I go ahead and distribute throughout the rest of the categories, starting with, with needs. So of course, like rent, utilities, groceries, uh, gas, those are basically my big ones. Um, and I, I have a monthly goal of how much to budget, so not necessarily how much to spend, um, but how much do I wanna allocate to each category? Um, and usually I don’t really know how much I spend in a month because that varies all the time. And also if I go get car maintenance and it costs $1,500, that kind of offsets my monthly spending, but it has almost no impact on my monthly budgeting, um, because I save for that, I know I eventually need car maintenance. I know I’ve eventually want to buy an expensive plane ticket. And so, um, so my, I don’t focus too much on the spending. Um, I just make sure that I spend whatever I have available in my budget and if I don’t, I sort of just reallocate, um, when I’ve called it rolling with the punches. Um, and so, um, and then after I reach sort of that amount that I am comfortable with budgeting, if I have any leftover, then I just start putting it in next month’s categories. Um, and then if I get more than two months out ahead, um, then I just, everything else just goes straight to, um, my home down payment fund.

Emily (24:15): So I’m not a YNAB user, but I’m a longtime wine nab admirer. Does the software en enable you and, and sort of teach you how to do all the things you just mentioned? And I’m specifically wondering if the software makes any suggestions on where you house these different pools of money? Like does the software think it’s okay to all stay in your checking account? Does the software want you to have like a single separate savings account? Like sort of mechanically? How do you communicate between the software and like how you structure your accounts?

Elle (24:42): Uh, great question. Um, I love YNAB because it is so flexible, it doesn’t necessarily give information as to whether it’s something should be checking or savings, um, or a cd. Um, that’s sort of for you to completely decide. Um, and so, and then I just write it in the account name. So I have like an ally cd and that’s where I house my emergency fund because if I need, if in case of emergency, um, break glass, I don’t really care about the interest that I might lose, um, if it’s like fairly short term. Um, but they do separate things into budgeting versus tracking accounts. So basically anything that looks that is within budgeting is for spending. And if you move something from budgeting to a tracking account, it looks, it comes up in your spending reports. So I love this feature because it allows me to make saving look like spending. So if I pull up my spending reports, um, and I don’t filter out anything, it, I see exactly how much I put aside for my home down payment for my car down payment, um, and for retirement, and I can always filter those out to get my actual spending. Um, but it sort of removes it mentally and within the software of, okay, <laugh> no touching, this is for these goals only. Um, of course in reality, if I really needed those funds, I can, I can pull from them, but I also would have to go through the hassle of adding them back into my budget where it would look like income. And so, um, in terms of, of checking and savings, it doesn’t really matter. So I think you’ve talked about ally buckets before, um, and I love those. And so for me, my ally buckets are listed as different accounts within YNAB even though in reality they are one actual account with one account number one routing number. Um, and so there’s a huge amount of flexibility in that. Um, and YNAB has like several, like four main rules, um, that, uh, really just help you figure out how to approach things. Um, and yeah, it’s a great software. Highly recommend it

Emily (26:40): Since you’re highly recommending it. Um, I, if I remember correctly, it’s free for one year for students, but then after that you pay for it. Um, can you tell people where to find this, how to sign up <laugh>?

Elle (26:53): Absolutely. Um, and so this is actually one of the many resources in, uh, a folder that I share with, um, UCLA students and my friends. Um, but yes, you can actually get 13 months for free. So YNAB offers all users a 34 day trial. So what I recommend to, especially students, unless you’re about to graduate, is sign up for the 34 day trial, then you just email them saying, hi, like, I did a 34 day trial, um, I’m still really interested, but I am a student, um, and I would like to sign up or I would like to get the year, uh, free that you offer students. Um, and, and then they say, no problem. They just need a proof of enrollment or acceptance. So I started mine even the summer before I matriculated, but at that point I had already had on my paperwork from U-C-U-C-L-A, so they accept that as well. So if you’re like a tech or about to reenter school, you can still, um, get away with that as long as you can have proof of being a student or about to be a student.

Emily (27:50): Oh, perfect. Thank you so much for the detail on that. Sometimes people really need like a what exactly when exactly,

Commercial

Emily (27:58): Emily here for a brief interlude! I’m hard at work behind the scenes updating my suite of tax return preparation workshops for tax year 2024. These educational workshops explain how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. For the 2024 tax season starting in January 2025, I’m offering live and pre-recorded workshops for US citizen/resident graduate students and postdocs and non-resident graduate students and postdocs. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they host one or more of these workshops for you and your peers? I’d love to receive a warm introduction to a potential sponsor this fall so we can hit the ground running in January serving those early bird filers. You can find more information about hosting these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Now back to our interview.

Talking to Peers About Money

Emily (29:15): You obviously have, you know, a great deal of passion, a great deal of knowledge about the subject area. You’re working on your own finances. I understand that you then started talking to your peers and started having more sort of interpersonal interactions around money. So can you tell us how that got started and, and what you were talking about with your peers?

Elle (29:33): Absolutely. So I, as soon as I started educating myself, um, about finances and personal finances and sort of really building up that confidence, um, and then starting graduate school, um, I wouldn’t really shut up about money. And so I would have, um, I would host these discussions just among my cohort about, um, finances. And everyone was coming in from different places. You know, some people were coming in straight through undergrad, um, and then some were married, some had been already been in the workforce for the better part of a decade. Um, and so it was really nice just to be able to see, um, how’s everyone doing? Um, right, how are we figuring out stipend housing? Um, how are we saving for retirement? Um, is anyone doing any side hustles gig work? Um, TA ships and, and sort of just opening the floor for those conversations. Um, and so that was really useful. And we also have to take a presentation class, um, as a first year and, but we can pick anything. So, um, I talked about finances, um, and, uh, and I think that really made me realize how much I loved educating people and just having a discussion and being educated. Um, I don’t necessarily, it’s not a one-way conversation most of the time. I learn a lot from everyone I talk with. Um, and so before graduate school, I, I started realizing this about myself and I was familiar that, um, or I knew that UCLA has a financial wellness program. So actually before I started graduate school, um, I reached out to financial wellness and talked with the, uh, then and still current director, um, Sara Potter-Gittelson. And she just sort of reaffirmed what I was doing. She said, she told me my options in graduate school. Um, we just sort of talked about retirement investing and, and aspects of being a student at UCLA, um, and how it impacts my finances and my financial wellness.

Emily (31:22): What are the specific kinds of like issues or questions that came up during like these money talks, money groups, conversations with your peers? Um, because I understand eventually you started creating some resources. So there, there must have been, you know, certain topics that came up over and over against certain questions or certain issues.

Elle (31:38): A lot of it was based on your podcast. And so one massive thing was taxes. Like how do we pay quarterly taxes? Do we have to pay quarterly taxes? Um, what, what’s the step by step for doing that? How, how well do they need to be calculated, et cetera. So, um, taxes were a big thing. Uh, payment schedule thing, scheduling was another. Um, and so just because UCLA, they, they’ve restructured the whole system, they just restructured it again. But when I started, we got paid pre-work. So our, um, our September stipend would disperse mid August, um, which was really nice. But once you join a lab and start being employed by your PI’s department, then it goes post work and it becomes a W2 income. And so just making sure everyone was sort of understanding what, um, that situation is. Um, making sure that if sometimes issues would arise with, uh, with how we got paid. So with our stipend, which also is how we paid our housing. So, um, if we got, if we got underpaid with our stipend and then housing just took that back up, we now have no disposable income and have to use like something like credit cards or loans if we don’t, um, have an emergency fund. And so, so those are things that I think came up a lot. Um, some people were, uh, uh, thinking about tutoring. Um, so a lot of like gig work. How do we manage that? Um, is it possible to do, um, and, and sort of all the implications that come with that. Um, and yeah, yeah, I think that’s the, the majority of it. And then of course I was just saying like everyone should open a Roth IRA and I got multiple people in my cohort, uh, to open a Roth IRA, um, which I am very, very happy about <laugh>.

Emily (33:24): Uh, honestly, I mean this is something that I get to hear through my work from time to time, but I, if they haven’t already said it to you, like, that literally changes people’s lives like five years from now, 10 years from now. Like if they haven’t said it already, like they’re going to think back on that and like, really, really appreciate that they ran into you that they were, you know, had the good fortune of just being in your circles and, and hearing that. ’cause they probably wouldn’t have gotten it, you know, from many other sources at that time. So, um, that’s amazing. So tell us more about the resources. Were they about taxes? Were they about these crazy bureaucratic pay schedule things like, um, I love how specific this gets to be, right? UCLA certain fellowships your program, like, let’s talk about that.

Financial Resources for Grad Students

Elle (34:01): Um, the resources, it’s just a, it’s just a folder where I’ve put everything that I’ve created. And so, um, I think one of the, the main things that I have the pleasure and privilege of doing is the orientation finance presentation, um, just to the program, just to the first year cohort, um, sort of orienting them on, okay, this is how we get paid, um, taxes are a thing, but also, um, I have a couple slides on credit and credit cards just to make sure that everyone’s sort of on the same page and we can have a discussion about that. And if you’ve never really considered credit or if you’ve never checked your credit report, I am available to go through it with you just because I think that is so incredibly important. Um, and I also just give, I cannot give tax advice. I am by no means qualified to do that, but I do provide links. Like this is exactly where you go to get your 1098T this is exactly our site ID that you enter. Um, here are the links to the California Franchise Chat tax board that is create an account, make your tax payments. These are the dates. Um, so just sort of links to things that are kind of hard to find sometimes. Um, and that’s even when you know you need to find it. And, and I think the major case with graduate school is that, especially at a place as big as UCLA is that it’s really easy for communication to sort of, um, be looked over, right? Like we get so many emails, we’re just inundated with all this information, especially while starting a graduate program, um, that I sort of try to synthesize the main key points of information, um, and, and, uh, communicate it to the incoming cohort. I also go through pay schedules. So I say, okay, this is our stipend, but also if we’re getting paid in May for June work and then we get paid in August 1st for July work, that means you have no more income coming in between May 20th and August 1st. Um, so sign up for direct deposit to make sure that your check gets, or that your, uh, uh, income gets to you in time. Otherwise they will mail you a check and you won’t get it till August 5th. And if you rent is due August 1st, you need that money. Um, so sort of just going over things to, so that people can either approach me about it if they have any questions later. Um, right. Roth IRAs and investing are a multiple day long conversation. Um, but uh, just sort of putting things on people’s radar. Um, I tell them, uh, oh, just put it in your calendar right now, um, or set aside money or this is where to go get a loan if your, uh, payment doesn’t come through, um, et cetera. Just so they have like a go-to uh, person and also a go-to presentation that. And then I give them the link to the presentation, um, that is just full of notes and links <laugh>. So, um, those, that’s the main, uh, resource that I, uh, created. And then every year the, the presentation changes, just depending on how long the presentation is and, and what changes the university has undergone.

Emily (37:04): Your program is so lucky to have you honestly <laugh>, um, because a lot of the things you just listed, um, I actually have, I I even use the same like phrasing that you do, but I created a new workshop this year called Your Financial Orientation to Graduate School. Um, and so it’s got a lot of, it has credit, like I never talk about credit, but I decided to put it in there because I was like, this is the best time, like right at the start of graduate school to be, you know, reassessing, rethinking, um, starting to build credit if you haven’t before. Uh, but my main point though is that like, even when I’m brought in by a client to give this presentation for like a specific university, and I do look into some policies, like I try to figure out, um, about their tax policies and I try to figure out about their pay schedules and, and all that stuff, but it’s not honestly not the same as having the lived experience of and knowing all those details.

Emily (37:49): And so I honestly can’t get to that level right without working through across many different clients. So your program, UCLA more generally is very lucky to have you have put this together because these resources are needed and they are really hard to find. And until you have, um, walked through it, it’s, it’s hard to know everything that you need to know, right? Until you’ve been through it. So they’re lucky this is not happening at other places. Although by the end of this interview we’ll get to how can this be happening at more places. Um, but that is just awesome and amazing. So next phase of this is, you already mentioned that you would approach the financial wellness office, you know, sort of as a, as a, as a client. Um, but then at some point you started working with them. So can you tell us why you took that step?

Working For the Financial Wellness Office at UCLA

Elle (38:33): Definitely. So, um, at the end of my third, third year of graduate school, I had applied to an NRSA an F31 diversity. Um, and so it’s just a, a grant. Um, and I had completed my qualification exams, um, and I was sort of just looking for more whether that was, um, volunteering and I, and I signed up for some volunteer opportunities. Um, and then in the fall, um, one of the two financial graduate consult financial wellness graduate consultants, um, was no longer able to maintain the position. And so they put out like a mid-year, like hire, um, job posting. And so I said, great, I already know that this is a great office. I’ve already met with Sara, um, and I wanna be a part of this because I’m already doing so much of this work and I’m spending so much time on Reddit giving people financial advice, um, or to, uh, redirecting them to, to resources. And so, um, so I sort of wrote out a whole thing to my, to my PI saying, this is not a zero sum game. Like, this is how I will make sure that I maintain my hours in lab, because that still is my priority, but also this is a huge passion of mine and I feel like I can absolutely really help people to an even greater extent. Um, and so it was really nice just because that was all in like October of, of 2023, um, and I got my PI’s approval, which I, uh, needed, um, on a practical and moral level. Um, and, uh, so I applied the interview was, was great. And when I was, uh, being onboarded, um, things went really smoothly and they had me sort of just go through a lot of their, their training that they typically do with consultants over the summer. Um, but we were sort of working on a, on a condensed timeline. Um, but fortunately I had been able to educate myself a lot, um, in regards to personal finances and, uh, so a lot of the stuff I was just able to like reaffirm, um, and I think it was mostly like student loans that was, uh, I was mostly unfamiliar with just because I don’t have personal experience with those. Um, but then we just dove right in. Um, so after a few weeks of, of training, um, I was signing up for, for workshops and for appointments. And so those are the main aspects of my job is giving, uh, workshops and the slides were already created to undergraduate students and graduate students. Um, so clubs or organizations within UCLA could ask us to come and talk to them. So these were like resident assistants, um, who wanted us to talk about credit to their, uh, to their residents, um, in the residence halls or, uh, more specific like biology PhD students who wanted me to talk about, um, graduate school and investing. And so, um, they could request that we go and talk to the group, um, and, and just be, be available as a resource and really just tell them like, Hey, if you want to dive more into your personal situation, you can make an appointment with us. So that was the other aspect of my job was one-on-one coaching, um, just sort of helping people figure out what resources were available to them, um, just to, you know, and it kind of motivated them to put a little thing together, just say, this is where I am, this is where I wanna go, help me get there. Um, and so, um, that was a phenomenal opportunity and I got to speak to, um, not just PhD students in the Biosciences, but also PhD students, um, in, you know, the humanities and in education and also, uh, law students, medical students, um, master’s students who are about to enter, uh, some really high paying jobs, but they didn’t know what to look for in their offer letters or, um, how to talk about like, uh, restricted stock units. And so I, I really was able to get, um, a whole breadth of, of people to talk to and I was able to educate myself. So we would have the coaching appointment, um, and, and then I would follow up with, with actual links and sort of an outline of what we talked about, an action item list if we created one together. Um, and, and I think with almost every single followup email, um, I think I included one specific, uh, uh, uh, episode from your podcast, like Emily talks about it here. And so, um, especially for, for uh, students who were expecting parents or who had just had a baby, um, or living in family housing, I think those episodes were incredibly useful. Um, and so yeah, so that was sort of my experience with financial wellness.

Emily (43:13): So exciting. Again, what a credit you are to this office, <laugh>, um, coming in with a great deal of like knowledge and, and, um, experience talking with your peers and so forth.

Outtro

Emily (43:32): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

This Grad Student Puts Half Her Stipend Paycheck into High-Yield Savings

September 9, 2024 by Jill Hoffman

In this episode, Emily interviews Maggie Canady, a rising second-year grad student at the University of California at Irvine, on her budget breakdown. Maggie gives us a peek into her life via her top five expenses each month, which are rent, car insurance, groceries, utilities, and travel. Despite taking a pay cut when she started grad school, Maggie maintains close to a 50% savings rate on her stipend. Maggie and Emily end their conversation by discussing how Maggie can get started with passive investing.

