In this episode, Emily interviews Elle Rathbun, a rising 7th-year PhD candidate in neuroscience at UCLA and repeat podcast guest. Elle explains the budgeting principles of giving every dollar a job, getting a month ahead, and sinking funds, which are bundled together in the software You Need a Budget or YNAB. She shares how she has used YNAB since she started graduate school and how it has benefited both her net worth and anxiety about money. Elle is now planning on a career transition into an MBA program and career in venture capital, a pivot that would not be possible without the nest egg she built during grad school.

Links mentioned in the Episode

• Register For a Free PFforPhDs Seminar
• How to Get 13 Months of YNAB For Free as a Student
• PF for PhDs S19E5: This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers (Part 1)
• PF for PhDs S19E6: This Grad Student Channeled Her Financial Exuberance into Teaching and Coaching Her Peers (Part 2)
• PF for PhDs Article: Perfect Use of a Credit Card
• 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

Teaser

Elle (00:00): I am very cheap. I pay for almost nothing. Um, and, uh, $109 for anything else to me is just so expensive. Um, but I know that it’s really helped me keep on track for all of my savings. I know for a fact, like, I would not have the savings that I have and my investment accounts would not be where they are if I didn’t have a really good tracking system for it.

Introduction

Emily (00:31): 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 (01:01): This is Season 25, Episode 4, and today my guest is Elle Rathbun, a rising 7th-year PhD candidate in neuroscience at UCLA and repeat podcast guest. Elle explains the budgeting principles of giving every dollar a job, getting a month ahead, and sinking funds, which are bundled together in the software You Need a Budget or YNAB. She shares how she has used YNAB since she started graduate school and how it has benefited both her net worth and anxiety about money. Elle is now planning a career transition into an MBA program and career in venture capital, a pivot that would not be possible without the nest egg she built during grad school. By the way, Elle shared with me a one-pager on how to get 13 months of YNAB for free, which includes her referral link, and you can find a link to that resource in the show notes.

Emily (01:53): This fall, I’m presenting four virtual seminars on personal finance topics for prospective and current funded graduate students in the US. The first two are practice rounds for presentations I’m giving at ABRCMS in November, titled The Grad Student Financial Checkup and Will the Stipend Be Enough?. The second two are chapter topics from my book, titled Increase Your Income Inside or Outside of Academia and The Most Effective Frugal Strategies for Grad Students. I invite you to participate in these seminars for free in exchange for your feedback on the material. The seminars will be on four consecutive Fridays between October 23rd and November 13, 2026. I’m unlikely to ever offer this content again in this format, so grab your spot now! Go to PFforPhDs.com/FreeSeminars/ to register. You can find the show notes for this episode at PFforPhDs.com/s25e4/.
Without further ado, here’s my interview with Elle Rathbun.

Will You Please Introduce Yourself Further?

Emily (03:08): I am delighted to have back on the podcast today, Elle Rathbun, repeat podcast guest from season 19, episodes five and six. Um, Elle is a rising seventh year PhD candidate in neuroscience at UCLA. And in our prior episodes, just a couple of years ago, we talked about how enthusiastic she was about budgeting and personal finance, um, so much so that she had a coaching position, uh, on campus helping other graduate students with their personal finances. That’s the subject of the prior episodes. Today, we’re gonna still be talking about budgeting, but more about Elle’s own personal practice and use of YNAB. So Elle, welcome back on the podcast. Um, you don’t need to go through everything we went through in the previous episode, but would you just please give a little bit more detail about yourself for the audience?

Elle (03:56): Yes, absolutely. I am entering my seventh year, as you said, of my PhD in neuroscience at UCLA, and I got into personal finance, especially in the context of graduate school, uh, mainly through this podcast. I was listening to a lot of podcasts as, uh, a technician, which, uh, uh, I took two years to do before grad school. Um, and I really took that time to learn about this whole world that I had no idea about. Um, and so, uh, I am applying to business schools, uh, right now and, um, previously pivoting from a, uh, an academic track. And, um, so currently, I’m thinking a lot about, uh, where I want my finances to be, but also what does that look like if I am planning on going back to school or continuing school.

What Does Giving Every Dollar a Job Mean?

Emily (04:48): So we’re gonna talk about YNAB in a moment, but first we’re gonna talk about an even more foundational budgeting principle, which is giving every dollar a job. And I know I practiced budgeting this way when I was in graduate school as well, but I wanna hear what that, uh, means, first of all, and then we’ll talk about how you do that.

Elle (05:06): Definitely. Yes, that phrase giving every dollar a job definitely comes from YNAB and the YNAB principles. So YNAB, yes, stands for You Need a Budget. Um, it is a website that I use, um, and you can get it for free as a student for a year. And to give every dollar a job means that you know exactly what that dollar is going to eventually be used for. And so one principle is that there’s no such thing as general savings, um, but you know what that saving is for, whether that’s emergency savings for job loss or savings for a home down payment that you’re probably not even going to, um, use for another 10, 20 years, who knows? Um, but still knowing what every dollar is purpose to do, um, and eventually being okay with spending that money. And we’ll talk about that a little bit later, but for me, giving out every job, dollar a job means, um, that I am able to spend the money that I’ve already allocated for a certain something, a certain budget line item, et cetera, um, sort of letting go of this guilt of like, “Oh, but what if, should I, should I go to this concert or should I have this incredible experience even if it means that, like, that’s less money in my bank account?” Um, I think feeling secure, for instance, if you have emergency savings already, then, then you can just have a little bit more flexibility. But it also means if you give a dollar a job and now you want to use that dollar for something else, that is okay. I give myself flexibility to do that, but at least I know what I’m pulling from, right? If I decide to go to a concert instead of saving up for a travel fund to, for an international trip, sometimes, like, that is okay, but I know what I’m doing when I, when I make that sacrifice.

Emily (06:59): So you took that pretty immediately to, like, savings and having a purpose for savings, but I actually think about, I mean, I do think about it that way, but I also think about it in terms of the monthly cash flow, right? Like, your paycheck comes in and it’s whatever amount it is, but you have in advance through your budgeting practice assigned every dollar a job. So, you know, this chunk of dollars is going to your rent, this, you know, all the fixed payments, they have to happen. And then you also make an assignment for your variable expenses that you can expect to have every single month, right? Can you talk a little bit more about what, how it works on the monthly basis before we even talk about accessing savings? Or maybe YNAB is such different system. Maybe I’m thinking about it in a different way than, than YNAB presents it.

Elle (07:40): Yeah, that’s actually a fascinating difference, I think, in thinking, just because another aspect of YNAB is to get a month ahead. So everything I think of, it, I think of money as something for later, um, because I’ve already saved for the current month, ideally. So there have been a couple times where I just moved all my money towards investments and sort of started fresh. Um, and so, but for the monthly expenses, for instance, the income I have from June, I typically allocate for July expenses. Um, so my June paycheck goes towards my July rent, for instance. Um, and I, I, yeah, I have target amounts. Again, there’s flexibility required in that. And in spending that money, um, especially the, the more variable expenses, um, one thing I do is I check how much do I have in this budget line item, or budget line in order to spend this money. Like when I go grocery shopping, um, do I, have I set aside enough to, for like a full blast, like, meal prep, um, or am I going to try to challenge myself to really use the things that I have at home and, and make the grocery run a little shorter or cheaper? Um, and so I think, I think one aspect of giving every dollar a job beyond giving every dollar a job is also don’t give future dollars a job, um, right? Just focus on what you have available to you in your bank account. I think especially as graduate students, um, UCLA has had this issue where, uh, sometimes we’re not paid on time or, uh, there might be hiccups or, you know, maybe too much of your health insurance got taken out because, you know, on the backend, they forgot to allocate your stipend for it, et cetera. Um, and so, so I think giving every dollar a job means only giving all the dollars that you already have available, um, a job and not worrying about the forecasting.

“Getting a Month Ahead” or “Living on Time”

Emily (09:43): I wanna go even deeper on something that you just mentioned, which is getting a month ahead. And I think this is maybe… Although I also teach this, I call it living on time. So I don’t even say it’s ahead. I say it’s on time to live on money you already have in your bank account. Um, and in fact, I, I do the same, uh, setup that you just mentioned. All the money you receive in the course of one month, June, goes towards funding your spending in July and maybe following if you’re able to push some of it even more forward. So it doesn’t matter. Like to me, a lot of people budget by paycheck if they’re paid, you know, biweekly or bimonthly or what have you. But I’m like, no, every paycheck you receive in the course of one month, doesn’t matter if it’s one, two, three, however many, goes towards funding your subsequent month spending. Um, so I guess what I’m underst – because I don’t use YNAB myself, um, although I have read the book. Um, so what I’m understanding is that it’s almost like every dollar becomes saving first, becomes savings, and then you spend it in those fu- like it’s already in your bank account and then you spend it in the future. Is that, am I interpreting that correctly?

