Personal Finance for PhDs

Live a financially balanced life - no Real Job required

Emily

Set Yourself Up for Financial Success in Your PhD Program, Postdoc, or Post-PhD Job

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Title: Set Yourself Up for Financial Success in Your PhD Program, Postdoc, or Post-PhD Job

Format: Live lecture with Q&A (in person or remote)

Intended Audience: Undergraduate and graduate students and postdocs graduating/moving on in the next year

Length: 60 minutes

Timing: Year-round

Summary: This seminar is designed for PhD trainees at the undergraduate, graduate, and postdoctoral levels who plan to graduate and/or take another job in the next year.

Outline:

  • Why and how to set up your budget before you move
  • Tax (income, FICA)
  • Payroll deductions, e.g., insurance
  • 8-step financial framework
  • Student loans (budgeting for repayment, income-driven repayment plans)
  • Investing (workplace-based retirement accounts, IRAs)
  • How to set your living expenses appropriately to your salary
  • Homebuying
  • Moving expenses
Schedule a Call to Discuss This Seminar

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Personal Finance for Postdocs

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This comprehensive presentation or workshop teaches postdocs the basics of personal finance and how they can set and reach financial goals during their training.

The major sections of the presentation are:

  • values, goals, and strategies
  • budgeting
  • saving
  • tax-advantaged retirement accounts
  • investing
  • debt evaluation and repayment

(60-90 minutes plus time for questions)

The Graduate Student and Postdoc’s Guide to Personal Finance

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Title: The Graduate Student and Postdoc’s Guide to Personal Finance

Format: Live lecture with Q&A (in person or remote)

Intended Audience: Graduate students receiving stipends, postdocs

Length: 120 minutes

Timing: Year-round

Live Seminar Outline: The Graduate Student’s Guide to Personal Finance from Emily Roberts on Vimeo.

Summary: This comprehensive presentation or workshop teaches stipend-receiving graduate students and postdocs the basics of personal finance and how they can set and reach financial goals during grad school. This talk is appropriate for grad students of all years and postdocs. It is well-suited as a stand-alone event or part of an orientation or personal/professional development series.

Outline:

  • Financial goals framework
  • Saving
    • Emergency funds
    • Targeted savings accounts
  • Investing
    • Tax-advantaged retirement accounts
    • Passive investing
  • Debt repayment
    • Student loan deferment
    • Whether to pursue income-driven repayment and forgiveness
  • Increasing income
  • Budgeting and frugality
  • Pay types and tax implications
Schedule a Call to Discuss This Seminar

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How Far Will My Stipend Go?

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When you first receive your offer letter from your graduate program, it may be difficult to determine what kind of lifestyle you’ll be able to afford, especially if you don’t have previous experience living on your own in that city. You may not be able to tell if you’ll need to take on debt or if you’ll be able to live on just your stipend. If you can live on your stipend, it won’t yet be clear how high or low on the hog you’ll be living or what kinds of savings goals you’ll be able to set, if any.

The best way to put your stipend in context is to talk with other students at your university who receive a similar stipend who are a few years ahead of you. Find a few students who are in your program or your lab or have your same fellowship and ask them if they find the stipend livable. Graduate students who receive stipends are more open about money than most others because we are all in the same boat, so to speak. They will be able to give you advice on where to live to keep your rent reasonable and let you know how tightly you’ll have to manage your income.

If you aren’t able to get in contact with any other students, you can compare your stipend to the living wage in your local area. The living wage should give you an idea of how much is needed for basic living expenses. If your stipend is above the living wage, you should be able to get by without taking out any student loans. If your stipend is well below the living wage, you might consider taking out loans or finding a very inexpensive living situation.

Also check out this database of grad student stipends. If you search for your university, you will be able to tell if your offered stipend is above, below, or in line with what other students are receiving, and the comments may let you know how livable the amount is.

Once you know that you have a livable stipend, you can start to create financial goals for your time in grad school, such as living within your means, saving a certain percentage of your pay, or paying down a lump sum of debt. Before you arrive on campus, you can even sketch out a budget.

Further Reading: How to Create Your First Budget as a Grad Student (a Grad Student Finances Guide)

Money Management Systems and Tools

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There are two basic components to any money management system: the plan and the execution. The plan (aka your budget) tells your money where it should go. You successfully execute your plan through automated systems, self-control, and tracking where your money actually goes.

The Plan: Your Budget

Budgets are an incredibly flexible tactic for reaching your financial goals and fulfilling your values. Any type of plan that directs your money is a budget; it isn’t necessarily restrictive or limiting. While there are many different ways to budget, every budget will have some similarities.