Links mentioned in the Episode

  • PF for PhDs Quarterly Estimated Tax Workshop
  • Host a PF for PhDs Seminar at Your Institution
  • Emily’s E-mail Address
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub
  • Maggie Canady’s Website
  • Maggie Canady’s Twitter
This Grad Student Puts Half Her Stipend Paycheck into High-Yield Savings

Teaser

Maggie (00:00): I live in a, uh, beautiful, like two story craftsman house here in LA and I have three other roommates. One of them is my boyfriend. Our house is, uh, $4,500 like total, and there’s four roommates total, and we split it four ways evenly. So we each pay, um, 1100. My boyfriend and I share, um, the like master bedroom, the larger bedroom. Yeah, I’ve lived in this house for two years now. It’s been great. I love my place and that’s also why I’m kind of doing the commute from LA to Irvine because I really love the community I’ve built out here.

Introduction

Emily (00:44): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:13): This is Season 19, Episode 2, and today my guest is Maggie Canady, a rising second-year grad student at the University of California, Irvine, and we break down her budget. Maggie gives us a peek into her life via her top five expenses each month, which are rent, car insurance, groceries, utilities, and travel. Despite taking a pay cut when she started grad school, Maggie maintains close to a 50% savings rate on her stipend. Maggie and I end our conversation by discussing how Maggie can get started with passive investing.

Emily (01:47): Let’s talk fellowship taxes for a minute here. These action items are for you if you recently switched or will soon switch onto non-W-2 fellowship income as a grad student, postdoc, or postbac; you are a US citizen, resident, or resident for tax purposes; and you are not having income tax withheld from your stipend or salary. Action item #1: Fill out the Estimated Tax Worksheet on page 8 of IRS Form 1040-ES. This worksheet will estimate how much income tax you will owe in 2024 and tell you whether you are required to make manual tax payments on a quarterly basis. The next quarterly estimated tax due date is September 16, 2024. Action item #2: Whether you are required to make estimated tax payments or pay a lump sum at time tax, open a separate, named savings account for your future tax payments. Calculate the fraction of each paycheck that will ultimately go toward tax and set up an automated recurring transfer from your checking account to your tax savings account to prepare for that bill. This is what I call a system of self-withholding, and I suggest putting it in place starting with your very first fellowship paycheck so that you don’t get into a financial bind when the payment deadline arrives.

Emily (03:07): If you need some help with the Estimated Tax Worksheet or want to ask me a question, please consider joining my workshop, Quarterly Estimated Tax for Fellowship Recipients. It explains every line of the worksheet and answers the common questions that PhD trainees have about estimated tax. The workshop includes 1.75 hours of video content, a spreadsheet, and invitations to at least one live Q&A call each quarter this tax year. The next Q&A call is this coming Friday, September 13, 2024. If you want to purchase this workshop as an individual, go to PF fsor PhDs dot com slash Q E tax. You can find the show notes for this episode at PFforPhDs.com/s19e2/. Without further ado, here’s my interview with Maggie Canady.

Will You Please Introduce Yourself Further?

Emily (04:14): I am delighted to have joining me on the podcast today, Maggie Canady. She is a current graduate student at UC Irvine, and today we’re doing a budget breakdown and we haven’t done one of those in a really long time, so I’m very excited about it. So Maggie, would you please introduce yourself to the audience a little bit further?

Maggie (04:30): Yes. Hi, everyone and Hi, Dr. Emily Roberts. That’s so, I’m so happy to be here. Um, my name is Maggie Canady. I am a rising second year clinical psych PhD student at UC Irvine. I’m originally from Dallas, Texas. I received my bachelor’s degree from Harvard in 2020 where I majored in psychology and minored in dance. Um, really broadly, my research interests, interests include understanding the risk and resilience factors around trauma exposure, as well as, um, learning about culturally responsive trauma interventions.

Emily (05:07): Okay, fascinating. And actually now that I know that you had a little bit of a gap between finishing undergrad and starting graduate school, let us know what you were doing during that period.

Maggie (05:17): Yeah, so my first year after I graduated and obviously graduated during the pandemic, I received a traveling fellowship from Harvard and I was supposed to be in Southeast Asia for a year. Um, that obviously couldn’t happen, so they said, okay, we’ll still give you the money, um, but you have to choose and create a project that stays in one state. So for my first year I was interviewing and photographing mixed race individuals and doing a, um, kind of like ethnographic project, um, about mixed race identity. And then after that I worked full time as a research assistant at the University of Southern California.

Emily (05:54): Okay. And I’m trying to sort of place some numbers on those kinds of jobs, like did you take a pay decrease when you started graduate school from that assistantship position?

Maggie (06:04): Yes, I did. So, um, at USC I was making about, I think I was making about $48,000 a year, $49,000 a year, and then went to a graduate student, uh, stipend <laugh> after that.

Current Stipend, Additional Income, and Household Size

Emily (06:17): Yeah, go ahead. Tell us what is your stipend right now?

Maggie (06:20): So this past year as a first year, I made a total of $29,125. Um, and that was for nine months of working as a part-time teaching assistant, which is defined as about 20 hours of work a week. Um, I also received a diversity recruitment fellowship of about $5,000 when I first started, and then I also received a merit award to help with summer costs, um, which I received at the beginning of the summer for $3,000. Um, this upcoming year I’ll make about $35,000, and this is due to the 2022 strike, um, that happened all across UC campuses. So starting, um, this, this year, the lowest paid workers will make $34,000. And then based on your level of experience, you make a little bit more incrementally. So this upcoming year I’ll make 35,000, which is great.

Emily (07:14): And that’s again for teaching assistantship, is that right?

Maggie (07:16): Yes, uhhuh.

Emily (07:17): Wow, I’m so glad to hear that. I’m so glad to hear that was the, the effect and also that you had some bridge funding for last year to kind of bring you closer up to that a number that you know, we will get to in this upcoming year. That’s really, really good to hear. Do you have any sources of income outside of your stipend?

Maggie (07:35): I occasionally tutor and babysit, but it’s very like one off and kind of just if my schedule allows, I’m also a dancer and I’ll get paid for gigs occasionally, um, like music video gigs or performance gigs. Um, but that’s more for like my own interest and like personhood as opposed to depending on that as, as like a source of income.

Emily (07:59): I see. Okay. And is there anyone other than you in your household, any living beings?

Maggie (08:05): Living beings? Yes. So I live in a, uh, beautiful, like two story craftsman house here in LA and I have three other roommates. One of them is my boyfriend, um, my boyfriend and I split a lot of the house grocery expenses, but when I pay my taxes at the end of the year, it’s just me.

Emily (08:24): Gotcha. Um, so no dependents, but you do have people, your boyfriend and other roommates that you’re sharing expenses with.

Maggie (08:30): Exactly.

Current Financial Goals and 50% Savings Rate

Emily (08:32): Alright. Are you currently working towards any financial goals?

Maggie (08:36): So I would eventually love to buy a house that feels a little bit, um, kind of like of a, a dream in the far distance right now, just with my stipend and how crazy California is with, um, like yeah. Houses. Um, but it’s definitely in the back of my mind, mind and when I put money into savings, that’s kind of what I’m thinking. I also love to travel, so I feel like I’m always kind of planning a trip or thinking about a trip and having money tucked away for a trip. I feel like when I think about my budget budgeting categories, that’s definitely one of them that I’m always, um, saving money for.

Emily (09:15): Okay. So you are, you do have some kind of savings rate for this like eventual house goal, um, and that could be several years away. Are you keeping that money in, in cash right now in like a savings account or are you investing it in some way?

Maggie (09:29): So I have, uh, Robin Hood and I am investing it, but I also have a high yield savings account. Um, and so I, this is like kind of one of my like tips or things that I learned this year, but, um, my 50% of my direct deposit goes directly to a high yield savings account and that, uh, a, that high-yield savings account is not connected to any of my credit cards or any of the ways that I spend money. So I feel like it’s just like this pot of money that, um, is really growing, which is really awesome. Um, and then I will also invest, um, invest like kind of every other month or so depending on like my schedule.

Emily (10:06): Wow, okay. A 50% savings rate. So once the money goes into the high yield savings account, does it come back out for spending in the present, like for travel, for example, like you just mentioned?

Maggie (10:16): I try not to, I try to really use like my 50% and, and go from there, but I definitely can pull from it and like have in the past, but I really try not to, I try to not touch it.

Emily (10:28): Okay. Wow. So you’re, you’re close to a 50% savings rate then. Yeah. This is something I’ve never heard of from <laugh>, a graduate students, so, okay. Now I’m very interested to hear how you’re managing your expenses to make that happen on the stipend numbers, um, that you mentioned. So that’s incredible. Let’s start talking about that. So we’re gonna go through your top five largest monthly expenses. And tell me first, are we hearing about these top five expenses based on like your average spending over the last year or like what you budget or like just last month or how did you come to this list?

Budget Breakdown: Housing and Car Insurance

Maggie (10:58): Yeah, so a couple of them are set in stone. Like my rent for instance is set in stone, that’s every month. My car insurance, I pay, um, every six months, so I just averaged it out for each month, but I pay it kind of in bulk. Um, and then my groceries, utilities, and, um, like flights that I pay for, um, that’s kind of an average. Um, so yeah, my rent is my biggest expense. Of course, it’s $1,100 a month. Um, so I’m, I immediately automatically budgeting for that.

Emily (11:30): Okay. So $1,100 per month for rent. Are you sharing? Okay. Just tell me more about the house. Like how many bedrooms are there? Yeah, how many people are there? Are you sharing a bedroom with your boyfriend and then you’re splitting it? Like, just tell me how you came to this number and what the house looks like.

Maggie (11:43): Yes, so fair. So, um, our house is, uh, $4,500, um, like total and there’s four roommates total and we split it four ways evenly. So we each pay, um, 1100. Well, we used to pay, we used to pay 1125 each. Um, but we have like a apartment. It’s kind of a long story, but now we each pay 1100, um, and we split it evenly. My boyfriend and I share, um, the like master bedroom, the larger bedroom. Um, and yeah, I’ve lived, uh, in this house for two years now. Um, we’ve lived together for coming up on four years. It’s about like three and a half right now. Um, and we’ve always split the rent evenly. Um, yeah, it’s been great. I love my place and that’s also why I’m kind of doing the commute from LA to Irvine because I really love the community I’ve built out here. Um, so yeah, 1100 and that’s what everyone in the house pays.

Emily (12:40): Gotcha, okay. Yes. ’cause I didn’t realize that you weren’t close to the university. So how long was your commute?

Maggie (12:46): My commute is anywhere <laugh> from 40 minutes to an hour and a half. Um, but I usually take the train and the train is like a clean an hour, 20 door to door, and I’m doing work on the train, et cetera. But if I drive, it varies depending on the traffic.

Emily (13:05): And do you commute every day? Every weekday?

Maggie (13:08): I, so during the school year, I commuted every day for the first two quarters, so about two thirds of the year. And then the last quarter I commuted for, I think it was, I think it was three days a week. Um, it really just depends on the quarter. It, and like these first two years are the most class intensive obviously. Um, so I will be commuting every day. And then the expectation is that as classes lessen more of my research becomes kind of independent. I won’t have to commute as much. And so it was like this real back and forth that I went of like, okay, do I move down to Irvine and like, do I kind of lose this community that I have but I’m closer to school or do I invest in kind of like my personal happiness and then have this balance? Um, and obviously I cho chose to stay in Los Angeles, um, and it’s, it’s been great. Um, occasionally I’ll house sit down in Irvine, which I guess is also, I don’t make money from it, but it is like kind of a relief from the commute. So it is an investment in some sorts but I’ll house, sit, dog sit, uh, closer, closer to campus.

Emily (14:12): I’m curious, um, how you and your roommates found this house,

Maggie (14:17): Craigslist, <laugh>? Yeah, so we were living in, um, echo Park, um, which is different neighborhood in la and we were looking for a new place that was slightly bigger. So we looked for about a year, really, I think eight years, eight months to a year. Um, and then my boyfriend found this place on Craigslist before it was on Zillow in the other, um, rental websites. So we were the first to apply. Um, we had three interviews with the landlords because they wanted to, um, rent to a family. Um, yeah, so they wanted to rent to a family. Um, but we convinced them that, you know, we all have incomes and steady incomes and that we’re reliable. So it’s been great. They’ve been great landlords.

Emily (15:05): Oh, that’s really interesting. I’m glad I asked about that. <laugh>. Um, yeah, ’cause I don’t talk with too many graduate students who live in houses with multiple roommates, but I think it can be a very cost effective, um, situation. So anyway, I’m, I’m just glad to hear all those details about yours.

Maggie (15:19): Oh my gosh. Yeah. I feel like it’s just like such a great perk of Los Angeles, that there’s so many beautiful, like artisanal houses and we have a front in the backyard and laundry and, you know, AC and uh, a fireplace. Like there’s so many, like, I don’t know, homey perks of it. And it is cost effective, which is sick.

Emily (15:37): All right. Number two, expense

Maggie (15:40): Car insurance. Um, so I pay $300 a month for a car insurance, which is definitely on the higher end. Um, I recently got an electric vehicle and it was a more expensive premium because of that. Um, yeah, my car insurance expires in September, so I’m definitely gonna be shopping around for a cheaper premium. So if you have any recommendations, I’ll definitely take them. Um, yeah, so it’s 300 a month.

Emily (16:10): I actually don’t have recommendations because I just found out that our car insurance company is pulling out of California.

Maggie (16:16): Wait, mine too.

Emily (16:16): I was using E-surance.

Maggie (16:18): Yes, same.

Emily (16:19): Okay. So we will both be shopping around.

Maggie (16:21): Okay.

Emily (16:21): For insurance on our electric vehicles. ’cause I also recently got an electric vehicle. Um, tell me, yeah, you too. How did you acquire this car? Because I’m not seeing a car payment on your list of expenses.

Maggie (16:33): Yeah, so I had a little electric car, um, before this one. It was like a little 2015 Nissan. Um, and I bought it on Facebook marketplace. Um, and it just didn’t go the distance. Like I had to charge it constantly, um, and all of that. So I was selling this car, I I put it on Facebook marketplace and then after about three to four months on Facebook marketplace, someone, um, purchased it. So I had, um, like that immediate check. Um, and I had, I’d say about like, so the car was 30, $37,000. I had this like about $10,000, $11,000 check from the car I sold. So then it was $26,000. I had about half of that money that I could, you know, I had allotted to like buy a new car. And then my parents helped me with the last like $12,000. So that’s how I bought the car full out. And then when I got my tax return in April, I got $7,500 back from that that I was able to give back to my parents. Um, so, so I’m, I know that math is kind of hard to like, speak out loud without seeing it. Uh, my parents probably gave about $5,000 to help me just like pay it out in full. And I had the rest in savings, the rest with selling my last car and then the, uh, tax stipend.

Emily (18:02): Yeah. Amazing. Um, I guess you probably had a pretty high savings rate during your last position as well, right? Making more money living in this same place. It sounds like same people.

Maggie (18:13): Mm-Hmm. <affirmative>.

Emily (18:13): So similar rent.

Maggie (18:15): Mm-Hmm. <affirmative>.

Emily (18:15): Um, yeah, so I, I see how that savings account was, was healthy enough to help you with that purchase, so that’s amazing not to have a car payment during graduate school, but, uh, yeah, hopefully we can get that insurance, uh, monthly cost down a little bit. I mean, you and I were probably both with insurance because it was a pretty good bargain <laugh> the last time we looked around, but hopefully there will be another bargain that we can both find. Um,

Maggie (18:36): I hope so. Yeah. <laugh>.

Emily (18:37): Yeah. Anything else you wanna say about that? Car insurance?

Maggie (18:40): Yeah, I guess this is more of like, um, kind of like a bigger thing, but, um, like my, my parents are like huge savers and I feel like I have like a very kind of like conservative background when it comes to money of like, okay, I’m going to like save my money and like, really just like, be aware of like, what’s coming in. And so I feel like I, I’m like always like, like nesting acorns or something, <laugh> with my money, which has been, has really paid off with like these bigger, um, payments. Um, so yeah, I, I think that that’s where it’s coming from of like, ’cause I know it’s like kind of insane to have like 50% of my income going to payments. Uh, sorry, 50% of my like, um, income’s going to savings. Um, but yeah, so I think that that’s where that’s coming from of this like very like, almost like must conserve my resources. Um, yeah.

Emily (19:35): Okay. Well let’s put a pin in that. We’ll come back to it at the end of the interview.

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Emily (19:41): Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, budgeting, investing, and goal-setting, each tailored specifically for graduate students and postdocs? I offer workshops on these topics and more in a variety of formats, and I’m now booking for the 2024-2025 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutes enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

Budget Breakdown: Groceries, Utilities, and Travel

Emily (20:56): Let’s continue with our list. What’s your third largest monthly expense?