Elle (10:45): Yeah. Yes. For, I think for the most part, I, for instance, I don’t know how much I spend per month. I have no idea. I would be, I think I could get close to the estimation, but, um, I don’t necessarily think of I think I think of allocating money as spending it. Because I’m giving myself permission to spend it, I can spend up to that. If I spend more than that, I can move it around. Um, and so, um, so I have what’s called, like, sinking funds, for instance, and this is another YNAB term, um, where, for instance, like, car, any car maintenance things, like, I budget for that every single month, um, and, and then I just pull from it when I need to get an oil change or when something else happens. And so, um, I… And that’s, and that’s just pre, like, already allocated at the time where I am looking at that month of a monthly target. Um, and so I think my s – the actual, like, output of spending is much less known to me. I enter every single transaction in manually, so I’m familiar with about how much I’m spending per, um, per month per line item, but that total per month, it’s just so variable that I sort of just embrace the variability and not really worry about it.

Emily (12:04): And that makes sense when you have escaped the paycheck to paycheck cycle, right? Like, if you do live paycheck to paycheck, if, as long as you’re not accumulating, like, credit card debt or something, like, you know, you’re spending the full paycheck. You can’t spend more, you’re probably not spending less either, um, but that’s what this cycle is that you’re in. But since you’re, again, I’m sort of framing it as, like, you’re, like, saving first, you just have pools of money that you pull from. Did that money come in from your most recent paycheck? Did it come in from an earlier paycheck? It doesn’t really matter. Well, I know YNAB tracks that, but it’s all been pulled together. But I’m curious about something… So I have taught many times on this podcast, and I know you, you probably listened to them about what I call target savings, what YNAB calls sinking funds, same, uh, concept. Um, but what I’m wondering about are your variable expenses that occur on a monthly basis, and groceries is a perfect example of that. So do you, I guess, have an amount of money that you’re trying to keep your spending within on a, that’s sort of the same on a monthly basis, or are you just like, “This is my grocery pool of money, and it kind of waxes and wanes, and I just spend whatever’s available in that if I want to”?

Accounting for Variable Expenses Using YNAB Principles

Elle (13:15): Yes. The way I tend to do it is I have a set amount, or I decide as I’m building a budget for the month, um, of money that I can give a job, or give a job for that month. Like these are all the monies for this month. Um, and so for those variable expenses, I allocate per target line item, et cetera. Um, and I’m pretty bad at guessing how much I’m going to spend. I would love to spend less on dining out, and every month I spend more than I intend to. Um, but what ends up happening is I then end up just borrowing from other, uh, other budget lines, essentially. So if I dine out more, I’m probably eating fewer groceries anyway, and so I just sort of take that money, put it down. Um, if it was part of my, like, if I go out to dinner with a bunch of friends, um, in particular, and that put me over, then I’ll borrow from, like, my fun money category. Um, and so that’s, that’s sort of my approach. And then sometimes I do… I try to have a scarcity mindset as well. Like, I, uh, I make it so that I don’t ever have too much money to play with that is within my budget, um, because I just try to invest as much as I can. And so that helps with the scarcity mindset of I only have this much money. Maybe I booked a trip, for instance, or I had to book a hotel. Um, there were a lot of weddings this spring, uh, where I didn’t necessarily save up for all of them. And then I borrow from my larger sinking funds, knowing that eventually, like, over the months, I would sort of pay them back. So I did borrow from my, my car, car maintenance budget, um, to, to fund some of the, the trips I took this spring. Um, but I also know that I, like, I gave myself permission to do that. I know fundamentally I have actual savings that can be for that. Um, I have, like, a, a saving fund for, like, my vehicle. So if something actually happened to my car, I still have a backup. Um, and so… Which is not necessarily recommended, but it has helped me save because it forces the scarcity mindset.

Emily (15:31): Yeah, I totally understand. So it sounds like with the YNAB system, and I know YNAB has this reputation of, like, oh, there’s such a learning curve. And I can see from our conversation already, like, you have to have a different mindset, and then you mechanically have to do a lot of, like, adjustments and playing around with numbers. So it sounds to me like you, at least once per month, are doing this projection of what, you know, the dollars are getting jobs, like, for the subsequent month. And then also, as you go along, there’s probably some corrections and, and so forth that need to made because things didn’t go exactly according to the plan. Uh, is, is that correct?

Elle (16:05): Yes, very much so. Spot on. Yeah, I budget… I go in and update absolutely everything about every two weeks, and that’s how often I pay off all my credit cards as well. Um, and so I… So that’s when I enter all my transactions manually, if I forgot to do it on the app, which I have just become really bad about. Um, and, uh, and then I go through every transaction, I see if they, um, match, like, my memory. Sometimes, very rarely, but sometimes there is a charge where I’m like, “That wasn’t me. That wasn’t my authorized user.” I think that that’s fraud. And so, um, but I also just… I think it’s a good way to engage with where my money is going, um, and to sort of root myself in how I’m spending my time in general. Um, if I am eating out at, uh, you know, if nice restaurants in LA, like, that’s incredibly expensive, but it also gives me a chance to reflect, like, was that worth it? Like, was that experience worth it with my friends? And sometimes a, a lot of the time, the answer is yes, but then it also comes with, like, “Okay, well, how am I going to do that better next month?” Um, and so, uh, there is, like, an optional, uh, import, automatic import from banks. Like they have, they have their own system to just import all that data. Um, and I think that’s valuable, but I, I always think that it’s time well spent doing all of that manually.

Emily (17:31): The phrase I use for that when you have a, a significant degree of manual manipulation going on with your numbers is that… I, I call it staying intimate with your finances and not just having it all going on in the background. Um, but I am wondering what you do have going on in the background. Like, given that you are quite attentive to these numbers and all the transactions, are you doing, like, manual, manually paying your credit cards, for example, or do you have those things on autopay? What about your other bills? Is that manual or automa – or automatic?

Elle (17:59): Uh, good question. So all my utilities are automatic, um, and those are the only bills that are automatic, because, like, wifi, water, gas. Um, rent is manual. All my credit cards have always been manual payments, um, and partially because I’m a little bit scared of overdraft fees, even though my bank doesn’t charge overdraft fees, if I rack up 14 of them because I have 14 credit cards, um, then, uh, then that could be a problem because, you know, there’s a limit. Um, and so I think because I am very into utilizing and maximizing the utility of the, my credit cards, and because I have so many, doing it manually is just better for me, especially because I can line the… It doesn’t… I don’t really care when my credit card statements are due. I know I’m going to pay them ahead of time. That’s been really useful in keeping my credit score down, um, because I never have that much utilization bec – uh, if I pay it off before it gets reported. And so, um, yeah, my approach has always just been do everything manually.

Emily (19:10): If listeners didn’t follow <laugh> along with what we just said about credit cards, I have a… It’s an article on the website, or maybe it’s a podcast episode, but it’s called Perfect Use of a Credit Card. So check that out if you’re confused about credit cards and utilization ratios and how it affects your score and all those kinds of things. Um, now, when we had our last interview, one of the subjects we spoke about was how you were, um, because you took on this additional coaching job at UCLA, you actually increased your stipend, but that also meant that you needed to increase your spending because you were spending more time working and had less time to do other things. And so I’m wondering how, like, were you using YNAB at the time, and how did YNAB help you with those decisions about actually it makes more sense to spend more on occasion in certain areas, um, and making those decisions and also, like, not feeling guilty about it? Like you kind of mentioned that earlier, like, reducing guilt because you’re, I guess, following the plan, but can you expand on that, please?

How Meeting Your Savings Goals Encourages Intentional Spending

Elle (20:05): Yeah, absolutely. I think, especially during that time, and now, I have another part-time position on campus now, um, that sort of went into the same calculation. Um, a lot of it just is based on my savings goal. I have a certain savings goal per month, um, and that is pretty solidified. Um, and I am typically able to make it, but the sacri – in terms of scarcity mindset, again, what do I have to do in order to make the savings goal. Um, and so when my income increases, uh, then, and my savings goal stays the same, then the budget automatically, I can have a little bit more flexibility in, and that number that I go into the budget thinking of, um, I just ended up raising, right? So if I had a certain number in mind pre-part-time job, um, then I would bump it by, like, $200 a month, it’s, uh, for instance, uh, and a lot of that would just kind of go into that dining out fund, um, or prepared foods fund. And so, it’s really… And I think that’s been really helpful, is to just really ground it in the savings capability, because at the end of the day, like, that’s, that’s where I want a lot of my money to go. I want it to go towards retirement and, and home planning, um, or at least a way to make more money, um, and, uh, and build wealth that way. So I really just root it in, in my savings goals and then build off of that. And I increased my savings… I ended up increasing my savings as well, um, and so that worked.