Further Reading: How to Create Your First Budget as a Grad Student (a Grad Student Finances Guide); Six Different Ways to Budget Your Money

An effective graduate student budget should include:

There is plenty of variation within that basic structure for different types of budgets. You can be as general or as detailed as you like in delineating your income to your regular fixed and variable expenses.

Resource: Grad Sense Budget Calculator

The Execution: Tracking, Etc.

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The single most effective action you can take to change your spending is to track it. Even without budgeting, tracking your spending will cause behavior change for the better. Tracking is a major accountability tool.

You can accomplish tracking your spending manually or in an automated manner. In the manual method, you literally note every transaction you make into some kind of ledger – paper, spreadsheet, or app. This method takes time, commitment, and memory, but it forces you into a high level of intimacy with your spending, which is ultimately better for changing it. In the automated method, you use the electronic spending record for your debit and credit cards do the tracking for you. Most typically, you connect each of your banking and credit accounts with tracking software; the software then downloads and categorizes all of your transactions. This method is easier to maintain, but you still have to check up on the data periodically.

The best way to accomplish your financial goals such as saving is through automation. Once your goals are automated, you no longer have to use your memory or willpower to accomplish them. Even better, your automated transfers should pay yourself first.

Of course, at the end of the day it is down to you to stick to your budget. Tracking tools and automation can help, but you have to be committed to living within your means and reaching your financial goals.

Tools

There are many pieces of software and apps available to help you with tracking and budgeting. You should invest some time into finding one that fits your style and personality well before committing to one, because the switching costs can be high. Your bank might provide an app or program for free, but if you would like to budget and track across accounts an independent program is preferable.

A few examples of leading budgeting and/or tracking software are:

Mint: Hook up all your banking, credit, investment, and debt accounts for an instantaneous net worth calculation. Create a monthly template budget and track your spending against it. Keep track of your bills. Set savings and track savings goals. Analyze your past spending. Free.

You Need a Budget: Hook up all your banking and credit accounts. Follow four rules: 1) Assign every dollar a job. 2) Save in advance for irregular expenses. 3) Update your budget as needed. 4) Live on last month’s income. Free for students.

Mvelopes: Hook up all your banking and credit accounts. Digitally implement the envelope budgeting method (allocate money each month to category-specific envelopes and then spend from them). Especially helpful for handling irregular expenses. Free and premium versions.

Every Dollar: Dave Ramsey’s budgeting software that follows his budgeting principle of giving every dollar a job. Manual tracking for the free version. Free and premium versions.

Set Yourself Up for Success

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Before you even move to your new city for graduate school, you will likely make decisions that will affect your financial life for possibly years to come. You can set yourself up for financial success by laying out your spending at a high level, including your “big rocks.” Two of the biggest “rocks” in any budget are housing and transportation.

As students generally set up their housing before arriving on campus, it’s the first opportunity you’ll have to make a financial decision. While you might be able to afford the rent in a posh apartment by yourself, think about how that will impact the remainder of your cash flow. A good rule of thumb is to spend less than 25-30% of your gross income on your rent or mortgage. That may not be possible in the highest cost-of-living cities or on less generous stipends, so it’s even more important in those cases to economize where possible.

Having at least one roommate will dramatically bring down your housing costs. The best deals may be found in renting with multiple other roommates, for example in sharing a single-family home. Also carefully consider the amenities that you are paying for in apartment complexes or neighborhoods like gyms and pools and make sure that you will make frequent use of them before you let them inflate your rent.

Owning a car can be one of the most expensive line items in your budget throughout your whole life. If your university is in a city with good public transportation or is highly walkable/bikeable, a car may not be necessary. Ask current graduate students if everyone has a car or if it’s possible to live without one. International students will likely give a different perspective than domestic students so be sure to ask both. If you do need a car during graduate school, be careful not to buy one that will saddle you with high debt payments or that will require expensive and frequent repairs. The best value you can get from a car is to buy a 5-6 year old used vehicle and drive it into the ground. Also consider the gas mileage of the vehicle if you anticipate driving long distances, as the amount you spend on gas will be a factor in your budget.

Sketch out the big fixed expenses in your budget before you sign a lease or buy a car. All of your needs – your rent/mortgage and utilities, all debt payments, grocery costs, insurance, etc. – should not amount to more than 50% of your take-home pay according to the Balanced Money Formula. If your needs amount to much more than 50% of your take-home pay (that’s after taxes and giving), take another look at your housing and transportation costs and consider reducing one or both.

Further Reading: How to Create Your First Budget as a Grad Student (a Grad Student Finances Guide), A Graduate Student’s Balanced Money Formula