Maggie (21:02): Um, my third largest is groceries. And so I split this with my boyfriend. Um, but even after splitting, it’s anywhere between like one 50 to two 50 a month. Um, I love to cook and we’re always kind of cooking meals, so that’s part of it and that’s more cost effective. But groceries are expensive. Like I can see the difference even from being here since 2020. Like it’s just, it’s just crazy.

Emily (21:30): Yeah. But that number actually seems pretty low to me. I mean, I also <laugh> grocery shopping, cook for a family of four, but it’s two little kids, so it’s not that much more than, you know, just two adults and, uh, we spend quite a bit more than that. So you must be doing something right. Tell us about a few of your go-to meals.

Maggie (21:47): So we have, um, a Costco membership. And so like, we’ll get like a rotisserie chicken, like $5 rotisserie chicken from Costco.

Emily (21:54): The loss leader.

Maggie (21:56): Um, Yes, love, um, big fried rice, stir fry kind of people. I just made like a shrimp fried rice, so frozen shrimp and then whatever veggies I have. And, um, we buy like a 20 pound thing of rice, which is awesome. Um, soups, I, not really right now ’cause it’s summer, but I’m a big soup girl <laugh>, and that’ll last, like, that’ll be made in bulk on like a Sunday, and then I’ll use that as like meal prep for the week. Um, and then I eat like, pretty light breakfasts, like I’ll buy like a pack of like a big thing of yogurt and like granola. Um, yeah. Yeah.

Emily (22:36): So eating out does not appear in your top five expenses, but let us know where that falls in the list. Like, are you eating out, how often do you do? So,

Maggie (22:45): Uh, it really depends on my social battery <laugh>, which I feel is like this pendulum swing. And, um, like, so I was in Europe, um, this, um, at the first two weeks of this month, and like my shopping was like through the roof, like my eating out obviously because, you know, we were on vacation and so like when I came back I like shut my doors, like grabbed my groceries and like, have been cooking, like eating in just because like I can’t, like eat out for the whole month. Um, and then when I’m back in LA like it’ll kind of depend on like, oh, okay. I’ll feel like, oh, I have a little bit more free time in my schedule, so I’ll see more of my friends and then we’ll like go like, grab a drink or we’ll go out to eat. Um, and then I’ll like feel like, oh no, I’m way too stressed. I have to like, just can’t see anyone have to stay in and then I’ll just do that. Um, yeah, so it really kind of varies. Um, but when I, I do go out, I try to just like go for coffee or like, um, frozen yogurt or something, like, something that it’s like still I’m, I’m still paying for something, but I’m not paying like 30 bucks for a meal, you know?

Emily (23:56): Mm-Hmm. <affirmative> especially if your purpose is to see people, then it doesn’t really matter how much money you’re spending on the food or whatever, it’s more having this setting to to be together with other people.

Maggie (24:06): Yes, exactly.

Emily (24:07): And how about, um, takeout or, you know, DoorDash, GrubHub? Do you do any of that?

Maggie (24:13): So, no, my mom owns a restaurant. She’s had a restaurant for like 30 years and I worked for her growing up. Um, and then even throughout college whenever I was back. Um, and GrubHub and DoorDash just like are so awful to small business owners. Um, and so kind of seeing like behind the scenes, I was just like, I, I cannot endorse this. So it’s like more of a personal value. Um, but I, I don’t, I don’t, DoorDash, yes, <laugh>. Um, I’d say utilities, they average about $75 a month. Um, it’s $25 for, um, wifi and then like somewhere between like, like 10 to $20 for gas. And then depending on the month, the rest of it is, um, uh, electricity. So anywhere, honestly, probably like closer to 75 to a hundred dollars a month. Like it really just depend, like we’ve had the ac blasting this, you know, this past month, so it’s going, it’s gonna be a lot higher than usual, but then kind of in the fall and spring it’s, it’s very, very little, very minimal.

Emily (25:26): Yeah. And this is one of those areas where having the multiple roommates really, really helps because yes, your utilities go up a little bit more with the higher square footage, but things like internet, like that’s just gonna scale down. Right, exactly.

Maggie (25:38): Yeah. Yeah, yeah. That’s exactly right.

Emily (25:40): Sounds great. And your last expense? The fifth one,

Maggie (25:43): My last one, it’s, uh, most recently been flights. Um, I’ve been trying to buy like my holiday flights early and then, like I said, I was in Europe, so I bought those flights. Um, the most recent flight I bought was for my parents actually to come visit me. Uh, my dad had a coupon and then for my mom’s, uh, ticket was $400 round trip. And so like kind of going back to that, like travel as like a bucket for my budgeting, like it’s, it’s one of those things that I’m like, I will be traveling home for the holidays or like, I want my family to come see me or I wanna go on vacation. So it’s one of those things that I just, I’m like, okay, this is where money is gonna go, you know?

Emily (26:24): Yeah. And with a 50% savings rate, nobody can argue with spending a little bit on travel as well. Um, tell us about your, um, strategies around buying flights, if there are any. Like, are you loyal to any airlines? Do you use any certain credit cards? Like how do you work this?

Travel Credit Cards

Maggie (26:40): So I have a Southwest credit card, which honestly has not been as great as I expected. Um, but I’m from Dallas and uh, Southwest, um, has like love, uh, love Field Airport, which is 10 minutes from my house. So it’s, um, it’s nice to have the Southwest credit card because I am building points on that and I try to use those when I can, but the flights are usually quite expensive still. I also have a, um, I have to look at the exact one, but it’s a Chase, like traveling credit card and that’s been great.

Emily (27:14): The Sapphire Preferred, I’m assuming?

Maggie (27:16): Yes.

Emily (27:16): Okay.

Maggie (27:16): Yes, the Sapphire Preferred. I love that card. I try to do like all of my expenses on that card and that card actually paid for my flight to Europe this past time, like after, like, just spending for the entire year. And I love that. So those are my two. I also have a Amex Blue Preferred, which gives 6% back on groceries. Um, and so I’ll just give that back as like a, um, kind of like cash, like return. Um, so yeah, those are my, my top three.

Emily (27:51): Uh, what airline did you use for your trip to Europe?

Maggie (27:53): Oh, great question. I used, um, I think it was, I’m, I will probably get the name wrong. France Air or like Air France. Mm-Hmm. <affirmative>. Okay. Yeah. Um, because they’re a partner with Chase and so I was able to transfer my points from Chase to Air France.

Emily (28:10): Yeah, I’m, I’m quite familiar with the Chase system because I also was trying to be loyal to Southwest for a little while. Um, it’s a little bit easier actually with the family because we can do the Southwest Companion Pass, which is a really great like, value. Are you familiar with it?

Maggie (28:26): Yes. That’s amazing.

Emily (28:27): Yeah, so like you can always take one for the listeners once you earn the companion pass. You can always take one when, when the primary person books a flight, they can always take a companion with them on any flight, unlike some other airlines where it’s like once per year. Nope, it’s every flight as long as there’s a seat available, um, for free, which is amazing. Uh, but anyway, the Chase points Trav, uh, transfer to Southwest as you probably know. So I was working that system for a little while. And smart. Yeah. Seeing where else the Chase points could go. ’cause we also have the, um, the Sapphire preferred card, but I haven’t gotten into any of the other systems yet. Like I’m not an Amex, you know, so it’s something to explore and see what those partners are. ’cause yeah, I mean, using credit card rewards for travel seems to be the kind of the biggest bang for your buck.

Maggie (29:07): Yes, I totally agree. And I feel like I’m like so sold on Chase as like my credit card because of how many flights and like how many points I get that I can then transfer. I’ve heard that for American Express, like it’ll start paying off once you have like the platinum or whatever, like the highest kind of credit cards are, and I’m just not, I’m just not ready to spend like $600 a year on a credit card. So I haven’t yet, but <laugh> maybe one day.

Emily (29:34): Um, yeah. Well this is really exciting. So you’re spending quite a bit on travel, but you’re also trying to optimize as what, as much as you can with points and so forth. Mm-Hmm. <affirmative>. Um, and it seems like you’re sort of using that, uh, save the high yield savings account that you split your paycheck into as, um, what I would call a, a targeted savings account, at least to a degree. Mm-Hmm. <affirmative> because you can pull from that account when you have these like large flights or whatever coming up, right?

Maggie (29:57): Exactly. Yeah, you’ve got it exactly on the head.

Saving Vs. Investing

Emily (30:01): Okay. Um, so the question I kind of wanted to come back to is why are you saving and not investing given that you have quite a high savings rate and you could be doing some of both?

Maggie (30:12): Yeah, that’s a great question. I honestly feel like it’s from a, like lack of knowledge around investing. Like I know that investing kind of consistently and monthly and like diversifying your assets is the way to go, but I feel like there’s still a bit of fear for me there. And kind of going back to this idea of like where my parents came from of like saving, like my, my mom and I just got into investing in 2020, so it’s kind of this new endeavor for both of us and she’s really gotten into investing, um, in the past few years. Um, and for me, like, it’s just, I haven’t put that like energy into like really knowing what I’m doing. Um, but I feel like that’s potentially like a financial goal I can work on, um, alongside like saving for a house, um, just because there is like so many benefits, um, to it. So if you have any advice for me, I would definitely take it.

Emily (31:14): Yeah, I mean, I, I said a second ago that you weren’t investing, but that’s not quite true, right? Because you are using Robinhood Mm-Hmm. <affirmative> you said sort of inconsistently. Mm-Hmm. <affirmative>. What kind of investing are you doing with Robinhood? Like what are you investing in?

Maggie (31:26): Um, like I’ll invest, you know, I have to honestly go back and like, look, it’s kind of all over the map. Like, like I, it would be like Apple <laugh>,

Emily (31:37): But single stocks is what we’re talking about.

Maggie (31:39): Yes. Yeah, Exactly.

Emily (31:39): Not Like, um, ETFs or something

Maggie (31:41): Like that. No, not ETFs. Yeah. Okay. And see, like I, I feel like I can feel myself like not even really know, like exactly like feel, not feeling super confident in like having a conversation about it because I, it’s just, it’s like a place where there’s a big gap in my financial knowledge. Um, so yeah, I think that that’s definitely like kind of a next step for me. Um, yeah.

Emily (32:04): Yeah. Well I have, I have content recommendations for you, please. Are you more of a reader or more of a podcast listener? Um,

Maggie (32:13): Podcasts, I think for, especially with my drives,

Emily (32:16): So there’s a very, uh, well known person in the, uh, the fire space, the financial independence and early retirement space. His name is JL Collins. Mm-Hmm. <affirmative>. And he has a book, if you are a reader, I would recommend his book. Okay. But since you’re a listener, I would say find his interviews, which he goes on a lot of different podcasts, but he’s been on, for example, the Choose Fi podcast several times. So I, I would go find like the earliest one or two interviews where they’re probably going over the basics of, uh, his book is titled The Simple Path to Wealth. So it’s all about this strategy, which is passive investing, which is investing in, um, index funds and ETFs that are based on indices. And so it’s a very like set it and forget it kind of investing strategy, which I really like. And it’s the kind of strategy that I teach also because it’s the most effective Mm-Hmm. <affirmative>

Emily (33:02): In terms of the money that you’ll have at the end of the decades, like in your pocket because you’re paying very little in fees and you’re not letting your, um, psychology and your human emotions, you know, get in the, in the way, in the way of like your investing strategy. So I would go find some interviews with him, definitely on Choose fi. You can probably just search like your podcast player for Col j Collins and hopefully some interviews will come up. But choose FI for sure, has him. Um, I might also suggest Afford Anything that’s another podcast name. I bet he’s been on that podcast too, although I haven’t listened through all the archives extensively. So yeah, just find, find a few interviews with him and see if you sort of like his argument, his philosophy.

Maggie (33:42): This is so helpful. Thank you so much. And I will definitely check out The Simple Path to Wealth. Um, I have like two free audio book credits for some reason right now, so that’ll be one of ’em. <laugh>.

Emily (33:54): Yeah, I don’t know if it’s an audio book. I certainly heard Hope it is Okay, because it is very popular, so hopefully they have turned it into an audio book. But I’m curious, um, whether he the author is the one who’s reading it or whether they hired someone else. He has a very like deep like gravelly like old man voice, which actually think would be great for an audio book. So, um, yeah, I’m curious if if he’s the one who’s who, uh, read it or not. Um, but yeah, start, start there, I would say.

Maggie (34:19): Okay. I definitely will. And if, like, I’ll definitely take a book recommendation too, especially with the summer. I have like ex like exponentially more free time. Mm-Hmm. So

Emily (34:27): The one After The Simple Path to Wealth that’s also great on investing is Ramit Sethi’s book, I Will Teach You To Be Rich. Mm-Hmm. And that’s on more broad personal finance topics, but he’s, he does have a couple chapters devoted to investing, passive investing. So that would be another good one to read.

Maggie (34:42): Thank you. That’s so helpful.

Emily (34:44): Oh, sure. I mean, you are already, honestly most of the way to winning the game by just having like a very high savings rate on obviously a limited income and really dialing in your expenses. Obviously you’ve thought a lot about what you value, um, in the travel and so forth. So like you’re already doing a ton of stuff really well, and if you decide you want to, you know, devote some of that very high savings rate toward investing, you’ll really be able to grow your money, um, over the next few years. And even, um, this is not like advice, but depending on how far out that potential house purchase is, um, you know, a savings account might not be the most appropriate place for it. Some conservative invest investments might be an appropriate place, but it kinda depends on what your timeline is on, on that front. So it’s just something to think about. Like you could do a split, right? You can do a certain percentage into just straight savings, a certain percentage into investing. Maybe some of it’s for long term, some is for medium term. Mm-Hmm. <affirmative>, um, again with high savings rate you kind of can’t go wrong. Um, yeah. With choosing where you wanna put that money.

Maggie (35:42): Yeah, that’s a great point. Yeah. Okay. This is a great summer project. I am excited to Yeah. Kinda go down this route.

Emily (35:50): Yeah. Um, I hope the listeners enjoyed this because this is a really, you know, unique example of like living in a very high cost of living area. But as we were talking about kind of setting those highest, you know, the, the expenses that are, have the potential be the biggest in the budget, the rent, the transportation, getting those set at the, the best level that you can and sort of letting everything else fall where it may, and, and doing that, um, strategy of paying yourself first by splitting your paycheck. These are really great examples. So I wanna say to the listeners, if anybody else wants to come on and do a budget breakdown, I love doing these kinds of episodes. I wanna hear from people all over the country with all different kinds of stipends, and it’ll be every one single one is gonna be a very different story. Right.

Best Financial Advice for Another Early-Career PhD

Emily (36:29): Um, so Maggie, thank you so much for coming on the podcast. I’d love to ask you the final question that I end all my interviews with, which is, what is your best financial advice for another early career PhD? And it could be something that we’ve touched on already in the interview, or it could be something completely new.

Maggie (36:44): Ooh, okay. Yes. Well, a couple things We’ve already touched on. High-yield savings account. Definitely recommend that. Um, I use SoFi because I had a great offer. Um, so kind of look at whatever has, you know, a great, uh, high interest rate. Um, like I said, the, you know, trying to like immediately put my direct deposit into savings and into that high yield savings account, so I don’t even have to think about it, um, was like kind of a great, like passive like, or, you know, intentional act that now has become like routine. So that was really helpful. Um, I listened to, um, financial Feminists by Tori, uh, Dunlap this, uh, at the beginning of this year. And I feel like it was a really like great, um, like supportive start into thinking about finances, um, because she really breaks things down and you don’t feel like overwhelmed or Yeah, she, it just feels like it comes from like a context in a place in a positionality that I also, uh, subscribe to.

Emily (37:48): And that was the audiobook version, right? Yes. She has a podcast as well. I don’t think it’s called Financial Feminist though.

Maggie (37:53): No, it was the audiobook. Yes. Great distinction. Um, and that’s where I learned about, um, kind of like values and having like when you’re thinking about budgeting, kind of breaking up the budgeting into buckets and like three buckets that you care about. Um, and that was a really helpful framework. And then this is kind of like a small piece of advice. Sorry, I feel like I, I just have my list, so I was like, oh, lemme just say it. Go for it. Um, but institutions have money and like applying for stuff, my first year was really fruitful. Like I was a mentor and received a stipend, you know, like I was a volunteer for a conference and I received a stipend. Um, yeah, just like reading the emails weekly, weekly emails you might get from your institution and just like checking those for additional pockets of money.

Emily (38:42): Great. Great advice. Um, you won’t be needing it as much, right? With a massive pay increase that you’re gonna enjoy this year, but should still be available to you should you want to access those opportunities and amazing. Well, Maggie, thank you so much again for volunteering to come on the podcast and sharing your life with us for the last half hour.