Emily (21:39): I think I had a similar experience when I first started using a budget because, because I was, you know, setting and meeting some savings goals, I then knew that I could do whatever with the rest of the money. And so instead of having, like, a question of, like, is it okay if I spend over here, um, is it gonna mess up something else? Am I then not gonna be able to pay my rent or, like, not be able to, you know, do something else that’s really necessary because I made this elective spending decision somewhere else? The whole budget process and knowing that I was reaching savings goals gave me permission to spend in those areas, like, yeah, okay, I didn’t strictly need to buy that, you know, item of clothing or whatever I could’ve done without it, but it was okay because I’m doing all these other things. It’s all planned out. Like, every dollar has a job, like you were saying earlier. Um, I know my dollars are doing their job with the rent and all the necessary expenses, so these dollars have the ability to do their job with discretionary spending. Um, so it just was a confidence booster to know that there was a plan, um, and that everything was being fulfilled within the plan. And yeah, kind of at the end of the day, like, money, we ideally do wanna put a chunk of it towards our future because that’s how our society works. We need to provide for ourselves, um, in our, um, elder years or when we’re not able to work. Um, but then after that, you get to have experiences of whatever type. You make purchases, you have services, whatever they are, um, and so it’s, it’s really up to you to, to spend it how you want to, and you don’t need to feel guilty about it, right, especially if you’re meeting those savings goals, because that’s providing for yourself over there.

Elle (23:13): Exactly. I think that that’s such a huge part of financial, what we call financial wellness, which is, you know, sometimes I’ll be talking to my friend and they’re like, “Okay, don’t, don’t say anything. I know you want me to save, but I, like, did this.” And I’m like, “No, that was a good experience. Use your money for things that you like and that you want to do.” Um, and so I think I just… Yeah, I’m a big advocate for intentional spending, um, but I’m not really a big advocate for less spending, if that makes sense. Um, and so… And I think the two often get conflated, and really, they’re not. Um, I think you can spend a lot of money, um, unintentionally, and that’s what I personally want to avoid. And you can spend a lot of money intentionally, which is great if you have that money and you’ve taken into account these other factors in your life. Um, and so, absolutely, I think giving every dollar job, and then knowing what job you’re pulling from when you’re being flexible is just incredibly important in being intentional.

Emily (24:14): I also take that same principle, and I apply it to the term, um, lifestyle inflat – lifestyle inflation, right? So, like, this is a big boogeyman in, like, the personal finance space lifestyle inflation. Oh, no. When you get a raise, like, you’re just gonna inflate more and spend more mindlessly. And that does happen, um, for sure. And it’s not good because it doesn’t necessarily align with your values, but, like, I’m definitely in favor of, in favor of what I call lifestyle increases. So, like, yes, when you go from grad student to postdoc or postdoc to, you know, permanent full-time position, like, those are significant jumps in your income, and you should have a difference in your spending and your savings levels. Um, but it should come with some, like, reflection and intentionality and not just, “Oh, whoops, I don’t know where the money went,” right? So, like, it absolutely… Money helps you have experiences you want, it helps you fulfill your values and so forth, but, like, only if we do it with some intention.

Elle (25:05): Absolutely. I think, especially as someone who moved to LA during the pandemic, I started grad school in 2020, um, and something happened that year where, <laugh> um, right, I, I wasn’t going out to eat, and I didn’t have a car then because I moved from Chicago and I just didn’t have a car there. Now, my spending looks incredibly different now with a car, with friends through, throughout the city, um, as it did, you know, my first month in LA. And abs – that was a lifestyle increase. Like, I am enjoying my life, and I give myself permission to enjoy my life, but I also just take in mind, “Okay, what am I sacrificing?” Um, and when I’m sacrificing just, like, gains in a taxable brokerage, that’s fine. I’m fine with sacrificing at least some of that in order to enjoy my life now.

Commercial

Emily (25:53): 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, budgeting, or designing your financial life, each tailored specifically for graduate students and postdocs? I offer live workshops, asynchronous online courses, and cohort-based programs on these topics, and I’m now booking for the 2026-2027 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. 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.

How YNAB Differs From Other Budgeting Systems

Emily (27:22): So we talked quite a bit about how YNAB requires a mindset shift <laugh> as well as learning, you know, how to use a, a new piece of software. Um, so is there anything else that you want to elaborate on when it comes to how you use YNAB specifically, or how YNAB is different from other, like, systems that you might use for budgeting or cashflow management?

Elle (27:41): Definitely. I, I previously used Mint, and Mint is no longer RIP. And, uh, for Mint, that did involve primarily expense tracking, so what you’ve already done with your money and forecasting, what do you want to do with the money that you’re expecting? Um, and YNAB does, you can use it for expense tracking, um, but you can’t really use it for forecasting. Like, is it in your bank account? No, you do not have it. Um, and so it sort of boils down to w – uh, the envelope, the analog envelope, uh, method, which is, okay, one envelope is for rent. That money, you have it, you put it in the rent envelope, groceries, et cetera. And, um, and if you don’t have that money, you can’t put it in an envelope. And so, there is this idea of expense tracking versus budgeting, um, which is, again, a s – the budgeting aspect is assigning jobs to those dollars, um, whereas expense tracking is like, “Oh, whoops, I overspent again.” And to some degree, I use it for expense tracking because, like, I don’t update my budget all the time. Um, and, uh, but as someone who was just starting out using YNAB in 2020, um, I, I did use it, like, every day because it was sort of a game to me. I s – I, I liked doing it, but also I was using it for its purpose, uh, where I was checking my budget, seeing how much I already spent, and seeing how much I had for the rest of the month to spend. The other aspect of YNAB that I like a lot is it has, uh, a tracking, uh, component to it. So you have your budget and you have your tracking. And once you move money from budget to tracking within YNAB, it doesn’t necessarily need to be a physical, like, different account. I use, like, Ally Buckets, for instance, but if you have an account in tracking, that is outside your budget. So when I invest, that goes from my budget, like, long-term savings line, and it spends it as a transfer to my, uh, my brokerage. And so that’s been a really great, great way for me to figure out how much am I actually contributing and investing, um, and it makes calculations for, uh, splits of how much I’m sort of assigning in my head of like, okay, this is for vehicle, this is for retirement, this is for home. Um, it, it, it gives me like a nice pie chart essentially. Um, and so I can see sort of the percentages because it’s also different when I actually look at the value of those investment accounts because of the gains from those accounts. And so that’s something that I, I don’t know if other, uh, other budgeting software mechanisms do that, but it’s something that I really appreciate.

Emily (30:29): Yes, I was a Mint user for many, many years until it went away. And Mint is absolutely on that like template budget system, like you were saying. Um, and one of the reasons why I never really used Mint fully, like I’ve always used my own system in addition to something that aggregates and tracks things for me. Um, I find that part of it very helpful. So something that I’ve come to learn about myself through doing this podcast and talking with people about how they do their budgeting, um, is that I really like having like separate accounts or separate sub-buckets, like you were just mentioning, um, for different purposes. But it sounds to me like YNAB is doing that. Like you could probably literally have all this money in your checking account. I mean, it wouldn’t be a good idea, but mechanically it could all reside in the checking account and then YNAB does all the differentiating and all the things for you.

Emily (31:15): So I’m just wondering, like you did mention you have Ally, for example, but like how many actual different accounts are you using and how much are you relying on YNAB for that, um, the splits and the differentiation? 

Elle (31:26): Good question. So I really only have one checking account, one savings account, and then I I do have like a CD for my emergency savings, um, which is not part of my budget, um, which is another component. I’m not even tempted to do that because I’m like, ugh, then I have to move it back into the budget and that’ll look like income, et cetera. Um, and so, um, but that’s really, that’s all I have, uh, for, for actual cash money that is available to me. And then, um, ex- exactly, like, YNAB makes all those splits themselves. And it’s also the reason why I can keep up with all of my credit cards scattered throughout different banks, is I just go down the, the YNAB list, see, you know, go to that account, look at my statement, put in my transactions, pay it next. Um, and so it actually doesn’t take that long. And, um, but yeah, the YNAB definitely helps differentiate between jobs for those dollars without requiring a bunch of different accounts or even buckets. The buckets are wildly necessary, and I really only use them for, uh, for, for instance, my, like, Roth IRA for next year, um, is, is its own bucket.

Emily (32:36): Yeah, it definitely seems like a lot of the systems that I teach, YNAB was just like, shoot, we just do it all in this software. And as you mentioned, grad students can get this for free for one year with their student status. After that, I think it’s something like 100 or 120 a year, is that right?

Elle (32:50): It’s 109 a year, yes.