Maggie (38:59): Of course. And thank you so much for having this podcast. It’s so helpful for people like me. So yeah, I really appreciate you.

Emily (39:06): You’re absolutely welcome.

Outtro

Emily (39:16): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

What You Should Know about Money Early in Your PhD Career

July 29, 2024 by Jill Hoffman

In this episode, Emily shares the microinterviews she recorded at two higher education conferences this summer. The conference attendees, virtually all of whom work at universities and most of whom have PhDs themselves, responded to this prompt: “What do you wish you had known about money earlier in your career?” Listen through the episode for insights into the financial steps for which, should you take them now, your future self will thank you.

Links mentioned in the Episode

  • Host a PF for PhDs Seminar at Your Institution 
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  • PF for PhDs Podcast Hub
What You Should Know about Money Early in Your PhD Career

Teaser

Lyndsi B (00:00): You don’t have to make one decision and have it be the right decision for the rest of your life. Like you can make changes at any point along the way and you are allowed to fail and like you can recover from failure.

Introduction

Emily (00:20): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (00:50): This is Season 18, Episode 5, and today I’m sharing the microinterviews I recorded at two higher education conferences this summer. The conference attendees, virtually all of whom work at universities and most of whom have PhDs themselves, responded to this prompt: “What do you wish you had known about money earlier in your career?” Listen through the episode for insights into the financial steps for which, should you take them now, your future self will thank you.

Emily (01:20): The two conferences I attended were the Graduate Career Consortium Annual Meeting or GCC and the Higher Education Financial Wellness Alliance Summit or HEFWA. GCC is primarily attended by university staff members working with PhD students and postdocs in career and professional development. HEFWA is attended by university staff members working in financial wellness across undergraduate and graduate populations. These two conferences were excellent networking opportunities for me on top of the built-in professional development. However, there are plenty of universities who were not represented at these conferences. Would you please consider recommending my financial education seminars and workshops at your university? My most popularly requested events for the upcoming academic year are Your Financial Orientation to Graduate School, How to Prevent a Large, Unexpected Tax Bill on Your Fellowship Income, Expert-Level Budgeting for Graduate Students and Postdocs, and Demystifying Taxes for Graduate Students. Please direct an appropriate potential host within your graduate school, postdoc office, grad student association, etc. to PFforPhDs.com/financial-education/ where they can learn more. Thank you in advance! You can find the show notes for this episode at PFforPhDs.com/s18e5/. Without further ado, here are the microinterviews recorded at GCC and HEFWA.

What Do You Wish You Had Known About Money Earlier In Your Career?

Amy (03:03): Hi, I am Amy from Princeton and when I was in graduate school I wish I had learned more about investing and saving for retirement and sort of how all that works early in your career to benefit you later.

Sharon F (03:18): Hi, my name is Sharon Fleshman. I’m a senior associate director at Career Services at University of Pennsylvania. I think coming out of undergrad I basically took the salary, I was pitched <laugh> and that was it. So I wish I knew the implications of a starting salary across the years.

Evan W (03:34): My name is Evan Walsh. I’m a career advisor at Harvard Medical School. I really wish I knew that it only takes a little bit each week to put towards something. So every week I put money away into a travel fund. Each week I put money away towards retirement. Each money I put a little bit away towards just miscellaneous fees that I may incur and it’s all within my master budget that I now wish I would’ve known earlier that I like to do and that’s really helped me sort of save for trips and things for my future, things that I wanna prioritize, how I utilize my money. So I wish I knew earlier that your money is yours to spend the way that you want to.

Laura S (04:11): Hi, my name is Laura Stark and I work for Harvard University. I got my PhD many, many years ago and I wish that I had known that I should start saving for retirement even as a graduate student.

Briana M (04:26): I’m Briana Mohan, I am a program manager at MD Anderson Cancer Center. A lot of times we feel, I have felt that money is tied to worth and my value as a professional and there actually is no correlation at all so far as I can see. So I think that decoupling those two things so that then it’s a little bit more feasible to work with money and money questions and speak about them and grapple with them and not have it so tied to how much I’m valued or how much I am worth, I wish I would’ve known that earlier.

Alla M (05:03): So my name is Alla Mirzoyan and I’m from Florida International University and I wish I had known about credit in the United States and not to sign up for credit cards without really understanding the implications. I was an international student so I knew very little about how credit works, but I know better now.

Gina B (05:25): I’m Gina Bellavia from the University at Buffalo and what I wish I’d known about money earlier in my career is, well, particularly because I got a PhD but then I went a non-traditional route. I didn’t go into academia, so I guess it would’ve been good for me to know going that route that I might have to kind of go down in pay to, to then start a new trajectory and then work my way up again, which I guess it makes sense if you think about it, but I didn’t really think about it that way. So it’s taken a little longer to to build up I think by taking that less traditional route, but, but I’ve also had greater career satisfaction.

Manali G (06:03): I’m Manali Ghosh. I’m a senior academic recruiter at St. Jude Children’s Research Hospital and I wish I had known sooner to invest in stocks like s and p 500 earlier in my career.

Ivonne V P (06:16): My name is Ivonne Vidal Pizarro. I’m at the University of Tennessee in Knoxville. I’m the research consultant in the graduate school supporting postdocs and I wish that I’d known that if I could save more money when I was younger, I’d have more in my 401k now.

David C-B (06:30): Hi, David Cota-Buckhout. I am the assistant director of Alumni Engagement and Career Support at the University of Rochester’s Graduate Education Postdoctoral affairs office. I wish I knew that I should have paid off my private student loans earlier so that way the compounded interest wouldn’t have backed me with so much debt. And just recently I was able to get rid of those student loans and then free up over $13,000 of interest that I can now put towards other things.

Katie H (07:07): I’m Katie Homar from University of Pittsburgh and what I wish I knew about money earlier in my career was the importance of researching salaries and negotiation.

Alex Y (07:18): Hi, this is Alex Yen, a second year postdoc at Boston University’s professional development and postdoctoral affairs office. The thing I wish I had known about money earlier in my career, and I think especially in graduate school, is that open a high yield savings account as soon as you can and put just a little bit of money, even if it’s 20 bucks, 30 bucks a month. Just having that and knowing that it can, it’s a long term sort of savings space that will continue to accrue interest, will make you feel less anxious and look forward to a time when you can save more

Dan O-B (07:56): Dan Olson-Bang, Syracuse University. If I had known this, I would’ve been grateful. Uh, don’t take out loans during your PhD.

Ryan U (08:05): My name is Ryan Udan. I’m director of the office for postdocs at UTM, the Anderson Cancer Center. As a long time trainee that did not make a lot of money, who navigated into a career path that I was ultimately happy in, it did take too long of a time to get to that career path that for me, I wish I knew about other career options that I would’ve been happy with earlier that paid better and earlier. So now I have a better understanding of all the other diverse career options that are available to people, not just for people with their PhDs, but for other types of professional degree programs that would’ve gotten me to a space where I was happy with my job and that I was making a lot of money more quickly. For example, I didn’t know about optometry field, I didn’t know about radiological careers and you know, the flexibility you have for, uh, uh, obtaining jobs more easily and, and many different places from small towns to big cities. And again, immediately after you get sometimes an associate’s degree, that stuff for me was a black box when I was training.

Giovanna G-M (09:14): Hi, my name is Giovanna Guerrero-Medina and I’m director of Diversity programs at the Yale School of Medicine and the Wu Tsai Institute. One thing I would’ve liked to know about money earlier in my career has to do with how much life costs and how there are gonna be times in your life when you will need to have extra cash because of health emergencies. Because you have to take care of family members who are sick. You have an emergency trip that you have to plan and so it’s important to have a, a fund or a a some money that is liquid that you can use in an emergency at some point in, in my life after my graduate school, my family had some emergencies and I also had some healthcare costs and it was really important for me to have that extra cash that I had saved and separated.

Bill M (10:15): Bill Mahoney. I’m the Associate Dean of graduate student postdoc affairs at the University of Washington. I’m also faculty in the School of medicine and I wish I understood a little bit better that making career decisions based on the next paycheck, the most money, it’s only part of the decision. You have to make it on what you love doing, the people you’re gonna support. And if you choose to stay in higher ed, you’re probably gonna not make as much money, but you’re gonna have a bigger impact on training the next generation of scientists and students to go on and do bigger and better things in uh, and improve the world.

Meredith O (10:44): Meredith Okenquist, Director of Career Management Villanova University. What I wish I knew more about was retirement planning at the very onset of my career and investing the full maximum percentage for my 401k.

Kirsten R (10:59): My name is Kirsten Ronald. I am the program manager of advanced degree career management at UT Austin. I wish I had known that you don’t need to go back to school to make a massive career change and I also wish someone had talked with me about the ROI of going back to school before I did it.

Colleen G (11:13): My name is Colleen Gleeson and I work at the University of Texas at Austin as an associate director for advanced degree employer integration. One thing I wish I had known about money earlier in my career is thinking about careers and jobs and salary packages and benefits in a way that like evaluates in the total compensation package and how invaluable it is to have employer paid health insurance and to have things like pay time off and something that forces you to invest in a retirement account or a pension to make you think about the future.

Marlene B (11:51): So my name is, uh, Marlene Brito, Dr. Marlene Brito and I’m the associate director of DEI at NYU Career Development Center. And what I wish I had known before I started a PhD was that you self-fund a lot of your activities as a doctorate student, especially if you’re a professional who’s going to school part-time, but sometimes even as a full-time student. So like save money for conferences, save money for research expenses because all of that cost thousands of dollars.

Melissa K (12:21): Melissa King, University of Mississippi, the best advice I ever received about money was when my husband and I married 13 years ago and my mother-in-law told us it doesn’t matter how much money you make if you spend all of it right? So knowing how to spend and how to save is by far the best piece of advice. It doesn’t matter if you make six figures if you’re, you’re spending all of it, right? Mm-Hmm. <affirmative>.

Lee T (12:46): Hi, my name is Lee Tacliad. I’m a manager of alumni and employer engagement at Scripps Research and what I wish I knew about money earlier was the magical effect of compound interest.

MaKenna C (13:00): Hi, I’m MaKenna Cealie. I am a graduate student at the University of Rochester. What do I wish I had known about money earlier in my career. So I had some great advice about learning to save and invest, but I think sometimes I took that too far. So I think it would also be important to kinda spend your money too as sometimes and enjoy your life. I read this great book Die With Zero and I think that was very helpful for me.

Dan E (13:26): Hi there. My name’s Dan Emmans. I am senior coordinator for student development and engagement at Harvard Medical School. Early on, get into the habit of putting 20% away and you’ll never go wrong.

Tamar G-C (13:36): Hi, I am Tamar Gaffin-Cahn. I’m the assistant director for graduate students at the Career Development Center at Emerson College. And one thing I wish I had known about money earlier in my career is put money away. Invest really early on, even if it’s just 20 bucks a month, invest early ’cause it will grow. I would also say to diversify where you’re investing and there are lots of opportunities of how to invest in uh, that’s connected to your values as well. So there are opportunities to invest in green energy, invest in programs that are good for the environment and good technology and things like that so it your money isn’t going to corporations that do harm to this world.

Bryan M (14:12): Hi, my name is Bryan McGrath. I do employer engagement over at Harvard Medical School. What do I wish? I had known about money earlier in my career that credit cards accrue interests and you should be paying more than the minimum each time.

Linda L (14:24): My name is Linda Louie. I work at the Lawrence Berkeley National Lab and I wish that earlier in my career I had known that retirement was a thing you needed to plan for <laugh>.

Jessica R (14:35): My name’s Jessica Roman, I’m the Assistant director of Graduate career Services at Stony Brook University and something I wish I would’ve known about money earlier in my career is how private loans and their interest works because I thought it was like public loans where you have the same principal and then I graduated and I got the bill and it was very shocking and I’m still paying that off, so I wish I would’ve known how that works so I would’ve made payments while in college.

Breanna G (15:06): My name’s Breanna Gallagher and I am a career coordinator at Oklahoma State University and what I wish I would’ve known about money earlier in my career is literally just the lingo of all of the money talk, being able to understand my benefits, being able to understand 401ks and medical insurance and being able to just understand what I was reading and signing, especially in a really tight window when you’re required to do your benefits in like 24 hours.

Aimzhan I (15:39): My name is, Aimzhan Iztayeva. I work as a program associate at the graduate School of the University of Minnesota. What I wish I had known about money earlier in my career is how investment works and also how taxes work with regard to money that you gain through investment.

Natalie C (15:56): My name is Natalie Chernets, I’m director of postdoctoral affairs and professional development at Drexel University. What I wish I knew about money early on is that higher education doesn’t necessarily mean more money in your salary, especially if you are an immigrant coming from another country. There are other barriers you have to think through to earn that salary.

Rowena W (16:14): Hi, I’m Dr. Rowena Winkler. I work for the University of Maryland, Baltimore County or UMBC in their career center as the assistant director for graduate student career development. So what I wish I had known about money earlier in my career is, especially as a graduate student, I, I’m an immigrant child, so my parents came here from the Philippines and I didn’t really know good personal finance and money management practices. I wish I had taken out loans or looked for more scholarships because as a graduate student in particular, I went into a lot of credit card debt just trying to finance my way through school. And so I wish I had known more about personal finance resources or funding options as a graduate student.

Mearah Q-B (16:56): My name is Mearah Quinn-Brauner. I work at Northwestern University. I wish I had known that sometimes it’s a good idea to spend money in order to have more money later in your life. When I was in graduate school, my mom tried to convince me to buy a house and I thought that that was insane. It was a crazy idea given how much money I had at the time, but it would’ve been worth figuring out so that I would have a house in Philadelphia now.

Diane S (17:24): Hi, my name is Diane Safer. I’m the director of career and Professional Development at the Albert Einstein College of Medicine where I work with PhDs and postdocs. I wish I would’ve taken the advice that I give to my students and postdocs right now and really negotiated for higher salaries and higher starting salaries right when I got the job because you can never really make it up once you’ve started a job and you’ve lost all your negotiating power once you’re in.

Mallory F-L (17:49): Hi, my name’s Mallory Fix-Lopez. I’m with Language ConnectED. I wish I would’ve known to charge for my work earlier in my career. I’ve done a lot of work for free <laugh>.

Emily S (17:59): So my name is Emily Sferra. I am the coordinator for career and Professional Development at the University of Michigan Medical School. If given the option to contribute to a retirement account you should contribute to a retirement account.

David B (18:19): Hi, I’m David Blancha. I’m a program manager at the OCPD at University of San Francisco. The thing that I wish I had known about money earlier, especially when I was a graduate student, is that when I was doing all of the math on my finances and what I might like need to live while I was in graduate school, all of those numbers would be wrong. Eight years later when I graduated I had no, I, no sense of adjusting for inflation or markets changing or anything like that. So I assumed the math I had done to live in a one bedroom apartment <laugh> in New York in 2015 is what I was going to need in 2022 and that’s absolutely not, not right. <laugh>.

Commercial

Emily (19:09): Emily here for a brief interlude. Would you like to learn directly from me on a personal finance topic, such as taxes, goal-setting, investing, frugality, increasing income, or student loans, each tailored specifically for graduate students and postdocs? I offer seminars and workshops on these topics and more in a variety of formats, and I’m now booking for the 2024-2025 academic year. If you would like to bring my content to your institution, would you please recommend me as a speaker or facilitator to your university, graduate school, graduate student association, or postdoc office? My seminars are usually slated as professional development or personal wellness. Orientations or very close to the start of the academic year would be a perfect time for tax education or general personal finance content. Ask the potential host to go to PFforPhDs.com/financial-education/ or simply email me at [email protected] to start the process. I really appreciate these recommendations, which are the best way for me to start a conversation with a potential host. The paid work I do with universities and institutions enables me to keep producing this podcast and all my other free resources. Thank you in advance if you decide to issue a recommendation! Now back to our interview.

What Do You Wish You Had Known About Money Earlier In Your Career?

Alexis B (20:37): My name’s Alexis Boyer. I’m assistant director of Graduate student career services at MIT. And I wish I had known the difference between a 1099 and a W2 and I wish that I had known that the skills that I was developing were worthy of being paid.

RC S (20:54): RC Stabile, uh, Vanderbilt University, director of trainee engagement and wellbeing. I wish I knew about investing, putting money in target date index funds and I wish I knew about high yield savings accounts earlier.

John M (21:10): Hi, my name’s John Miles. I’m the Chief Executive officer of Inkpath, uh, the professional development platform. I wish earlier that I had known that by spending my time working on Shakespeare and taking a very academic direction that I wasn’t counting myself out of decent salaries later on that I should be confident that time will reward you and, uh, you can indulge those academic perspectives, uh, without feeling like you are narrowing down your options for the future.

Zarna P (21:42): Hi, I’m Zarna Pala. I am the assistant director of the Biological Sciences graduate program at the University of Maryland. And I wish I knew, uh, more about investment and investing money in the right direction or any sort of like small investments which I, which I could have started early on, uh, as a graduate student, as a postdoc fellow, that would’ve been really helpful.

Anne-Charlotte M (22:08): Hi, I’m Anne-Charlotte Mecklenburg. I am the postdoctoral associate for academic support at the University of Maryland College Park. And I think something that I wish that I knew about money earlier in my career was just all of the different ways of like saving money and organizing money that I would need later in my career as a graduate student it was kind of like, okay, I have a stipend and it covers all my living expenses and I can’t really do anything else with it, so I just spend it until I don’t have it anymore. And now that I’m sort of moving into more of a mid-career moment, it’s like, oh, I have a retirement account through my university and I don’t really know how that works. All that kind of stuff that I feel like in other careers people kind of learn that kind of stuff closer to right af out of college. It’s something that now feels like a little bit delayed for me and now I feel like I’m a little bit behind. So something I wish I was thinking about before I needed it so that I’d be ready when I did need it.

Amy A (23:00): I’m Amy Aines and I’m with Championing Science. What I would’ve loved to have known more about is how to invest. I think I was conservative and I was okay with a 401k with someone else thinking about it, but it would’ve been nice to know for myself what that was about and how I could take advantage of the opportunity.

Gina D (23:18): Gina Delgado, director of doctoral and post-doctoral life design and what I wish I’d known earlier about money in general is not just knowing about money but not being afraid of being broke because I’m not afraid of being broke.

Beka L (23:32): This is Beka Layton. I am the director of professional development at UNC Chapel Hill and thinking back to when I was a graduate student, I think benefits life insurance 401ks and kind of how to balance life expenses with long-term goals and budgeting. I think that whole like black box of like, I don’t know any of those things was mystifying to me. So things I learned by accident along the way and wish I knew then.

Aurora W (24:02): I’m Aurora Washington. I am currently a postdoctoral research fellow at the University of North Carolina in Chapel Hill. And something that I wish I knew about finance when I was a graduate student is how to budget a little bit better and to manage my expectations because I’m a postdoc, postdoc don’t get paid well and so I wish I knew a little bit more about benefits in negotiating in Texas.

Sam R (24:29): Hi, um, this is Sam Ramosevac, I’m director, um, at the office of Postdoctoral and Mentor trainee program at Emory University. Uh, I wish I actually negotiated my salary and I think it’s really important at least to attempt to negotiate and get more money for the level of experience you have and you know, just at least to try.

Ian K (24:57): I’m Ian Krout. I am a postdoctoral fellow at Emory University. For me, being a postdoc, I went on a training grant and realized that I was losing some benefits that I had gotten as being an employee at the university. And so I actually began to ask questions to both my PI and the postdoctoral office about if this needed to be the case and if there was any way to get benefits and advocating for myself was enough to get those benefits brought back through a workaround at the university, which was really positive for my experience and helped me to still be able to save for retirement and not pay into my health insurance myself.

Jessica T (25:35): My name is Jessica Taylor. I’m a research fellow at ACLS and I wish I had known when I was a graduate student that you’re supposed to tip in hotels.

Natalia (25:44): My name is Natalia, I work for the University of Pittsburgh as a career advisor. Yeah, and I wish I, I had known that money would be able to buy me freedom of choice.

Autumn A (25:55): Well, my name is Autumn Anthony. I manage the office for graduate student assistantships and fellowships at GW. I think it would’ve been really important for me to realize earlier that if you are looking to make more money, then you have to go to the organizations that actually have more money <laugh> and that when you are committed to the work that you’re doing and working hard and looking for opportunities to succeed in your work, just because of your commitment and just because of your hard work doesn’t mean you’re going to make more money. So you have to go where the money is.

Jessica V (26:33): My name is Jessica Vélez. I am the membership engagement and early career programs manager for the Genetic Society of America. And I definitely wish I had known that I do actually make more money than I think I do. And by creating a budget, that’s how I learned that I made more money than I thought I did and I signed up for a budgeting app at some point in my graduate career. Because of that, when I finished my PhD, I wasn’t able to immediately get a job, but I had enough money saved up from the budgeting I had done on a graduate school stipend to survive for two or three months without having to worry about unemployment because you can’t apply for unemployment as a graduate student <laugh>. So that was extremely beneficial and I’m glad that I finally learned that, but I wish I had learned that earlier for sure.

Melissa B (27:20): This is Melissa Bostrom. I’m assistant Dean for Graduate Student Professional Development at Duke University and I wish I would’ve known that investing for retirement didn’t have to be perfect. It didn’t have to be the best. I just had to get started with a small amount on a regular basis.

Chris S (27:35): Okay, my name is Chris Smith. I manage the Office of Postdoc Affairs at Virginia Tech. The importance of investing in special retirement vehicles, whether that be a Roth IRA or traditional IRA that have different benefits in terms of tax purposes, whether you pay them now or later. And it might be real benefit when you’re in your lower paying years to be in investing in or Roth where you’re paying the taxes now and then when you eventually retire, you don’t know taxes on that and all the compounding that happens over those 30 plus years of your career.

Jason H (28:06): I’m Jason Heustis, assistant Dean for Student Development Evaluation at Harvard Medical School. I’d say one of the things that would’ve been helpful to know in graduate school, similar decisions you’d make when you start getting a real paycheck, things like allocations for insurances, the different types of saving options, that type of thing would’ve been helpful for me to know earlier, right? Or to be prepared for those decisions so that I can do as much research at the time. That would’ve been helpful.

Anne X (28:30): Hi, my name is Anne Xiong. I’m from UC Berkeley Center for Financial Wellness. I wish I know that no matter how much money you have, you can start investing early.

Kelli W (28:41): I’m Kelli Wright from Wayne State University. I’m the financial wellness advisor there. I’ve been there since March of 2023. I’m an accounting background, so I’m really excited about this space and what I wish I would’ve known is the importance of saving, creating that healthy habit, of saving even $10 a month just where I would be at financially if I would’ve known that.

Charah C (29:07): Yes, my name is Charah Coleman. I work for University of California Merced, and I am the Financial Wellness Center program manager on that campus. I would say the time value of money. I don’t have any regrets with how I spent my money in my undergrad or even early grad school, but I wish I really would’ve invested earlier and given myself a leg up a lot earlier. Now I definitely have to invest a lot more aggressively and I have to cut a lot more expenses now than when I was starting off in my career. I, I definitely think having that awareness of the time value of money being aggressive at the front end, I think would’ve behoove me a lot better.

Beth H (29:49): Beth Hunsaker, MS. Uh, associate Director, financial Wellness Center, university of Utah. After my graduate work, I did take some time off to have kids and although that was a wonderful chapter of my life, I really wish I would’ve taken time to keep my network strong, to keep working on my skills because when it was time to come back for my career, which has to do with money, it was a little harder for that on ramping. And I think that there is a way to balance and do both, and I wish I would’ve focused a little more on that.

Roland K (30:27): Roland Keller Jr associate director of financial aid at Tulane University in New Orleans, Louisiana. One thing that I wish I would’ve known about a little sooner is the importance of credit. Credit is very important. It literally is life or death. So I would’ve wished I would’ve been more educated about credit

Darrel S (30:45): Darrel Stufflebeam, uh, a doctor in education from KU and I’m the new assistant director for Jayhawk Finances at ku. Uh, I wish I’d have known about the importance of starting early and compound interest and I did not have a financial background and my parents didn’t really have advice. So if I would’ve started a little earlier then I’d be much happier now, but I’m just spreading the word as part of my current job.

Khalilah L (31:12): My name is Dr. Khalilah Lauderdale. I am the Associate Athletic Director for student services at the University of Southern California. And earlier in my career, I wish I had known, um, concerning money more about how to buy a home. I was very green in our process and very reliant on my realtor resources, so that would’ve been helpful.

Nafisah G-B (31:35): My name is Nafisah Graham-Brown. I am a program administrator of a financial coaching program at SUNY WCC, that’s Westchester Community College. What I wish I had known about money earlier in my career was the value of retirement savings. Uh, unfortunately I was in a job where we were discouraged from taking part in the pension and retirement program mainly because the people that were talking to us also didn’t have much information or knowledge. So I guess the value of it wasn’t seen by most of us. And I guess the lesson is make sure you’re getting your information from someone who knows.

Aly B (32:13): My name is Aly Blakeney. I am an instructor of economics at Phillips Academy Andover. What I wish I had known about money earlier was honestly how important it is to talk with any significant other. If you have like a very serious prospect with them to talk with them and be like, Hey, where are we at in terms of money and debt? I think that will cause stress quicker than anything. And setting yourself up for future means also taking care of your financial wellness via your emotional intimacy wellness as well.

Tony F (32:45): My name is Tony Froelich. I am the financial literacy coordinator at the University of Tennessee at Chattanooga. What I wish I’d known earlier in my career about money is the power of investing in yourself. I always thought of saving as taking what was left after the month and that was my savings. So whether that was $10 or negative $50, pulling outta my savings account, but learning the lesson of taking that savings out of my paycheck first and putting that away and then spending the rest has been life changing.

Zach T (33:19): Yes, Zach Taylor, assistant professor at the University of Southern Mississippi, and what I wish I had known about money earlier in my career is saving it earlier in my career would facilitate a lot more time and that as I’ve gotten older, time is money and I’m now realizing how much more time money can buy you. And that has become so important as my parents have aged and as I have continued in my career where I feel like I have enough money now, but I don’t have the time, but if I had more money, I know I would have more time. So I think the relationship between time and money is what I wish I had known earlier in my career.

Lyndsi B (34:04): I am Lyndsi Burcham. I am the financial Wellness Program manager at the University of Pennsylvania. I think what I wish I had known about money earlier in my career isn’t even necessarily about money. It’s the fact that like you don’t have to make one decision and have it be the right decision for the rest of your life. Like you can make changes at any point along the way. And I think a lot of times when we’re having conversations about money with students, they’re so caught up in the fact that they have to do the right thing first. And oftentimes there is no right thing. And even if there is a right thing, it’s gonna change depending on your life circumstances. There’s a lot I could say about tactical information about like what is a credit score versus a credit report and, and knowing those kinds of things, but like the psychological component of it, which is you are allowed to fail and like you can recover from failure. I, I don’t think we talk about that enough and instead we instill fear in students that they have to do things the best way.

Peter B (34:59): Hi, I am Peter Bye. I am a doctor of music student at Indiana University and what I wish I had known about money earlier in my career is that sometimes it works out well and sometimes it doesn’t work out well and you kind of gotta roll with the punches and make adjustments constantly. It’s never something you figure out. You can’t solve it unless you’re like super rich, but you can make changes and slowly affect your, your situation hopefully in a positive way. Uh, so you kind of just have to roll with the punches until you hopefully get to the place you wanna get to.

Outtro

Emily (35:41): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

This Grad Student Took Control of Her Finances to Shift Her Income Sources

April 15, 2024 by Jill Hoffman

In this episode, Emily interviews Fern Wolburg Martinez, a 4th-year PhD student in Industrial/Organizational Psychology at Portland State University. Fern shares the pros and cons of the various income sources she’s used for her graduate work: a teaching assistantship, a fellowship, student loans, side jobs, and social safety net programs. When Fern was offered a fellowship, she realized she would no longer be eligible to take out student loans and had to decline it. Fern subsequently worked on her spending and budgeting to put herself in a position to accept the fellowship and increase her income later on. Finally, Fern and Emily discuss how you can employ a researcher’s skills and mindset in the personal finance arena.

Links mentioned in the Episode

  • PF for PhDs Tax Center for PhDs-in-Training
  • PF for PhDs Subscribe to Mailing List
  • PF for PhDs Podcast Hub
  • Fern’s LinkedIn
This Grad Student Took Control of Her Finances to Shift Her Income Sources

Teaser

Fern (00:00): No idea where my money was going, how much money I was spending, and how, what my stable fixed expenses looked like every month. And then finally what my advisor offered the fellowship and she’s like, Hey, you should go on this fellowship. I was like, oh, I don’t know. I can’t do student loans. I have to look into it, so maybe I can afford it, but I’m not sure. So this is where the scientist mindset came in. It’s like, okay, I need objective data to look at my situation and make an informed decision.

Introduction

Emily (00:36): Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

Emily (01:05): This is Season 17, Episode 8, and today my guest is Fern Wolburg Martinez, a 4th-year PhD student in Industrial/Organizational Psychology at Portland State. Fern shares the pros and cons of the various income sources she’s used for her graduate work: a teaching assistantship, a fellowship, student loans, side jobs, and social safety net programs. When Fern was offered a fellowship, she realized she would no longer be eligible to take out student loans and had to decline it. Fern subsequently worked on her spending and budgeting to put herself in a position to accept the fellowship and increase her income later on. Finally, Fern and I discuss how you can employ a researcher’s skills and mindset in the personal finance arena.

Emily (01:51): If you’re listening to this episode on the day it drops, you know that it is Tax Day! I hope that you have already submitted your 2023 tax return, paid your 2023 tax bill, and made your 2024 quarter 1 estimated tax payment for your fellowship, if required. However, there have been many years in which I was still working on any or all of those elements right up to and even past the deadline. If you’re in that position and need additional resources on taxes tailored to the graduate student, postdoc, or postbac experience, join one of my asynchronous tax workshops to immediately access my best teaching on these topics. Go to PFforPhDs.com/tax/ and scroll to the bottom of the page to learn more about the tax return preparation workshop and the estimated tax workshop. Best of luck to you in these final hours of tax season! You can find the show notes for this episode at PFforPhDs.com/s17e8/. Without further ado, here’s my interview with Fern Wolburg Martinez.

Will You Please Introduce Yourself Further?

Emily (03:10): I am delighted how joining me on the podcast today, Fern Wolburg Martinez. She’s a current graduate student at Portland State in industrial organizational psychology. And we are going to talk about how Fern has funded her graduate program, both, you know, through the graduate program, through side hustles. Um, we’re also gonna talk about budgeting and just really get into the numbers today of like what a current graduate student is, um, is making and spending. So, Fern, I’m so delighted to have you on. Thank you so much for volunteering to come on and be open about this subject. And would you please introduce yourself a little bit further for the listeners?

Fern (03:41): Yeah, thank you, Emily. So, like you mentioned, I’m Fernanda, I go by Fern and I am currently in my fourth year of my graduate program preparing for my comprehensive exams. And my expertise is on occupational health psychology. Specifically, I explore how sexual harassment and customer sexual harassment affects the wellbeing of employees.

PhD Program Funding and Stipend Advocacy Efforts

Emily (04:03): Okay, thank you so much. Can you tell us about how your program has been funded to date?

Fern (04:09): Yeah, so the nice thing about my program is just a master’s to PhD program and it’s fully funded if you get accepted. So they cover tuition, everything. And it was an interesting trajectory because we had a stipend that was very low. It was like after taxes, it was about a thousand a month. And then the students really advocated for more because that’s barely covers rent in Portland. Portland’s a pretty expensive city. And then they raised the stipend by almost like 200%. So after taxes, it ended up being like $2,000. Um, and that’s just for the graduate teaching assistantships. And we also have a, an amazing funding program from the National Institute of Health, which is under the CDC, which is an OHP or occupational health psychology type of training where they give a fellowship to up to three to four students per year. And you can have it for two years. And that’s what I’m currently on, and that one is not taxed. And it’s about like 2,400 a month.

Emily (05:14): Okay. I wanna hear more about this advocacy process. It doesn’t sound like, was there an official union going on or was it just like, Nope, we’re all just talking together and saying you have to pay us more. This is unsustainable.

Fern (05:25): Yeah, so I cannot take full credit for that. Not even partial credit because I have to say it’s when I started the program, it’s kind of like, oh, I’m so excited to have a PhD and join this program and I don’t care how much money it is. And then I face the realities of actually having to live on that stipend and take out student loans. And the stress comes with that because grad student loans are different from undergrad student loans with the interest and the plus loans. Um, so I was just dealing with it and I was like, this is fine. This is the way it is. And stressfully. And, but thankfully I was, uh, I started during covid, so I was still living at home in Arizona at this time, so I could still save on rent, but it was still nothing. Right. Um, and it’s not until the cohort after me that the program really focused on diversifying our population of students.