Emily (32:52): Okay. So just going into it, if you fall in love with the software, <laugh> you’re gonna be paying, um, a little bit more for it after that first year. Bringing it back around to how we started this conversation, like, all this effort, you know, that you put into budgeting, it does sound like a significant amount of time to stay this intimate with your finances and use the software. Like, how has this helped you throughout your grad school journey with, that could be, like, literally with, “Okay, I saved all these dollars, like, amazing,” or it could be, um, about stress or any, any way you wanna take this.

How YNAB Can Reduce Your Money Stress

Elle (33:20): Definitely. I, I come from a very low income background, and so saving money was always, like, a game for me and my mom. Like, I would collect coupons, we would go through them together, et cetera. And so, um, how that manifested as a young adult, especially someone who just graduated college, um, and through the first year or two of grad school, is I then had a lot of anxiety around spending money, um, especially if I noticed that I could have gotten the same thing that I got in one place for cheaper somewhere else. And so, um, and that was not healthy. Like, it was to an unhealthy degree where I would get, like, actually pretty upset about it. And, um, to the point where I was like, “This, th- that 50 cents does not matter. Like, let it go.” Um, and so YNAB was actually really helpful in me letting that go, me saying, “Okay, no, I’m good. I have my emergency fund. I have put aside the savings that will allow my money to grow, and this money has already been allocated for this. If I don’t spend it on this, I will spend it on something similar anyway.” Um, and it also kind of helped… It aligned with me taking on a bunch of, like, side gigs where I was just like, “No, my money or my time is worth money now, um, and real money now. It’s not just like a, you know, a high school throwaway job for, for a couple hours. It’s something where I’m like, no, I can actually build wealth if, but I can’t build wealth and I can’t work well, um, if I have this mental weight on me that is just so completely unnecessary.” Um, and so just having that number, having that green number in YNAB saying, like, “Hey, you still got $70 for groceries? You’re good. Just buy the groceries.” Um, and so that’s been, yeah, a huge, hu – uh, progress in t- terms of mental wellness, uh, in my, in my respect, or in respect to, to finances. Um, it all, honestly, the, I pa – I am very cheap. I pay for almost nothing. Um, and, uh, $109 for anything else to me is just so expensive. Um, but I know that it’s really helped me keep on track for all of my savings. I know for a fact, like, I would not have the savings that I have and my investment accounts would not be where they are if I didn’t have a really good tracking system for it. Um, but also, I’m so motivated, and I’m sure a lot of this audience could relate, I’m so motivated by data, um, and YNAB is just really good at presenting a lot of your own data. So now I can go back six years and see that progress, and I’m still motivated to continue the scarcity mindset, right? Like, of course, we’re grad students, like, we only are making so much money, um, but it’s not necessarily the amount you put in, uh, the, the investment account or the, the savings account. It’s really the momentum and the habits you build. And YNAB has just been a really good habit that, you know, looking at one month, okay, fine, but looking at the progress, um, has been really helpful.

Emily (36:39): I’m gonna ask you about this career pivot again in a moment. But before I do that, I’m thinking of an audience member who’s listening to us and you’re six years into using YNAB. I’m a lot of years into caring about my personal finances, and they might be like, “These people are not speaking to me where I am,” because maybe we’re speaking to a graduate student who is not living on time, is not a month ahead, is in fact behind every single month, living paycheck to paycheck, accumulating debt, maybe paying it down sometimes. Like, can, even if you don’t have personal experience with this, or maybe you do have some from when you started your journey, um, can you speak to how the software might be able to help a person who is, like, really drowning and not managing their cashflow and definitely not ahead and definitely does not have savings?

Elle (37:21): I used to coach students who were in these types of situations, and I’m not completely unfamiliar with that situation myself. Um, ignoring a problem will not help solve the problem, and that’s what a lot of people do tend to do. They’ll at least ignore a part of it. With something like YNAB, again, I’m not sponsoring YNAB in any way, shape or form. Use whatever. Yeah. Um, and so, but with YNAB in particular, um, or any budgeting system and tracking system, it really forces you to confront the reality. Um, maybe you do have to spend more than you are making per month. Maybe all of those line items are completely necessary and you’ve already shaved down everything. Then hiding from that is not going to help. Um, but knowing how much more you need to make per month in order to make it work is incredibly empowering information so you know, okay, I gotta go tutor, or I have to get a part-time job, or this program is not going to be sustainable for me. Um, and so I think it, the sooner you can start a good habit, um, and the sooner you can identify the things that need to change, then the better you’re going to be. Um, and so, so YNAB, any other budgeting system, really makes the reality sink in, I think. Um, because you’re giving every dollar a job, and if there just aren’t enough dollars, then, then you need more, frankly. Um, and so, but you don’t wanna take on too much either. And so, so I, yeah, I, I believe in the power of, of personal data, um, and s – and knowing, knowing how sustainable something like grad school, something like a long-term commitment that grad school is, is going to be. Um, it can be, it can be helpful. And if you don’t like it, then that’s, that’s okay. If it doesn’t work for you, that’s okay. But I think it’s a good first step in finding out what does work.

Emily (39:26): And you have that first year free. So, like, you’ll be investing some time into it, but at least you don’t have to pay the fee until you know that it’s working for you. And it can be really chaotic and confusing with, like, well, I have a pocket of money here and a pocket of money here, but I also have these credit cards and everything’s just flowing around. And, like, at what point do I even take a snapshot and look? And I’m sure the software or any software that you might engage with would, like, help you, um, feel more organized around that. And like you said, just actually, like, kind of face up to the situation. Um, like you said, it doesn’t, it doesn’t help to just keep feeling stressed and terrible, but not, but also frozen and not able to take any action to really change either the income or the expenses, uh, or both, uh, sides of the equation.

Elle (40:09): Definitely. I think I also just, I have, I have, I think maybe 20, over 20 different accounts, if you include all the credit card accounts, all the savings accounts, brokerages, et cetera, across, like, at least 10 different banks, just organize it. I think building that good habit is really gonna come down to organization. And so any, again, any way you can organize that and, and face it is going to be incredibly useful in addressing it.

Emily (40:37): And I do think this concept, even if you weren’t using the software specifically, but the being a month ahead, the living on time, as I call it, like, this concept is actually really unfamiliar, I think, to most people, but it’s so, so, so helpful that, yes, you only spend money that you have already actually received. You’re not putting something on a credit card that you don’t have the money to already pay. Like, um, again, living on time to me is like using credit cards like debit cards. Sounds like it’s exactly how you use it as well, but the money has to already be in the account before you spend it, even though technically you don’t have to pay off the credit card for, you know, some weeks into the future. That can just really trip people up and become very confusing.

Elle (41:15): Definitely. And I understand that sometimes you just have to put something on a credit card and you don’t have the money to pay it. And that is, if that’s what needs to happen, okay. But then having a plan to pay off that credit card is more important than putting it on the credit card without that money in the bank account. And so, um, don’t, yeah, don’t lose the, the forest for the trees.

How Budgeting, Saving, and Investing During Grad School Allowed for a Career Pivot

Emily (41:38): So you mentioned earlier that you’re now gonna pursue an MBA, um, instead of the, you know, more traditional academic track that you had expected to be on at this point. Um, how has your budgeting, your saving, your investing, all those efforts that you’ve been doing during graduate school, um, contributed to or enabled the possibility of this career shift?

Elle (41:59): In a podcast years ago, someone referred to money as freedom units, and I think that, that really stuck with me. Um, and money, I think, is just flexibility in life. Like, the end goal for me is not to have a certain dollar amount, um, although that is kinda nice. Um, but it’s really what, what can I do and what more can I do if I have this money, if I have this flexibility? And so I think going into something like an MBA where I would have to pay for at least some aspect of school or living expenses, um, would not be possible if I was in the same situation that I was in when I was a technician, right? I just did not have savings and I needed a job and I had nothing to fall back on and no retirement savings, et cetera, right? I could not delay that for even two years. Um, whereas now, I can really take a step back, figure out what’s, what I would enjoy as a next step, what would be good for my career as the next step, um, and really find where they intersect without having the pressure of, like, I need to take out student loans, but I need to take out private student loans because of this new cap. Um, and, you know, I can, I can now see the system a little bit better, um, and even play the system a little bit better. And, and just having that flexibility has been almost everything in terms of figuring out what, what to do next. Even if I decide to do a postdoc at the end of all this, I think doing a postdoc where we’re not, postdocs are just in academia are just not paid as well as industry positions, um, even doing a postdoc is something that I can really only consider because of the savings that I have, um, if I decide to move to, like, a high cost of living area. And so it, it has definitely impacted my career in just giving me flexibility and being able to pursue what I want to pursue.