Fern (06:14): And these students from different backgrounds were all about fighting for themselves and for the collective wellbeing. And they were like, this is not a livable stipend and if you wanna be a diverse and competitive program, you need to do something about it. So they really insisted with the faculty. And we do have a union, but the union, you know, the students can barely afford to pay for the rent. So like, nevermind paying for a union due. Right. Um, so they didn’t go through the union. It was more like the psychology department students from that specific cohort just really advocated with the faculty. And then the faculty were also really amazing at being receptive about it and talking to the dean about it. And I’m not sure how they moved the funds around, but they were able to increase the stipend for everybody.

Emily (07:00): Wow. Love to hear that success story especially.

Fern (07:03): Yeah. Shout out to them.

Emily (07:04): I mean, the union as like approach is certainly powerful, but it’s, but it’s slow and it’s, um, it’s onerous. And so this sounds like kind of a quicker if if the faculty and so forth, everybody is, um, amenable to it. This is kind of like a quicker route. So I’m so glad to hear that story of how that cohort after you, um, helped themselves and everybody else by just talking about this. And it’s, I mean, a thousand dollars a month is just ridiculous for an amount of stipend to try to live on that. Okay. So it sounds like you had been on a teaching assistantship at first, is that right? For at least a couple years,

Fern (07:36): Yes, for the first three years.

Emily (07:38): Okay. So for three years on a teaching assistantship, now you’re on this fellowship  through the federal funding kind of route. Can you tell us, um, in terms of your experience as a graduate student, what the advantages or the pros and cons were for each of these different, um, types of funding?

Fern (07:54): Yeah, so the teaching assistantship, it’s like a regular W2 job. So you, your taxes are taken out, you don’t have to worry about that. You get the same money at the same time every month. It’s less money though. So it’s about, oh my God, what’s the difference? Like $500 less, probably more in comparison to the fellowship. Um, but the good, the biggest pro about that, besides the fact that they give you the W2 and the taxes, is that you can take out student loans with that. So with having the teaching assistantship, I was also able to qualify for loans and then like my teaching assistantship would pay for rent and some credit card bills or whatever else I had to pay. And then I would use the student loans to pay for, like, if I wanted to visit my family, if I have to travel to conferences, if I have to buy food, if I want to go eat up food with my friends, everything else was covered by the loans.

Fern (08:51): And then the pro of the fellowship is the time flexibility, because I’m just doing research. I don’t have to do a teaching assistantship. And sometimes, uh, just working with professors and instructors can be a great experience and sometimes not such a great experience, and you never know who you’re gonna get and if it’s gonna be a more stressful term in comparison to the previous one. So having the time flexibility to do research on my own time and work on my own projects and get paid for that is amazing. It’s also more money, but the cons is, it’s, um, it’s weirdly coded this grant, I think there’s only like three universities in the, in the United States that have this type of fellowship. And it’s coded so that it counts the tuition reimbursement as part of the fellowship that we receive. So it counts as salary. So we no longer qualify for loans because we’re making too much money.

Fern (09:44): So beyond our monthly stipend, that tuition money was also, it also looked like from the tax perspective, from the, uh, government’s perspective, that that money goes to us instead of it going to the university for tuition. So I no longer qualify for student loans at the moment. So that’s why I waited my three years until I was at a place where I had like, I could afford rent and I had paid off all my debt so that I could actually take out this fellowship and not have to rely on student loans, which was always my goal to only take out loans for two to three years, and then not for the last two years of my program.

Emily (10:17): I see. So it sounds like you actually had a degree of agency over when you had one position versus another, so you could kind of coordinate that with your personal finances. Um, I haven’t heard of that before. I, I guess I’m more accustomed to people like sort of being, um, the timing of fellowships happening just based on like your timing in your program or something like that, or like when you happen to win it. Um, but that sounds really, really smart that you worked on your personal finances while you had access to those loans. Um, before switching over, I’m a little surprised to hear that you don’t have access to loans anymore, but I don’t know.

Fern (10:50): Yeah.

Emily (10:50): I don’t know all the details about it, so.

Fern (10:52): It’s so weird.

Emily (10:52): I’m sure you’ve been through the technical specifications.

Fern (10:54): Yeah, it was, it was a whole thing because I actually got it offered my second year and I said, yeah, I’ll take it. And then I found out, they didn’t let me know it was miscommunication. I found out that I couldn’t qualify for loans anymore and I had to tell my advisor like, Hey, I, I didn’t know about this and I can no longer afford anything if I can’t take a loan. So they had to switch me back to being a TA ship. So after that I was like, okay, next time I, if I do switch back to a fellowship, I wanna be more conscious and in a good place where I can actually take advantage of that.

Emily (11:24): Hmm. Yeah, I think the generalizable like, you know, lesson here for the audience is just to be really, um, heavily consider how these different types of funding are going to affect your personal finances. Whether it’s, you know, the tax implications, whether it’s the student loan implications, whether it’s the increasing amount of take home income, decreased amount of take home income, and just as, as best you’re able to, like you did, um, exert, you know, agency in this process and or prepare on the personal finance side for the changes that are upcoming so that you’re not caught. I mean, what would you have done, like if you had to, had to accept this fellowship? Couldn’t afford everything, couldn’t take out student loans? Well, we’re gonna talk more about how you’ve like, um, made the budget balance. Um, in a moment. But yeah, it would’ve been a harder financial position for sure.

Fern (12:08): Yeah, absolutely. I think it’s very important for people who are in grad school and are considering one versus the other to look into, like you said, taxes, student loans, and just asking all the questions to their advisor regarding these things. I think that, uh, supervisor support is very important if you have a supervisor who’s transparent about the process and helping you to the best of their capabilities on everything that entails going into a fellowship versus having a regular, uh, teaching assistantship, um, with all that stuff.

Side Jobs During the PhD Program

Emily (12:38): Yeah. Um, did you also have a side job at any point during these four years?

Fern (12:45): Yeah, I worked my first two years and, you know, as I was like in college I had two jobs and I was going to the gym at five in the morning and it’s like, yeah. But I was also 18, 20 years old. It’s very different, uh, than going to grad school. Grad school is a different beast. So I had a job for the first two years I was working in the restaurant industry, which is what inspired my thesis topic. And it was really stressful because, you know, I don’t know if you remember what your first two years were like, but it would take me four hours to read like a 20 page article because the content is so dense and so difficult and so different from just a textbook. So I was spending my time with the four hours, uh, classes per week and two classes, uh, for every week.

Fern (13:33): And then also on top of that, reading the articles. And then on the weekends I was working. So I was just exhausted all the time. I was burnt out. It, yeah. I wasn’t great for my health, so I decided on my second year to quit. And then on my third year, again, before I moved to Portland, I decided to get a job to be able to afford to move to Portland. So I started working back in the restaurant industry. So a lot of respect for restaurant employees because that industry’s always there when we need it, but it’s definitely a sacrifice. The quality of my work and the quality of my health did decline, but it’s also a trade off of then I can have more money that is not, that I don’t have to give back to the government.

Emily (14:16): Hmm. Yeah, I mean, because you were, you had the stipend, you had the student loan, um, kind of bridge coming in and you had the side work. You really had to find that balance among all three of those things in which funding source is most appropriate and how much energy would you have to use and so forth. So, um, that’s really tricky. And since you’ve switched over to the fellowship, it sounds like you haven’t been working on the side, right? With the higher income?

Fern (14:40): No, I did hold a, so this was another opportunity that just came to me and follow my lab. This student recently graduated and her and I just had a really good working relationship and worked on a lot of projects together. So she really liked my work ethic, so she recommended me to do a summer internship that she had to turn down and that worked great for me. So I was doing analysis for the university factor analysis where they wanted to reduce the items in a course evaluation scale. And that was awesome because I was able to make a couple extra, like 2000 that month or that summer. Uh, so opportunities like that arise as I progress through the program and I become more skilled. Like now I’m at the point that with my master’s I can get an internship and that’s a lot more money than any part-time job can give me. Right. Um, so opportunities come and go. And also it’s just every year is different and just have to adapt and find ways to make the finances work.

Using SNAP (Food Stamps) During the PhD Program

Emily (15:35): Yeah, I like that you pointed that out. Like as you progress in your program, you become more skilled, you become more knowledgeable, there are different opportunities that come up for you. I’m like, you, you’ve probably heard me say on the podcast before, but I’m like a big advocate of people, um, being paid a high hourly rate as much as they can. And that probably means employing your unique skills that you’re developing inside of academia, maybe inside of academia, maybe outside of academia. So in addition to the stipend from the assistantship and the fellowship in addition to the student loans for some time, in addition to the side work, I understand that you also relied on government programs for a period of time. Can you tell us more about the types of programs that you accessed and what they did for you?

Fern (16:14): Yes. So I need to give credit again to the cohort that came after me because I was like, oh, I’m just stuck in this. And some people mentioned food stamps, but I went into the snap and SNAP is, I don’t know what it stands for, but it’s the Food Stamps Assistance program. And they said that graduate students didn’t qualify and I didn’t look further into it. I was like, okay, I just don’t qualify. Undergrads do, but graduates don’t for whatever reason. And then the cohort after me said, yeah, you do qualify. I’m on it. And I had never been on food stamps before and I also had this perception that food stamps was for people that were very low income and really needed it and were like below the poverty level. And I was, I’m a grad student so I can still rely on my parents if I need to.

Fern (16:56): So I just didn’t see myself in that realm. But if anything, once they told me that they were on it and I could apply for it, and I applied and I got it and I got an extra $200 a month to be able to pay for groceries, it was great. And it just gave me a lot of independence and freedom and just a lot of relief for my expenses because sometimes if I have to pay for conferences and I have to pay my bills and everything else, then I would just buy less food. And with the food stamps it’s like, oh, now I can afford it. And also relying on the food pantry at my university. And a lot of us got on food stamps. And what’s also great about this program is that at, at least in Portland, they’re very supportive of the arts.

Fern (17:38): So if you show your EBT card, which is how you pay for the food stamps, I a lot, I thought it was actual stamps, it’s not actual stamps. It’s like they give you like a little debit card and they refill it every month with X amount of dollars that they give you every month. And like it never expires until you no longer qualify for the program. But if you show your EBT card, then you can also get $5 entries to like museums and opera concerts and ballet concerts. So it’s great also for that experience if you also can’t afford hobbies and to get out there and have um, things to do, it also brings that option on the table.

Emily (18:12): Um, so I wanna follow up on two pieces to that for the first is the mindset. Um, this is not for people like me. But you mentioned you were making a thousand dollars a month. Yeah. Like that’s not a lot of money in an expensive city. Yeah. As you mentioned. So like, I, I’m glad that you brought up like the fluctuating expenses too, because you might think in a given month, I don’t have any problems paying for food this month. So I don’t need this program. But then the next month you have an unexpected expense that comes up. And like you said, the food is like the variable thing that can get sacrificed that month and it’s just not a position that you want to be in. It’s better to be precautionary, take all the benefits that you’re eligible for, um, use them to the fullest extent, and then have more reserves to be able to build up for those unexpected, um, expenses that might come up. So I’m really glad that you mentioned this and that and that you did take advantage. I want to learn more about, okay. You initially read grad students weren’t eligible, then you found out that you were, what, what changed? What was the difference?

Fern (19:07): I don’t know. I didn’t ask. I just, I just applied. I told them how much I made and they said yes. I, I don’t know if it’s one of those things where it’s like, we’re gonna look the other way. Um, it’s just graduate students are in this unique position where we’re students, but we’re employees and the taxes are different. And like, I’m not poor, but I’m below the poverty line, but I have an iPhone. So it’s really weird mindset and like thing to get into. And also this, like, I don’t wanna take resources from the people that really need it, but also I qualify for these resources. So it’s this like weird situation that I had to just get over and be like, just apply if they say no, no. Which eventually they did say no once I got my fellowship and I now I make too much money for them.

Fern (19:55): Um, but yeah, I think it’s important that if there’s resources out there, if it’s food stamps and this and that, I was like, oh my God, I can’t believe I’m gonna be on food stamps. And I was like, no, this is great. I love ’em. I can go to $5 Chinese gardens and explore. It’s something that otherwise I wouldn’t be able to afford because it’s too expensive and I can afford food, which is great, and I don’t have to stress out about buying that. And it’s nice because it’s an allocated amount of money that’s specific for groceries. I cannot go and spend it on anything else. So yeah, I, I don’t know what was different in the application process. The website says that I shouldn’t have qualified, but I did qualify. So worked out for me.

Emily (20:34): I like that approach of just like, make them tell you no. Just, just apply, just push if they say no. Okay. You weren’t any worse off than you were beforehand, but hey, they said yes. And like again, credit to that cohort behind you for like experimenting with this and just pushing for it and helping everybody by, you know, sharing what they found out.

Fern (20:54): Yeah, definitely. They’re, they helped change my mindset and they’re helping change the program for the better.

Using Medicaid for Health Insurance During the PhD Program

Emily (21:00): I love it. Okay. So were there any other public benefits that you’ve been taking advantage of?

Fern (21:05): Yeah, the, I can’t remember the difference between Medicare and Medicaid, but I’m on that and that’s for health insurance. Portland State University has mandatory health insurance, so this is crazy. One thing that I don’t like about my university is that if you don’t have health insurance, they automatically enroll you in the university’s health insurance, which is very expensive. It’s like 300 a month. And that’s a little ridiculous to me because if you can’t afford to have health insurance, then they get you on their expensive health insurance. And yeah, it’s, it’s weird. I appreciate the aspect of wanting to keep the overall community healthy, but at the same time as employees wouldn’t qualify for health insurance from the university whereas other universities do. So I, uh, decided to apply for the, uh, Obamacare and again, I qualified for that and I have it and it’s in Oregon. It’s actually great. It’s a, it’s completely free for me and I have a really great doctors and a really good network of doctors. I was able to go to the dentist after like five years of not being able to afford it. So another great benefit to use.

Emily (22:12): Yeah, absolutely. I mean it’s so common. All universities require that their students have health insurance. Um, it’s unfortunate. It sounds like their internal option is, is unaffordable, like you said for the students, but, um, it’s so great. Obviously this is a very state by state thing, but great that Oregon has a robust exchange and with your income and everything you were able to qualify at that, um, it sounds like zero premium, right? Yeah. So that’s immediate. Yeah. And another great thing to look into.

Fern (22:38): Yeah. And it’s like above a percentage of the poverty level. So you can be, I think 200% above the poverty level and still qualify in Oregon, but it varies by state.

Commercial

Emily (22:49): Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac, is PFforPhDs.com/tax/. From that page I have linked to all of my free tax resources, many of which I have updated for this tax year. On that page you will find podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs and PhDs-to-be. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. Again, you can find all of these free resources linked from PFforPhDs.com/tax/. Now back to the interview.

Changes to Budgeting Throughout Graduate School

Emily (23:41): Now you mentioned to me that the way you budget has changed throughout graduate school. We’ve already seen some hints of that in the changing of the funding and the different, you know, sources of income and so forth. But can you tell us about how you used to budget and then how you budget now?

Fern (23:55): Yeah, so the simple storyline is that I didn’t budget. I was just have my money and spend it and not know where it went. And I would get my, uh, student loans and I would put half of them ’cause I get them per term. So every three months. Um, so I would put half of them on my savings accounts. That was not a high yield savings account, so they was just sitting there doing nothing. And then I would just keep the rest of my, uh, checking accounts and just hope that the number didn’t get to, to zero. So try to keep it as high as possible, but no idea where my money was going, how much money I was spending, and how what my stable fixed expenses looked like every month. And then finally what my advisor offered the fellowship and she’s like, Hey, you should go on this fellowship.

Fern (24:42): I was like, oh, I don’t know. I can’t do student loans. I have to look into it. And at the time I had moved in with my partner and I was like, well, my rent is about to be cheaper. My, I have, I’m on food stamps, so my groceries about to be cheaper, so maybe I can afford it, but I’m not sure. So this is where the scientists mindset came in. It’s like, okay, I need objective data to look at my situation and make an informed decision. So that’s when I had a breakdown for what I first did is track my expenses for a month. And that’s when I realized like, oh, I go to the grocery, like I buy little snacks here and there way too much and I’m spending too much at the bars and why am I buying shoes that I can’t afford?

Fern (25:19): And that was like a wake up call for me. So then I decided to look at my fixed expenses and see what that looks like and see if I had any money left over for me to have a decent living because again, I couldn’t take out student loans and I didn’t wanna take on an extra job to protect my wellbeing and my mental health. So if my remaining balance after all my fixed expenses was something like a hundred, that’s just not realistic. That’s just not enough. Especially right now with inflation, everything’s very expensive. So if there was an emergency, anything, I wouldn’t have been able to do it. So it’s like, okay, first thing I need to do is set up my emergency savings. And then I started learning about finances and I was like, okay, I need a high yield savings account so that the money that I have extra is not just sitting there. It’s actually like accumulating interest. And I started doing that and now I know exactly how much I spend on what each month. I know how much I have left over each month. And it’s, yeah, it’s a really good feeling.

Emily (26:16): I’m, I’m so glad to hear about that positive kind of transformation. Um, it sounds like your income source is changing is what really prompted you. You knew you weren’t gonna have that cushion of the student loans, so like you had to get more granular about what was going on in your finances.

Fern (26:30): I’ve always been pretty good at not spending and saving, but now I wanna take it to the next step and make my money work for me. So investing in a a retirement account and knowing what I’m spending on and being more essential with like my buckets of money of like skincare makes me really happy. So I wanna spend more on that and I don’t wanna eat out as much, so I’m cooking a lot more now. So I wanna be a lot smarter with my money beyond just saving and not spending.

Using a Researcher Mindset With Personal Finances

Emily (26:56): Now you mentioned earlier kind of taking, um, the, the researcher’s approach actually looking at the data, um, to figure out where your spending was going and what you would, you really started budgeting, like what were you going to be able to afford? Were you going to be able afford to switch onto this fellowship given the new rent, given all the other changes that were going on? Um, are there any other ways that you’ve employed this like researcher mindset within your personal finances? Aside from setting up the budget?

Fern (27:21): I mean beyond finding you and your account. You know, ’cause my, my friend Morgan always says this to me every time I’m like, oh, I need to do something really hard. And she’s like, you’re getting a PhD, you can do anything. It’s like, you’re right. Like I know how to investigate, I know how to learn. I need to start doing that. So I remember I wanted to get more broad skill sets with data analysis and I was like, well, Excel is always required, so I’m gonna learn how to use Excel. So I’m gonna use a nice spreadsheet as an excuse to learn Excel. And my excuse to do that is gonna be by budgeting. So I have this like really fancy spreadsheet that has formulas that are connected through different tabs and different cells. And I really learned how to use Excel for my advantage and use, uh, data visualization to look like my most expense categories.

Fern (28:09): And I have different percentages for everything. And it’s, yeah. And with that is just learning how to use Excel. So looking at tutorials and then actually doing the work, which is a lot of what we have to do as PhDs when our advisors don’t know how to use something in SPSS and no one else knows how to do it. And you just have to learn how to use an SPSS macro yourself. Um, and then learning the lingo. So like, okay, if I wanna go beyond saving and uh, start investing, what does that look like and what does that mean? And where does it start looking at the experts? Kind of like when you’re doing a lit review and you just have no idea what the topic is about. So you have to read a bunch of articles until you get an like a, an an understanding of what that topic is.

Fern (28:53): It’s the same skill sets can be applied to budgeting and knowing where your money goes and then just implementing that behavioral change. Whenever we write our research articles, and at least in psychology, we always try to make practical recommendations of what organizations can do with the research findings that we have. It’s like, okay, how can we expect other people to follow these behaviors that we’re suggesting to do if we can’t follow the own behaviors that we are learning from budgeting and all these other behavioral things. ’cause also saving money and spending money is very psychological, right? So just the same skills that we learn on research can be applied to anything in particular right now talking about budgeting.

Emily (29:37): I love it. I love the way you articulated that and that mindset and kind of going back to the beginning of what you said, like where your friend Morgan has been telling you. Um, I totally agree and I never like felt so, um, accomplished or like expansive in my person as I did like right after I defended, like I literally felt like I was like on top of a mountain. Like I can do, I finished the, like I finished my dissertation, I defended it, it’s done. I literally can do anything I put my mind to. And even though personal finances are challenging in psychological ways and logistical ways and all that, um, like you said, when you take, I mean all, everyone who gets into a PhD program is so capable and so talented and so smart. And like if you just decide to apply what you card kind of already innately can do in these other areas of your life to your personal finances, like you’re going to be successful. It’s just a matter of time. Yeah. It’s a matter of time and a matter of increasing that income eventually when you get out of graduate school. So eventually. Um, I just love that approach.

Best Financial Advice for Another Early-Career PhD

Emily (30:32): Well Fern, would you like to wrap up now by telling us your best financial advice for another early career of PhD? And it could be something that we’ve touched on already in the interview or it could be something completely new.

Fern (30:43): Advice. Oh my God, I don’t know if I have any advice. I just feel like advice is so like personal individualized, but I have like a thought that just occurred to me both with what you were saying is that a lot of new PhDs have this huge, especially underrepresented PhDs, you know, women, women of color or people from like low socioeconomic backgrounds whose parents never went, uh, to college or immigrants. It’s, there’s this huge imposter syndrome that we start with. There’s like, oh, I’m not supposed to be here. And now looking back, I think if like the Fern first year Fern saw met with the Fern right now, fourth year Fern, she would be like, oh my God, that girl is so smart and I’ll just never be like her. And like, you know, that is me. So I think it’s really important to understand that it imposter syndrome is just your social comparison of where you think you need to get and where you are.

Fern (31:38): And it’s all about learning. The only way to get over that imposter syndrome is to actually do and increase our self-efficacy and our belief that we can do these things. So just it, and that can apply to anything, right? With budgeting, it’s like, it’s not this imposter syndrome of like, I have to have X amount of money in order to be successful. It’s like you just have to learn how to budget and learn those skills and just do it. And then once you feel confident about it, that imposter syndrome will just eventually dissipate and just pass on that knowledge to people who are just getting started.

Emily (32:09): And that ties in back so well with what we were talking about with like the social programs that you learned about from like your peers and everything. Just not counting yourself out as like, oh, I’m not the type of person who should be doing this at this stage. Yes you are. These programs are designed for you at this current stage. You’re not gonna use them forever. It’s gonna be a temporary thing, but it’s really gonna help you get your feet under you, you know, and you only needed to be on them for, you know, two, three years and now you have this fantastic fellowship and like things are so different in your finances now, just, just after the passage of a little bit of time and a little bit of change of income sources. So again, I’m so glad that you share these, these tips and these insights with the audience. Um, thank you so much for volunteering to come on and being so transparent and I really think people got a ton outta this interview, so thank you.

Fern (32:50): I hope so. Yeah. Thank you so much for having me.

Outtro

Emily (33:03): Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

How This PhD Student and Her Higher-Earning Partner Manage Joint and Separate Finances

February 19, 2024 by Jill Hoffman Leave a Comment

In this episode, Emily interviews Tram Pham, a 3rd-year PhD student in economics at Uppsala University in Sweden. Tram describes the financial aspect of her relationship with her boyfriend, Markus, from discussing money on their first date to how they structure their joint and separate accounts now that they live together. Even though Tram is the lower earner, she came into the relationship with savings and has guided Markus into starting to save for joint goals, such as emergencies, vacations, and gifts. She knows that her future in academia is likely to require flexibility, so she saves for the unknown. Tram and Markus have learned how to moderate one another’s natural saver/spender tendencies so that they both plan for their finances and live in the moment.

Links mentioned in the Episode

  • PF for PhDs Tax Workshops (Sponsored) 
  • PF for PhDs Tax Workshops (Individual Purchase)
  • PF for PhDs Subscribe to Mailing List 
  • PF for PhDs Podcast Hub
  • Tram Pham Website
How This PhD Student and Her Higher-Earning Partner Manage Joint and Separate Finances

Teaser

00:00 Tram: I try and always try to make our saving plans fun and interesting because for me, from the beginning, I’m more just focusing on saving, saving, saving, even though I don’t know what I’m saving for. And Markus is like focusing on living, living, living, just living at the moment. So right now we are trying at least to balance those things. Hey, I save, but also I don’t forget to live. And those savings will be spent on the things that I love to do or make my life more meaningful.

Introduction

00:36 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. This podcast is for PhDs and PhDs-to-be who want to explore the hidden curriculum of finances to learn the best practices for money management, career advancement, and advocacy for yourself and others. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs.

01:04 Emily: This is Season 17, Episode 4, and today my guest is Tram Pham, a 3rd-year PhD student in economics at Uppsala University in Sweden. Tram describes the financial aspect of her relationship with her boyfriend, Markus, from discussing money on their first date to how they structure their joint and separate accounts now that they live together. Even though Tram is the lower earner, she came into the relationship with savings and has guided Markus into starting to save for joint goals, such as emergencies, vacations, and gifts. She knows that her future in academia is likely to require flexibility, so she saves for the unknown. Tram and Markus have learned how to moderate one another’s natural saver/spender tendencies so that they both plan for their finances and live in the moment.

01:51 Emily: The tax year 2023 version of my tax return preparation workshop, How to Complete Your PhD Trainee Tax Return (and Understand It, Too!), is now available! This pre-recorded educational workshop explains how to identify, calculate, and report your higher education-related income and expenses on your federal tax return. Whether you are a graduate student, postdoc, or postbac, domestic or international, there is a version of this workshop designed just for you. While I do sell these workshops to individuals, I prefer to license them to universities so that the graduate students, postdocs, and postbacs can access them for free. Would you please reach out to your graduate school, graduate student government, postdoc office, international house, fellowship coordinator, etc. to request that they sponsor this workshop for you and your peers? You can find more information about licensing these workshops at P F f o r P h D s dot com slash tax dash workshops. Please pass that page on to the potential sponsor. Thank you so, so much for doing so! You can find the show notes for this episode at PFforPhDs.com/s17e4/. Without further ado, here’s my interview with Tram Pham.

Will You Please Introduce Yourself Further?

03:16 Emily: I am delighted to have joining me on the podcast today, Tram Pham. She is a therapist. third year PhD student at Uppsala University in Sweden, uh, in economics. And we are going to talk today about finances in a relationship. And this is going to be exciting because Tram and her partner do something very different than what I do and what I’ve covered on the podcast in the past. So I like this new perspective. So Tram, would you please introduce yourself a little bit further? 

03:39 Tram: Thank you so much, Emily, for having me. Uh, I am Tram Pham, a PhD student. I am a student in economics at Uppsala University in Sweden, yeah, very far away. Uh, and, uh, I am doing research in labor and health economics. I am originally from Vietnam. Uh, as you said, currently I am staying with my boyfriend partner in Stockholm in Sweden. 

04:05 Emily: Excellent. Um, and your partner’s name is Markus, is that right? 

04:08 Tram: Yeah. So he is a Swedish, yeah. 

04:11 Emily: All right. And what does Markus do for his profession? 

04:15 Tram: So he is a machine learning engineer. And he is, uh, yeah, so he just had his master finish it two, three years ago. And now he’s working in a real job. 

04:28 Emily: Gotcha. But he spent some time in academia, so he understands. Well, we’ll get into it, right? So how did you two first meet? 

04:35 Tram: So, yeah, so we was introduced to each other through our mutual friend.

Early Financial Conversations With Your Partner

04:42 Emily: Awesome. And so when you started dating, when you first got together, how soon did conversations around finances or conversations around lifestyle, how did that start? 

04:53 Tram: So, uh, I am very conscious in finance and I have been reading a lot of books and also practicing finance independence for a long time. So I think that finance is a really important topic for me. So I brought it up in the first date. Yes. So the first day meeting Markus, I was asking him about his view about finance, how he is practicing, uh, with his own money. Of course, it’s not very in detail, but like just a brief perspective to see whether he also considered that finance is important or not. And in the second date, we asked more question about, Hey, what do you like to do in your life? And, uh, what do you think that finance can help you to achieve that? And how have you planned out and things like that? So yeah, very early in the dating process. 

05:47 Emily: Okay. I’m, I’m really curious about this now. Um, because the way you phrase that it sounded very interviewee, but is that how it, is that how it felt for him or for you in the moment? Or was it more like casual, like I’m going to ask a little subtle question about finances and, you know, 30 minutes later, maybe another little question, or was it really like, no, we need to be on the same page right now? 

06:09 Tram: Yeah. So now that you mentioned that, I think for me, it came out really naturally because I like talking about personal finance with my friends and things, but yes, with Markus, it’s felt like an interview, like I came in as a teacher or someone interviewing him about his perspective about finance. So from the beginning, he was a bit hesitant, of course. And also he was like, yes, but then I. I think that I explained it to him that, yes, I’m not coming here trying to like interview you or something, just that because I am more serious about relationship. I don’t want to play around. I’m coming and searching for a partner and commitment and things. And I think finance is important for a relationship. That’s why I’m asking these questions. So yeah, I think after my explanation, he became a little bit more open, but of course also not like, in very details, as I wished it could be, so.

07:11 Emily: And in these early conversations, what kind of answers were you getting? Like, were you seeing that he was kind of on the same page as you, although maybe a little bit more reticent to share? Or was it like, oh, no, I’m actually detecting some differences in practices or differences in values? 

07:26 Tram: Yes. So. I think that Markus know what is fire movement, what is a financial independence movement, but also in general, he and me, even, even though I am super interested in personal finance, but I don’t consider money as the most important part in my life. I just want to have the freedom and the opportunity to choose whenever I want to have. So I think for that, Markus and I was really on the same page. Like we think that yes, money is important because it allows us to, to live the life we want. And, but also in the just first few days, I could not ask in very detail about, Hey, how much you earn? Or like, what is your expenses? What is your saving? And that kind of thing. Just that On the surface, yes, it’s, it’s very similar. Hmm.

08:18 Emily: So, I haven’t been in the dating pool for a very long time, um, but what I remember reading in terms of like advice for talking about finances was to share first, like to share your, if you want to take that step with the person you’re dating, like, okay, we’re going to talk about our income or our debt or whatever. Like. You reveal first and you set the model and the tone. Is that what you did? Were you more sort of leading the way in the openness? 

08:42 Tram: Yeah, so the thing about Sweden is that I think that the gap between different incomes is not a lot. It’s not very much, right? And also kind of like pay and things like is kind of very transparent and also our mutual friend is also a very close friend to Markus and she and her husband also are doing PhD. So I think that Markus kind of has some sense about the salary range that I am in. So yes, I didn’t specifically say how much I earn, but I, I expect all I could hypothesize that he knew kind of not exact, uh, amount, but kind of the range. Yes. But for me, I had zero, zero clue about how much he’s earning. 

The Interplay Between Relationship, Financial, and Career Goals

09:28 Emily: So you mentioned earlier that Markus had a master’s you’re in your PhD program. And that one of your values, shared values was freedom, being able to do what you want to do, having money be a tool along that path. I’m wondering how you think about your being in a PhD program at this time, and maybe what your future career plans are and how that interplays with like the fire pursuit. And then the next layer on top of that, of course, is how Markus would feel about you being currently in academia or maybe in the future. So can you talk more about how you think about that with your finances and your career and the relationship and all that stuff? 

10:05 Tram: Um, so I think that I, I really love doing research. I love my job and everything like that. But I am also aware that I, I cannot earn a lot of money or like become a millionaire just being a researcher. So, uh, since my childhood, I, my parents had taught me to save money and that kind of thing a lot. So like, I am always a saver. Yeah, regardless of how much I earn, I usually try to save at least 10 percent or even sometimes more than 50%. And also because the prospect of PhD, especially after PhD, if we want to get a good job. we have to be willing to move. So all of these also went into my consideration that, hey, I need to save money because I don’t know where I would end up to be. And also, how about the cost of moving? And, uh, how about later if I want to have babies? If I move so much, I would not receive the social benefit and that kind of thing. So for me, saving is important. And I have always been practicing that. Uh, at the same time, I think that like, Sweden has a really good social assistance, uh, security and that kind of thing. So, usually, like, okay, so I am generalizing here, but I think at least with Markus and my friends, they don’t, they don’t save a lot. Because they don’t think that it’s necessary to save even. Because, uh, after the salary, a large, uh, a large part of your salary already go for the tax and which will be paid for your pension and unemployment insurance later. So at least in term of Markus, before meeting me, he had zero saving because he didn’t think that it’s important. Yes. He think that money is important, but maybe now he’s young and also in the tech sector, he’s earning a lot. So, uh, why should I save? I, I can do that later or something like that. So yes, so when we, uh, entered relationship, I already had some amount of saving, even though my salary is always much lower than Markus and he with large salary, but, uh, yes, he, he didn’t have any saving at that time. And. As I said, I was really very transparent and honest from the beginning, so I also brought up these topics with him from the first few days. Hey, I have to move a lot. Of course, I would love to stay in Sweden, but, uh, I’m not sure whether I have that option. After my PhD,and also, yes, my salary would generally be lower than yours in, in good times. I mean, assuming that he still has a job because yes, in fact, the turnover is also very high. Uh, he understand that. I think that’s the thing that I like so much about Markus also, really very open and also trying to learn things. So yes, because of that, even though he aware of all of these things, but he know that, as long as we are more suitable in our values, and we want to build a family together. It doesn’t matter. So, yeah. 