Emily (44:05): Beautiful. I’m so happy that… And maybe you have the same experience, but, like, I also came to a similar point by the end of graduate school that I realized that the saving and the investing and the nest egg that I, that my husband and I had at that point enabled both of us to pursue careers that were very meaningful to us, although more uncertain in terms of income and cash flow. So at that stage, that was, like, so crucial that I had that money to be able to make that shift. But I had no idea when I started my postbac and I read my first book about personal finance and first started saving that that would be the end result just seven or eight years later. It was actually not, like, that long of a period of time. So I just, I guess, uh, le – we’ll leave the listeners with kind of a final exhortation of, like, you don’t know how having savings or having these mindsets or having these practices is going to benefit you in the future. You don’t know exactly how, but it for sure is going to <laugh> in some way. And so it’s worth it even as an early on graduate student or even as a later stage graduate, or whatever point you find this, it’s worth it to start putting in that effort and learning about this aspect of your own personal wellness because it is gonna pay off in, in some way and probably sooner than you think.

Elle (45:14): Absolutely. I 100% agree.

Best Financial Advice for Another Early-Career PhD

Emily (45:18): Well, Elle, it’s been so delightful to speak with you again. Um, and I want you to leave us with your current best financial advice for another early career PhD, and it can be something that we’ve touched on in the interview already, or it can be something completely new.

Elle (45:35): Definitely. So something that we did touch on a little bit was the idea of an emergency fund. And one thing that I’ve been a huge proponent for, um, for a while now, but now I am listing it as, like, my best financial advice, is to identify what that emergency fund is, what you will grant yourself permission to use it for, and how much you will need for each item that you are considering an emergency. Um, and I think that that’s one of the most foundational aspects of financial wellness, is that sense of security even before investing, right? Maybe you can start investing a little bit, but once that emergency fund is set, it is such a load off that it really allows you to make decisions without having to worry about very key foundational aspects of just your life. Um, and it’ll give you the, the flexibility needed in, in case of one of those emergencies.

Emily (46:36): So I’ll ask you to expand just a tiny bit on that, which is that a lot of classic personal finance advice says, “Okay, uh, save a certain number of months of expenses as your emergency fund.” Sometimes it’s three or six or nine different numbers get thrown around. But you’re saying, “Okay, think about the possible uses of this emergency fund.” And I think that classic advice comes from job loss. Like, if you were to lose your entire income and you have to fund your entire life from your savings, how long is it gonna take you to find another position? Three, six, nine, 12 months? What is it? So that’s kind of the logic there, but you’re, you’re using a different justification, so I wonder if you could expand on that a little bit.

Elle (47:10): Job loss is going to be a huge part of an emergency fund, I think, in any, in any position. Um, and so I think especially for graduate students, we have somewhat typically uh, job stability, and so that job loss might be a little bit, um, less in terms of how much you save for that job loss, especially-

Emily (47:31): And Elle is speaking as someone who lost her funding recently – <laugh>… And ha – some behind the scenes pivots had to happen. So even in that, you’re still speaking to this is typically secure. 

Elle (47:41): Typically secure. At least there will be signs when it becomes less secure, I think, especially if you have a program that is typically very supportive of their graduate students. And so job loss, again, but also how long will it take you to find a job after your PhD? It depends on how close you are to finishing your PhD. And so that should always, I think, be the first line item, and that’s the bulk of my emergency fund, that’s a bulk of a lot of people’s emergency funds. But I think a problem that I’ve seen people run into, students, professionals, et cetera, is that they sort of know how much is in their bank account, and it’s all emergency fund slush money. And it’s not quite clear how much of that they can reach into for something fun, for something necessary, and for something absolutely critical. And so I just think having a number of… no, like, I am considering my car breaking down as an emergency because that is something I would have to fix immediately, and I don’t necessarily foresee it, but it is a possibility, like, that would be something that could go into an emergency fund. Whereas for me, like, I have an emergency fund for my car, but I also have a car maintenance sinking fund, right? So registration, I don’t consider an emergency, but sometimes it creeps up on people. And so, um, things like, okay, if, say, I need to… Say I have a family member in Taiwan who passes away, and I need to book a last minute flight to see them, like, that would be an emergency for me, so I allocate a certain amount of money for that emergency. And so, just kind of going through different scenarios, again, because I don’t want to be stressed in an emergency about my finances, having that ability to be like, “No, I’m good. I saved for that. Maybe I didn’t save quite enough, but I saved a decent amount for it,” um, is incredibly empowering in and of itself.

Emily (49:35): I, I’m glad you answered in that way because th- this is very similar, almost identical to what I teach when I talk about, okay, we have an emergency fund, and then also this concept of targeted savings and sinking funds, because there is an interplay between the two. Like, if you have no other savings, a lot of things are emergencies, but at some point when you have, like, a basic emergency fund in place, then you can start to think about some of these would be emergencies as inevitabilities or, like, likelihoods where you can save in kind of a different bucket for it. And when I teach about targeted savings, one of the prompts that I use is what do you fear will happen in the upcoming year? So it’s not like a completely out of left field, “Oh, I had no idea this medical event, it was… nothing could have, you know, forecast that this would happen.” That would be a real true emergency, but, like, yeah, your car needing some kind of repair at some point, like, y- y- you know, like, that’s a little bit more foreseeable, or like you mentioned, that maybe you have an ailing family member, things like this are like, “Well, it’s kind of coming up on the horizon.” So, again, the, the emergency fund is the basis of that, but then once you are building more on that, you can start to think about these other possibilities in a way that overlaps kind of between emergency and also sinking funds/targeted savings. Okay, now we really have to <laugh> end this interview. It’s been so wonderful to speak you, with you again, Elle. Thank you so much for explaining YNAB and your use of YNAB and what it’s done for you, um, for the audience. And good luck with finishing your PhD and your next endeavor.

Elle (51:03): Thank you so much. Always a pleasure to be on the show, and thank you. I’m obviously a huge fan, um, so thank you for all you do, Emily.

Outro

Emily (51:14): 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? We have 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 view transcripts or videos of each episode? We 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. Podcast editing by me and show notes creation by Dr. Jill Hoffman.

In this episode, Emily interviews Ariel Floro, a second-year PhD student at the Buck Institute for Research on Aging in northern California. Ariel details her budget, from the mechanics of her system to the emotional benefits she experiences. Ariel started budgeting after finishing her bachelor’s while she worked as a research associate, and she was able to adapt that system to still work for her with a lower income in a higher cost of living area. Ariel explains why she believes budgeting is an essential activity for every graduate student.

Links Mentioned in the Episode

• Emily’s E-mail Address
• PF for PhDs S14E11 Show Notes
• Budgeting Apps
  • Mint
  • EveryDollar
• PF for PhDs Season 15 Contribution Sign-Up
• PF for PhDs Subscribe to Mailing List (Access Advice Document)
• PF for PhDs Podcast Hub (Show Notes)

Teaser

00:00:00:00 Ariel: It just gives more control and power overall and not being so, not feeling like we’re like completely powerless to, you know, grad students just make this and that’s just how it is. And I’m poor and I can’t really do anything. And I know it is really hard to live on the income that we have now, but it gives us some control back and some power so that we can really set ourselves up well financially in the future.

Introduction

00:00:27:20 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts, a financial educator specializing in early-career PhDs and founder of Personal Finance for PhDs. 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. This is Season 14, Episode 11, and today my guest is Ariel Floro, a second-year PhD student at the Buck Institute for Research on Aging in northern California. Ariel details her budget, from the mechanics of her system to the emotional benefits she experiences. Ariel started budgeting after finishing her bachelor’s while she worked as a research associate, and she was able to adapt that system to still work for her with a lower income in a higher cost of living area. Ariel concludes by explaining why she believes budgeting is an essential activity for every graduate student.

00:01:29:22 Emily: If you’ve been getting value from this podcast, would you please do me a favor? This is a perfect time of year to recommend me and my work to a potential host or sponsor at your university or alma mater. In case you didn’t know, I offer numerous personal finance seminars and workshops on topics like financial goals, investing, budgeting, and debt repayment, all tailored for graduate students, postdocs, and/or prospective graduate students. These are in addition to my tax workshops. If you think that you and your peers would benefit from my teaching in the upcoming academic year, please recommend me to your graduate school, graduate student association, or postdoc office. My seminars are usually slated as professional development or personal wellness. These recommendations help me get my foot in the door with new clients or remind past clients of the need for this material. If you choose to recommend me over email, please cc me, [email protected], so that I can pick up the conversation. I really rely on these types of recommendations and appreciate them so much. 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! You can find the show notes for this episode at PFforPhDs.com/s14e11/. Without further ado, here’s my interview with Ariel Floro.

Will You Please Introduce Yourself Further?

00:03:04:12 Emily: I am delighted to have joining me on the podcast today Ariel Floro. She is going to speak with us about her budgeting journey during graduate school and prior and all the things that she’s learned and how much budgeting has benefited her. So, Ariel, I’m really pleased to have you on the podcast today. Would you please introduce yourself a little bit further for the audience?

00:03:21:09 Ariel: Yeah, thank you so much for having me here. So, as you mentioned, my name is Ariel. I’m currently a second-year PhD student at the Buck Institute for Research on Aging, which is in NorCal up in Novato in the Bay Area. And it is a joint program with the University of Southern California.

00:03:41:07 Emily: Alright. I can already see that it’s going to be a very interesting conversation because obviously, budgeting is especially challenging in a high-cost-of-living area. So, actually, let’s get some groundwork out of the way first. Do you mind sharing how much your stipend is?

00:03:56:24 Ariel: Yeah, our stipend is $38K per year, which actually just recently got moved up.

00:04:01:21 Emily: Okay, nice. So, we’ll be talking a little bit about, I guess, last year. What was it like prior to being bumped up?

00:04:07:15 Ariel: It was $34K last year.

Budgeting: Peace of Mind

00:04:09:01 Emily: Okay. So, 34 up to 38, sounds decent, but again, very high cost of living area. So, I’m really curious about your strategies here. So high level first, what benefits have you enjoyed in your life thanks to your budgeting practice?

00:04:25:19 Ariel: The first thing that comes to mind and I think is really the key one, is just peace of mind amongst many different fields. So, the main thing knowing that because it’s such a low income, knowing that I’m not spending more than I actually have, because that just like really terrifies me. And along with that, just giving myself the freedom to enjoy time with friends, like going out to eat or do other fun things.

00:04:49:00 Ariel: And so that I know that if I budgeted a certain amount of money for that, then I have the freedom to really just not stress out about it and enjoy it and not like freak out or like, “Oh, I shouldn’t be doing that,” or feel guilty in any way. That’s the main one. I would say the second one is just planning for saving more or like financial goals, and just know that even though again, because it’s kind of like a low income at this moment, I’m still setting myself up well for later, even if it’s just investing a little bit of money or saving a bit of money, like any bit helps and kind of helps to build that habit.

00:05:22:07 Emily: So, it sounds like in your case, a lot of times people have this like kind of avoidant behavior with their finances, like it stresses them out, so they don’t want to look at it. But it sounds like you’re like me, which is that it was it was stressful not to know. And so, it’s easier to look and make the plan and execute the plan as best you can. Is that right?

00:05:41:12 Ariel: Yeah, definitely.

00:05:42:19 Emily: So, how did you get started with budgeting? Did this start in graduate school or were you budgeting in at any point prior to that?

00:05:49:22 Ariel: Yeah, the minute I graduated from undergrad, I worked as a research associate for two years and between, and once I knew that I was having a steady income, I knew I had to budget the first dollar that came into my bank account. And so, I have kind of been planning, you know, since that time and really built up the more efficient process that I have on budgeting now.

00:06:12:23 Ariel: I also saw it as once I knew I was going to go to graduate school while I was working as an RA, I took even more power over my budget at that time and said, okay, I’m making more as an RA right now than I would be as a graduate student. So, I’m going to make sure I know the ins and outs of my entire budget so that when I do move to that lower income, I know where I can cut costs where I want to, you know, what I can sacrifice and this and that.

Gap Years Working as an RA

00:06:40:16 Emily: Give us a few more details about that time you spent as an RA. Like, where were you? You said you’re making more, but how much more?

00:06:48:16 Ariel: Yeah, I was at UCLA working as an RA, and I think starting I made about $40K and then it jumped up to maybe a little over 45. But at the end I was making a good amount. Yeah, so that was all in L.A. and I was just planning out. Rent there is still more expensive. But you know, there are a lot of areas around L.A. that you can find cheaper places. And so, I had a roommate, we lived in a two-bedroom, two-bathroom place, which is a really good spot.

00:07:19:13 Emily: Okay. So, it sounds like your experience going from being an RA to a graduate student, your income is going down a bit. Your cost of living is probably jumping up a bit, but not huge shifts in either of those directions. So probably a lot of what you learned as an RA, that is to say with your budgeting as an RA, was able to apply. Do you want to tell us any more details about you know, you said you kind of took more control of your tightening up and then how you did that transition into graduate school with your budget?

00:07:46:24 Ariel: Yeah, I think I was definitely the main thing is I like to go out to eat a lot with friends and I’m sure a lot of people do. So, I realized that that was probably the first thing I was going to cut down was just eating out and food and being more intentional about cooking meals and like looking at prices and not just like, “What am I going to cook today?” and then just buying things off of the shelves. The other interesting thing about my program is that because we’re at the Buck Institute and USC, we actually spend our first semester at the Buck Institute, and then we have to move to USC for the second semester. This is all within the first year. And so that was another cost that my cohort and I had to think about is moving here and there and then having to do short term leases. So, I would say also the way that I budgeted this past year is different than now because I had to keep in mind just having money to move and my rent actually was even higher because it was a short-term lease.

00:08:42:10 Emily: Yeah, that’s a big financial challenge to throw at a first-year graduate student of living in two different places. And then I understand, so it was like you were living in the L.A. area, then you moved up to Northern California, then you moved back to the L.A. area. Now you’re back in Northern California. Okay. So, at least you had some familiarity with those areas.

Mechanics of Budgeting

00:09:01:04 Emily: Let’s talk more about kind of like the mechanics of how you budget. Like, do you use software? Do you use your own spreadsheets? How often are you looking at or touching the budget?

00:09:11:12 Ariel: Right now, I use an app on my phone, and I know there’s some there’s one called Mint that I’ve tried to use and it doesn’t really work that well for me. I actually use an app called EveryDollar, and I’ve used that since the beginning where they have every line item, you know rent and food for groceries, you can even add certain funds in there maybe if you’re saving up for something. And so normally, like in the beginning, I kind of took a couple of months to figure out what I was spending each month on certain things and realizing I probably spent more on eating out than I thought I did and other things like that. And so, then I kind of started to regulate and now it’s a lot faster where I just kind of copy last month’s budget and I go through and make minor changes. If I maybe have a friend’s birthday or something that I have to buy a gift.

00:09:59:18 Ariel: And the other thing that I really like about the app on my phone is that some of them can connect directly to your bank accounts or your transactions can go directly into them. But the app that I use, I actually don’t have that software for that just because it’s an extra fee for it. But I do have my bank account app on my phone, and anytime I use my debit card that’ll show up as a transaction, as a notification in my phone. And so, I kind of see those notifications build up as like a to-do list to enter into my budget later. So, I end up probably looking at it at least I once every couple of days, maybe once a day even.

00:10:36:24 Emily: Okay, so two things I want to follow up in there. So, one, budgeting, I mean, we’ve been using term budgeting, but I really think of budgeting as two different actions. So, one is budgeting, which is telling your money what to do in the future and the other is tracking, which is making sure that your money did what you told it to do. And that’s like the accountability portion of it. So, you just mentioned both of those, right? So, on the budgeting front, you are creating a unique budget for every single month. It’s based on, you know, roughly templated from what you did last month. But you’re making those individual tweaks for what’s going on in this current month, is that right?

00:11:10:03 Ariel: Yes.

Manual Tracking of Spending

00:11:10:24 Emily: And then the tracking component of it, like you, I’m a little bit familiar with every dollar, so you can pay a fee to have your transactions automatically down a little, but you choose not to. You are manually tracking. And what I love about that is, of course, it does take some time and it takes, again, accountability with yourself to stay on top of it, like you just mentioned, your system of notifications, but it keeps you very, very intimate with your numbers. There’s no like escaping, facing up what you did with your money as long as you are keeping up with the tracking. So, I think that works really, it’s not for everybody, but I think that works really, really well for some people. Can you maybe give us an example of how the manual tracking specifically has helped you? Like in behavior change, for example?

00:11:54:24 Ariel: Yeah, I mean, even just if I stop at a Starbucks or something and get a coffee and then I have to put that into my budget. And since the interface is very easy to look at, sometimes I just kind of end up scrolling through the rest and, you know, I might say, “Oh, okay, I actually only have like $40 left for eating out and it’s only like halfway through the month or something like that.” Then I can kind of keep track and keep an eye out and like, how far into the month I am and versus how much I’ve earmarked for all of the things that I budgeted for.

00:12:29:00 Emily: So, you mentioned that you started with this budgeting practice the minute you graduated from college and had this regular, you know, salary coming in. What was it that inspired you to start budgeting at that point, and maybe why not earlier?

00:12:44:21 Ariel: Yeah, I think my dad was a big influence and wanted to set me up well financially, where even going back to like the 2008 recession, I remember when our house had to go on a short sale. I mean, it was I just always style. My dad really stressed with money and so he was always, especially after that point and kind of getting a hold of his finances, he was always very intentional, telling me, like, I want you to do this. I want you to you know, when you have a steady income, you should start budgeting and kind of encouraging me to do a lot of that. And it made a lot of sense to me. So, I do attribute my dad to helping me a lot in that way.