13:20 Emily: Okay. Yeah. So you’re preparing for the possibility of moving out of Sweden, um, depending on where the job opportunities are. And yeah, like that is, that is a really different, um, perspective, I think for people who are, you know, like your, your peers, maybe who are Swedish, like who are used to having that social safety net.  I mean, if you moved to the U. S., it’s going to be all on you. Um, right. So that’s just so interesting to think about, like, depending on that, but making that assumption that you’re always going to be living in that country and it’s always going to have the same kinds of benefits. And you’re introducing this, like, well, Maybe I won’t always live here and why not prepare for that like sort of uncertain or like the possibility of a change in the future. And I just think it’s so interesting as you’ve been talking how you’re the lower earning, uh, partner, but you have quite a bit of financial acumen. Um, and least maybe not now, but maybe when you started the relationship more so than Markus did. It depends, of course, on the things that we’ve been talking about, like whether or not it’s necessary to save or to what degree, depending on where you live and so forth. Um, but yeah, I just think it’s interesting, you know, you’re, you’re coming in with savings with the lower income and he doesn’t have that even with the higher income.

Combining Finances With Your Partner

14:27 Emily: So let’s fast forward a little bit. You two live together now, right? And you have some, some degree of joint finances. Can you talk about that process of sort of, uh, joining up more financially?

14:38 Tram: Mm hmm. So, yes, I think as you already mentioned, at the moment we have shared economy. So, um, how it happened is that when we was considering whether to move in or not, Uh, I talk with a lot of my friends about finance and how they are doing with their partner, whether they share economy or whether they separate it. So I think that most of my Swedish friends that I talk with, they have a separate, uh, economy. But most of the Asian friends that I talk with, they have shared economies. So I could hear a lot of pros and cons also about different perspectives. And personally, I think that I also prefer the joint economy. And then I discussed that with Markus, and I discussed why I think it’s a good thing. And because I think that we are living in one household, so it’s better to join. We also will be able to check and see what each other are doing. And if we have a shared, uh, goal of buying an apartment or later moving somewhere, all of these will need to be shared. So I think it will be much also transparent and honest. It’s, it’s, it’s good. And yes, as I said, from the beginning, Markus is really, really open and supportive. He just say, yeah, let’s test it out. I don’t know how it will be, but, uh, let, let’s try it. And if, uh, it doesn’t, um. If it’s not suitable for us, then we can adjust or even change to another method. So yeah, so far we have been practicing joint, uh, account, and I think that we are doing quite well on that. 

16:22 Emily: So I love that, uh, openness to experimentation. So that’s, yeah, it’s a great attitude. So you have, it sounds like. A joint account, is that right? Is it like joint checking, joint savings? 

16:35 Tram: For example, my salary will go directly to my separate account, and Markus’ salary will go to his separate account, but then we already calculated like a per month how much we need as a fixed expenses, like for the bills and for the groceries for the saving. So I think 90 percent of our joint salary will go to the joint account. So we have like 10 percent left. That means that 5 percent for me and 5 percent for him. So that we can just spend as our individual allowance, like if we want to buy gift for each other, or if we want to hang out with friends, so we don’t have to ask for each other, uh, opinions or something like that. So the 90 percent will be shared between saving, and yes, I can explain that later, but the saving and the bills, the grocery, and also another account called play account, like something that we can use together when we hang out together. And for us, we eat out every week once just so that, uh, yes, it’s, it’s also helps us to understand why money is important and also like. Yeah. Energize us. 

17:57 Emily: Okay. So what I’m hearing is that, um, your incomes start separate, but then almost all of them become combined, um, into this joint, joint checking and joint savings model. Um, so the separate, what you keep separate is very, a small percentage of your overall income. Um, and I think the, the listeners will like be curious about this because you mentioned that Markus has a higher salary than you do. How you both, I understand mechanically how it’s working, but how you both are like feeling about it or how he feels about it. Right. Because he’s. Subsidizing, you know, your lifestyle to a degree. So, like, have you had conversations about that?  

18:32 Tram: Yeah, yeah. So, uh, I think, yes, because that was also my concern from the beginning. Hey, I am having a much lower salary. Would it be fair for you also to, to give the majority of your salary? And so far, I would say that, let’s say, if our joint account is 100%, then I am contributing around 35 ish percent, and his one is 65%. Uh, yes, Markus agrees with that, of course, but also because he entered into the relationship with a small loan, also from his student loan. So he thinks that it would be fair for him to put more in the joint account because from that we also take out some part to pay for his private loan.

19:20 Emily: I see. Okay.

Commercial

19:24 Emily: Emily here for a brief interlude! Tax season is in full swing, and the best place to go for information tailored to you as a grad student, postdoc, or postbac, is PFforPhDs.com/tax/. From that page I have linked to all of my free tax resources, many of which I have updated for this tax year. On that page you will find podcast episodes, videos, and articles on all kinds of tax topics relevant to PhDs and PhDs-to-be. There are also opportunities to join the Personal Finance for PhDs mailing list to receive PDF summaries and spreadsheets that you can work with. Again, you can find all of these free resources linked from PFforPhDs.com/tax/. Now back to the interview.

Savings Goals and Using Sinking Funds

20:16 Emily: So you mentioned that you have like a few different savings goals going on right now. Can you talk about how you are, like what you’re working towards and also how you are, um, maintaining finances within your relationship, not just how it’s structured, but how you are having conversations and communication around that.

20:33 Tram: Yes. So, I think for the saving goals, the biggest, uh, saving goals right now is, uh, the coming trip to the U. S. Next year, hopefully for my exchange. So for this, uh, we estimated that, hey, we would need around 10,000 USD. I mean, because I already received the scholarship for that, um, uh, exchange, but. 10,000 would be an extra thing in case things happen or also help us to visit other states because we will stay there only for six months. So we would want to utilize the time there as much as possible and also to help us to purchase the flight tickets and insurance, that kind of thing. So for that, Every month, so far, we, uh, try to save around 2,000. So whatever we do, it doesn’t matter. Whenever the money come in, we immediately take out 2,000 for the, for the saving account. So I think, uh, that goal will be completed next month or so, and then we will try to move in other long term savings, such as, like, wedding expenses or apartment expenses. And another, uh, smaller, smaller saving goals would be, like, uh, gifts, such as, like, Christmas is coming. And I think for Swedish people and also in my family, we have a tradition of giving each other gifts. So we are so like each month so far, we add in that around 100 or 200 USD so that we will have some, some amount to buy gifts for our loved one. Another one is a vacation. We also add in, um, yeah, I think 100 or 100 ish around every month, hopefully that next year or the year after that we can afford our trip to Japan. So, yeah, so those are the common and biggest saving account so far. And oh yes, and we also have emergency fund, if you also can count that as saving. Uh, yes, so we have around 500 or so. Uh, yes. Going for the emergency fund. Actually, so far, sometimes we would take out some money from the emergency in case we spend so much money in cooking or eating outside. But we are trying to stick to that as much as we can. 

23:00 Emily: I like that you’re, so the way that, the way that I talk about this is, is sinking funds or targeted savings funds. Um, and I like that so much of your saving is for like. Fun, exciting things that you get to do together, because I think that’s a really good introduction to saving for someone who maybe hasn’t practiced it or is less familiar with it. It’s like, it’s really just like planning. Like, do you want to have a December when you’re stressed because you have to buy all the gifts at once and you have no savings for it? Or would you rather build up gradually over time and be more generous because you’ve already planned for it? Like. It’s such a positive, you know, thing.

Plans for a Potential Visiting Fellowship at Harvard

23:36 Emily: Um, I want to hear more about your exchange in the U.S. Um, I’m so excited you’re going to be spending six months and you want to travel and so forth. Like, are you going to a particular university? Is it, you know, for research purposes? Just tell us more about, um, the sort of official, like, career wise reason that you’re doing the trip and then also what you plan to do for fun.

23:53 Tram: Uh, yes. So, uh, hopefully again, it also depends so much on the situation, but I will have a visiting fellow position at Harvard in Boston for six months. I’m still, I already applied and I got a scholarship from Sweden, but I still need to, uh, um, get the offer. Again, they have the possibility to reject still from Harvard. But if everything goes well, I will be there from January to June, like the spring semester. And most of the time, yes, I will be doing research in Boston area. And Markus also is going with me. So that, that will, that, that is a plus. Uh, but beside that, we also plan to visit California where my own sister is staying with her husband. And I also do have other friends there. Markus and me also plan to go to Texas where we can try out the real Texas food. We watch so much YouTube videos about that and maybe Mexico. So, yeah. Those are the plans so far, and I think, as you said, I try and we try to make our saving plans fun and interesting because for me, from the beginning, I’m more just focusing on saving, saving, saving, even though I don’t know what I’m saving for, and Markus is like focusing on living, living, living, just living at the moment, so right now we are trying at least to balance those things, hey, I save, but also I don’t forget to live, and those saving will be spent on the things that I love to do or make my life more meaningful.

25:35 Emily: Yeah, I love that approach. Um, it actually reminds me, I, I reread Die With Zero recently by Bill Perkins. Have you read it? 

25:41 Tram: Oh, not yet. Okay. 

25:43 Emily: Well, this is definitely a recommendation to you, um, because it just reminds me that like all the saving that we do, whether it’s for retirement or whatever, like pretty much all of it is for your own spending in the future. And hopefully to have a great lifestyle that you really enjoy in the future, uh, maybe some of it is leave a legacy, right? For other people, but probably primarily for most people who are not super high earners, it’s like to provide for yourself in the future. Um, but it’s not all about the future. Um, it’s also about living in the present. So it’s really nice that you do have that balance, but it sounds like it’s not really causing a lot of conflict, right? It’s like a, a healthy, um, I’m going to, you know, moderate you and you’re going to moderate me in terms of your like, you know, um, natural preferences. So I really like that. I’m so excited. I hope you get to do that exchange and that you get to do the traveling that you want to. I’m curious, is Markus going to continue working during those six months or is he taking like a leave of absence? 

26:37 Tram: So I think that’s a blessing. thing also because his company allow him to work online during that period of time. I think that is also a thing that I like so much, uh, about his job. I mean, the flexibility to work from home or online sometimes, of course, you cannot check like that for two years or three years, but, uh. If you can explain the reason and if you still can maintain the quality of your job, you have that possibility. So yeah, it’s, uh, it’s, it’s good that we can be there together. 

27:12 Emily: And that’s like a really kind of fire thing, right? Of like having the financial flexibility to work somewhere else if you want to for a while to set up your job so you have that flexibility. Like. Yeah, that’s awesome.

Communication Practices for Maintaining Finances in Your Relationship

27:22 Emily: Okay. I asked you a way too complicated question earlier. The second part of that was, um, what are your like practices around communication and finances, uh, for like maintenance purposes today? 

27:32 Tram: Hmm. Okay. So I think I, I must say that the foundation of everything is that we already kind of agree with each other that we will be very transparent and honest with each other from the first, from, from everything. And from the first few days, we already had that kind of condition. So, um, yes, even though finance topic is kind of really sensitive, but, uh, we bring it up whenever we think that, Hey, for example, if I look at the joint account and I see like. Markus spend 20 or 50. So usually when we spend something, we try to write out, like when we transfer the money, we try to write out the reason why we’re spending that money. But sometimes the Markus would forget. I usually don’t. Uh, so I would say, Hey, I’m looking at the money today, it seemed like you are spending 50 somewhere. Uh, did you have something fun to do or did you eat something nice or something like that? So we would bring it up to each other and ask to know, Hey, where are the money is going? Because for me, I would be very frustrated if I don’t know where the number is going. And at the end of the month, I’m like, Hey, why are we? In short of money, why, what is going on? Like, should we readjust the budgeting things or things like that? And another thing is that every month when the salary comes, we will sit down and we call that like finance days. So we will try to discuss, Hey, this month we have spent this much on this, this, this, it seemed like we eat a lot. Or it seems like we spend a lot on buying clothes or something like that. Should we adjust something? And, uh, so far, I think it goes super well for us and, uh, to have, um, so usually what we do is we have some fun things to do. When we discuss finance, usually we could eat out in a restaurant and when we were waiting for the food to come, we would starting discussing finance or like we say, okay, first we sit here, we discuss finance and after that we can go for sauna or like a beer or something like that. So we try to incorporate some fun activities again to go in so that, like, especially for me, it’s already become a habit. But also I agree that from the beginning, Markus would find it a bit difficult and also, hey, why every time about money, money, money. So to reduce that frustration, we try to incorporate things that we would like to do and also talk about the topics, constantly discuss with each other, being transparent and honest. I think that helps so much. Another thing we also have been practicing is that we try to celebrate our wins, even though sometimes it’s super small. So for example, last week or so, I received a small scholarship. So we also went out to eat, even though every week we already go out and eat, and in the same week Markus could sell his computer, the one he doesn’t need to, need to use anymore. So we also celebrate that. So actually last week we went out and eat three times. Uh, but I think it’s, it’s, it’s good. It give us some motivation that, hey, we, we really enjoy life and, uh, we have the meaning and we like to do things together. 

31:00 Emily: And I, I’m sensing that that is coming from Markus’s side, right? Like if you, like when you weren’t with him, when you were single, if you had a financial win, were you celebrating that or were you just like, great, it goes on my savings? 

31:11 Tram: I do not think so. I just like, Oh, you did great. That’s all I would do. But yeah, yes, like literally celebrate and go out and buy something nice for ourselves. I think I’m also learning so much from Markus. Yeah. 

31:25 Emily: And it just creates that again, like the positive cycle, right? Of like, we did something positive and we get an immediate, like nice reward to it and it encourages you to keep going. And yeah, I think that’s just beautiful. So what I was hearing about for your communications was that you have at the top of the month, you have like a planning period. Um, and then you have maybe just light check ins throughout to make sure you’re sort of, Oh, was this part of the plan? We need to adjust the plan. Um, But I like that balance. So it’s not all like reactive. It’s not all like, Oh no, we overspent. How did this happen? Blame, blame, blame. You know, it’s, it’s more like, okay, we’re, we’re getting on the same page and then we’re just going to sort of check in and make sure that everything’s going fine. And then you have that reset for the next month where you plan again, but it’s also not just planning. It’s not just like, okay, this is what we’re going to do. And we have no idea whether it happened or not. Right. You have to do like both those sides of process. So I like that you’re doing that together. Um, yeah, it reminds me, my husband and I were both pretty involved with our finances when we were both in graduate school, but I would say in the years since then, he’s kind of let me like do what I want. And like, I will ask him questions like, Hmm, okay. You spent 75 at Home Depot. What, what was that? And he’ll be, oh, remember I bought this thing. Okay. Okay. As long as we’re not like spending for spending sake at Home Depot, now that we’re homeowners, that’s the kind of problems we have. Um, okay. Well, this has been such a fun conversation and I’m so glad that you shared these elements of your relationship with us. It sounds so fun as we’ve been talking about. 

Best Financial Advice for Another Early-Career PhD

32:49 Emily: As we wrap up here, would you please share with us your best financial advice for another early career PhD? And it could be something that we’ve already touched on in the interview or it could be something completely new. 

33:00 Tram: So I think I would say that, yes, maybe learn to save, even though the PhD salary is not that high, but I think that, uh, saving give us the freedom and the liberation, literally to choose and also in the future. We don’t know what will happen. But at the same time, I think this I’m also learning like saving, but also do not forget to live, like try to do something fun, even though it’s just a small thing, but also make you feel like, oh, the money I’m earning really bring the meaning. So by that you can keep going in a long time instead of like, drop out in the middle of, of the journey. 

33:42 Emily: yeah. Great point. Very well said. Thank you so much for coming on Tram, and it was lovely to to meet you and thanks for volunteering. 

33:49 Tram: Thank you so much for having me.

Outtro

33:57 Emily: Listeners, thank you for joining me for this episode! I have a gift for you! You know that final question I ask of all my guests regarding their best financial advice? My team has collected short summaries of all the answers ever given on the podcast into a document that is updated with each new episode release. You can gain access to it by registering for my mailing list at PFforPhDs.com/advice/. Would you like to access transcripts or videos of each episode? I link the show notes for each episode from PFforPhDs.com/podcast/. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! Nothing you hear on this podcast should be taken as financial, tax, or legal advice for any individual. The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Dr. Lourdes Bobbio and show notes creation by Dr. Jill Hoffman.

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