00:13:19:03 Ariel: Before then, I didn’t really budget that hard because in undergrad I would get some income here and there. Maybe if I was teaching a private lesson for like a hobby or other things like that and I was just so used to saving anyway, it was I would just dump them into my savings. And then if I wanted to go out to eat, and I didn’t go out that often, right? Because college is just so busy, I kind of just knew, I just kept tabs on how much I had in my savings. So, it felt a lot easier once I was getting a steady income. I could say I’m making X amount of dollars per month and I’m going to designate each dollar in that to a certain point. So, I know exactly where my money’s going each month. And I felt like it gave me a lot more control over my finances and again, gave me the peace of mind to know that I’m doing okay.

Looking Ahead

00:14:06:18 Emily: Yeah, that makes sense. Do you think there’s ever a time in the future when you wouldn’t budget or would change the mechanics of how you budget?

00:14:15:24 Ariel: I do see a possibility where, if your income goes up significantly and the way you live your lifestyle stays about the same, you might have that flexibility where, you know, no matter how much you know, if you’re spending and living your normal lifestyle in your normal ways, that you’re always going to have enough in savings. I think that might be a way like a situation where you wouldn’t have to budget. But then I would still think that with the extra money there, you know, there’s a lot of potential other than just dumping it into savings. You know, you can put that into investing. You’d be giving it away to charity. So, I don’t know, I would say maybe rarely at this point, but I wouldn’t know for sure.

00:14:56:19 Emily: Yeah. You’re actually describing kind of the point that I am with my like budget right now, which is the way that I budgeted when I was in graduate school and for a few years afterwards is not necessarily serving me now with a higher income, but also different kinds of goals than I had before. So, it’s like, how do I have the income that I have, meet the goals that I want to meet, not overspend, but also feel more like relaxed about how much to spend and how to balance all that together. And we’re recording this in December 2022. So, like, I’m literally thinking about this of like for the new year, like how do I adjust my budgeting system so it works more with the current realities that I’m living in rather than, you know, kind of a holdover from what I was doing before? So anyway, just a little food for my thoughts there.

Commercial

00:15:42:01 Emily: Emily here for a brief interlude. We’re doing something special for season 15 of this podcast, and as a loyal listener, I know you’re going to want to be involved. Season 15 will be a chance to share your financial experiences, even if you don’t want to give a full episode interview or want to remain anonymous. We’re going to publish compilation episodes around certain themes, and each episode will feature at least a half dozen different contributors.

00:16:12:05 Emily: If you are interested in contributing, check out PFforPhDs.com/season15/. That’s the digits 1 5. On that page, you’ll find a list of the proposed themes and how many volunteers I’ve identified for each episode. Your next step is to email me at [email protected] to let me know which episode you’d like to contribute to or if you have another idea for the list. Once I’m confident that we have enough contributions for an episode to be created, I’ll give the volunteers specific prompts and directions to create their submissions. I hope you will choose to participate in this unique season! I can’t do it without you, so please get in touch! Now back to the interview.

Expected, Irregular Expenses

00:17:06:24 Emily: So, let’s get back to some more like kind of mechanics of budgeting. So, I wanted to know how you handle large irregular expenses. So, by that I mean maybe something that costs maybe a couple hundred, few hundred dollars that comes up very occasionally. And I’m always curious about this because I know irregular expenses are a really tough challenge for graduate students or anyone living on a tight income. So, how do you handle those? I mean, I know you already mentioned adjusting your budget, but let’s say for a really large one, how would you do that?

00:17:33:10 Ariel: Yeah, I think the main, so one of the points that came to mind is that you know, there’s large irregular expenses that might be unexpected and there’s those that are expected. And so, under the expected category would be things like I have a car, so car maintenance is something that’s, you know, large and irregular. I think since I’ve started budgeting, I have that as a fund where I put some money into a fund designated specifically as car maintenance. And then whenever that comes up, I know I have that fund. And I realized probably about this year that I’d put a lot more money in it that I may have needed to. And so that actually gave me a little bit of leeway for other irregular expenses, maybe like, like the current thing right now that I know is coming up is that I might want to buy a pair of skis which can be like a couple of hundred dollars or more.

00:18:20:21 Ariel: And so, if it’s something like that, then I can spend the past few months prior saying, okay, I’m going to put X amount into this fund. And then of course that might have to come out of some other aspect of my budget and just, you know, it’s only just for those three months and then I’ll have the amount needed for the item and then I can purchase that. And then other times maybe if I just, at the end of the month, I will go through my budget. And because some of the times what you actually planned isn’t going to be exactly what I end up planning, or what I end up actually spending. So, I might find that, oh, I didn’t spend as much on gas as I had expected to. I can put the excess there and to just general savings and I’m sure something might come up. But I do like having a good amount, like maybe like a little bit more in liquid savings in cash I have on hand just because I know things can come up here and there.

00:19:12:20 Emily: So, when you say, you know, moving money into general savings or moving in to a certain fund, is this like different bank accounts or is this maybe within your budgeting app, you’re like allocating things differently?

00:19:23:03 Ariel: This is within the budgeting app, so it’s all within my bank account. But just in terms of my like where I’m mentally earmarking them, that’s how that goes. And I also do have some investment accounts. And so, then if I know I want to put more into investing than I actually have to like deposit that into that account.

00:19:43:07 Emily: Okay. But you are operating for all of your cash out of a single account. A single checking account.

00:19:48:13 Ariel: Yes.

Money Mindset of a Saver

00:19:49:18 Emily: What stops you, psychologically, from spending how you didn’t allocate? That was always my temptation and the reason that I don’t use a single account for everything is that I would really be tempted to move things around.

00:20:04:04 Ariel: I think I also have just been a saver since I was little. If I would get like $20 for Christmas, I was like, “Oh, I’m going to save this all so when I get older, I’m going to have a lot of money and be financially stable.” I have with my bank, I have like a checking and savings, and technically my savings I have what my emergency fund and the checking I have right now, it’s just the remainder of my cash. But I think just because I am naturally such a saver, I do kind of get like a, I guess I don’t know if it’s a reward or reward thing when I see a bigger number in my account, but it just makes me feel safer. So, I put more towards savings and not just spending it.

00:20:44:11 Emily: And you also mentioned a moment ago about like if you come in sort of under budget in some categories, you said gas specifically. So, for your variable expense categories like gas, are you usually coming in under budget? Like have you set a generous enough budget that that’s a typical thing that you spend less? Or if not, what do you do in situations where you have overspent the budget?

00:21:06:01 Ariel: Most of the time, I put in roughly about the amount like, I’ve tightened my budget now to where I spend the amount that I plan to. There might be some instances where if I’m expecting to spend say $200, if I maybe carpool with friends to an event that we’re going to and they’re nice enough to not or they don’t ask for gas money or I tend to drive back home because I’m from L.A., so I tend to drive home a lot. And so, I know I’m going to be spending more on gas in those times. And again, that’s just a thing that if I know I’m driving to L.A., then I’ll add it in more money into the gas budget the beginning of that month. But most of the time, I think they stay pretty closely. I mean, if I come under budget on some categories together, that might come up to maybe 100 bucks, but that’s still like 100 bucks more I can put in the savings versus not really planning for that before.

00:22:05:22 Emily: So, it sounds like you’re keeping like you have a dynamic budget, from month to month you do. In the course of the month, do you also update what you budgeted for that current month?

00:22:15:21 Ariel: Yeah, I think there’s times where that could happen. I think that like one of the examples is maybe if I know I want to go out with friends and do another thing or if there’s a concert or something, and then I’m like, “Oh, I really want to go to this concert,” I would take out from my eating out budget to spend more on going out to a concert, for example like that. So, it is very, very dynamic and I think that’s super easy to do being a single person and just having me on the app. So, I really, again, I really appreciate the mobility of having the app on my phone and just deciding wherever and whatever I want. As long as it’s within the monthly income, I still know that I’m still planning where everything is going.

Unexpected, Irregular Expenses

00:22:57:21 Emily: Gotcha. And when I was starting to ask you about irregular expenses, you mentioned four expected irregular expenses. That’s a system that I called targeted savings. What about for unexpected irregular expenses? Are there any unexpected irregular expenses in your life, or do you expect everything?

00:23:14:05 Ariel: I think maybe some unexpected might be medical or something. And I know I always have an emergency fund on hand for that. I just again, I’m such a saver and I’m kind of in a transition period right now because I moved. And so, I do have a heftier amount of cash in my checking than I probably normally would. But for unexpected ones, I could always dip into the emergency fund and take that out. If it was like an E.R. visit, for example, but then the next month would have to be really hunkering down and replenishing the emergency fund back up to what it was before. Then I can go back and do fun things and all that.

00:23:54:01 Emily: Yeah, I think that system makes a lot of sense. And like the way that I sort of define an emergency is an unexpected but necessary expense. It can’t be discretionary, and you should try to anticipate everything that you reasonably can. Yes. If you get into like some sort of major accident or unforeseen illness, of course those things can happen. You may not have prepared for that. I mean, that’s why we have insurance for, right? So like insurance then accessing your emergency fund, that really makes sense. But yeah, under sort of my like system, you would you would anticipate everything like you would really spend some time brainstorming like the things that could happen and setting up either targeted savings or like you, just a general dynamic, flexible budget that will help you meet those expenses when they do come up. And then if something is truly necessary and truly unexpected, hey, that’s what your emergency fund is there for. And like you said multiple times so far, like it gives you peace of mind to have this money in your savings, in your checking, to know that you know you’re spending within your budget and so forth, living within your means.

Regular Expenses: Housing, Transportation, and Food

00:24:54:00 Emily: Zooming out a little bit more like high-level speaking about your budget, how did you set your large regular expenses like housing, transportation, food? How did you set those up so that you are able to live within the stipend provided?

00:25:11:13 Ariel: Yeah, I think even from, so again, going back to once I graduated and started as an RA, even those months prior, it was my dad and I kind of just he was helping me form what a budget is. And so, we were saying, well, you know what would rent be? I’m going to estimate this and maybe get an idea of if it was me going into an RA position, I would get an idea of what RA’s normally make and the rent that was in the area or some of the areas that I wanted to live in and just kind of do like a mock budge then and get an idea. And so, once I had had that, it was actually pretty similar because I set a rent estimate that ended up being pretty much exactly to what I ended up spending for that. And so, that was pretty easy to transition into. And now coming into this program, like the first short-term lease that I had to take for moving up here, I just did the same thing. I kind of mock budgeted on my app and I put in, “Okay, I’m probably going to spend this amount on rent. How is that going to look? Where am going to have to cut? Can I even afford this?” And it really was just kind of trial and error through the app and me taking time and sitting down and manually doing it.

00:26:22:03 Ariel: Because I know that a lot of the general advice for how much you should be spending on rent based on your income is always like, I feel like doesn’t really apply to PhD students because you spend way more. But I was just making the mock budget and when I had moved back to L.A. for that short-term lease, it was also kind of tricky because then instead of renting a place, I did like an Airbnb, and that meant that utilities and everything were included. Plus, it was for a four-month period of time versus sometimes you have to be locked into like a six-month lease. And so, with that one, I kind of had to budget long-term, but it was still amongst the same principles of just trial and error, trying it and seeing if I could do it, where would I have to cut? Is this okay? And this and that.

00:27:08:14 Emily: Let’s put aside the short-term leases because that’s obviously, it’s a big challenge, but it’s a little bit like unique to your situation. Let’s take the example of when you moved back to start, what I presume is you’re now on a year-long lease, right? Currently?

00:27:21:13 Ariel: Right now, my situation’s a little interesting. I came back. I’m actually living with my boyfriend’s parents because of some personal things with him moving back. And so, we had just signed a lease. We’re signing on to a one-year lease now. So, now I’ll be on a 1-year lease.

00:27:38:22 Emily: Okay, so in this process that you’re currently in of figuring out your housing expense for the upcoming year, locked in for a year, how are you like researching the market? I mean, obviously, you’ve lived here prior as well, so like that gives you some insight, but how are you figuring out like what’s reasonable, what is attainable for you to spend on rent in this area so that you can build as your budgeting model?

00:28:00:20 Ariel: I think just getting an idea of if you go on any of the apartment’s websites and saying what the average, you know, one or two-bedroom or three-bedroom places depending on roommates and stuff, I’m getting an idea of that. I also like when I was originally in L.A., I paid about $1200 a month for rent and I was pretty comfortable with that at that time. And even though I’m at a lower income now and knowing that it’s higher cost of living here than it was when I was in L.A., I ran the numbers again and know that looking at that, that if I do $1200, I could still be pretty good with that and feel okay.

00:28:40:16 Ariel: It’s still super tricky to find that around here. And so, my boyfriend and I actually had spent a lot of time kind of like researching like when is rent really low and rent prices are really low in winter. And so, we’re really, really grateful to have his parents nearby and letting us live with them to figure that out. But I think about like around here, I have a friend who has a one-bedroom for $1600. I have three friends that are paying, like two of them are paying $1100 and the other one’s paying $1400. And so, kind of those seemed pretty similar around to the $1200 range that I had thought. And I just realized, you know, if I did end up having to go higher like $1300, that’s just something I have to figure out. Because I really do want like my own room, if I was going to live with roommates and other things I would have to consider and just realize like a lot of things like that.

00:29:34:02 Emily: Yeah, that makes sense. I love that you mentioned that you actually know how much your peers and friends spend on rent. It’s a topic of conversation that is not as taboo among graduate students as it may be at other times in your life to kind of like share that information. So, I’m really happy about that.

Why is Budgeting Essential for Grad Students?

00:29:47:20 Emily: So, kind of to wrap up here, why do you think that budgeting is essential for graduate students?

00:29:54:10 Ariel: I think as I mentioned before, the number one thing is just that we have such a low income anyways, and it’s really vital knowing where all your dollars are going and you don’t run any risk of overspending. Like I know somebody in my program who is like, “Yeah, I kind of just put my card and see what happens.” And hearing that really just did kind of terrify me. And so, you don’t want to accidentally go into debt or you’re just more intentional. It’s more about the overspending that I think really like scares me a bit. And I think that alone is like the biggest goal to come out of a PhD without any debt.

00:30:32:09 Ariel: I was also actually pre-med and I didn’t want to go $200,000 into debt and so if that’s really one of the big things that I went into a PhD, I think that’s a good goal to have. And you’re still able to fulfill some financial goals, even though it might not be as high of a degree as you want to. It still really helps you to facilitate that and just gives more control and power overall and not being so, not feeling like we’re like completely powerless to, you know, grad students just make this and that’s just how it is. And I’m poor and I can’t really do anything. And I know it is really hard to live on the income that we have now, but it gives us some control back and some power so that we can really set ourselves up well financially in the future. Even if it’s not putting, you know, $300 into savings every single month, if it’s just building a habit of saving or building a habit of investing or building habits of this, this, and this, that’s really going to help you financially.

00:31:26:13 Emily: I love those points. Thank you so much for articulating that. I also think that budgeting is a really powerful and essential tool and especially because of not only like sort of the tangible benefits that we’ve talked about of having control of where your money is going and awareness and so forth, but also the intangible ones that just help you sleep better at night and everything.

Best Financial Advice for Another Early-Career PhD

00:31:45:03 Emily: So, I’m so thankful that you volunteered to come on the podcast to talk about this subject in detail, Ariel. And I want to finish up here with the question that I ask of all of my guests, which is what is your best financial advice for another early-career PhD? And it could be something that we’ve talked about already or it could be something completely new.

00:32:01:12 Ariel: Yeah, I would say my best advice, I mean, I’m also an early-career PhD, is having to do with investing. And I would say it’s best to start investing monthly, even if it’s something that seems kind of small and you’re wondering, is this even worth it? Again, it’s still just building that habit and building that, you know, like muscle memory and plus one is bigger than zero. So, I think anything is good. And I’ve heard some people, like a lot of people say a bunch of different things, like, “No, you should just save a lot.” And maybe it’s different for, you might be in a different situation. But I find that even just starting to invest at this time will help you get the habit once you graduate.

00:32:43:13 Emily: And to add on to that, I mean, the habit formation alone is a great reason to start investing or start budgeting or start doing other kinds of financial practices. But specifically with respect to investing, I think it’s really powerful just to get your systems like off the ground. Like with investing, you have to make a bunch of decisions, like especially with an individual retirement arrangement or an IRA, you have to decide which brokerage firm you’re going to house it at, you have to decide what funds you want to invest in. So those are like big, like they don’t have to take necessarily that much time to make those decisions, but the decisions have to be made and it’s really easy to procrastinate them. And so, if you aren’t, you know, determined to start your investing now, it could be something you end up putting off for years just because of the annoyance of like starting this system, right?

00:33:27:01 Emily: So, not only the habits but just getting like your account set up is like a great thing to do and it’ll facilitate, you know, continuing to invest going forward. Yeah, really easily. So, I’m really glad you brought that up. And I think you also want to give some advice about those two years you spent as an RA, right?

00:33:43:14 Ariel: Yeah. Those two years that I took in between undergrad and grad school were some of the best, like really was probably one of the best decisions that I’ve ever made. I was pre-med, I graduated and was a little bit unsure if I wanted to do a PhD because I was kind of not wanting to do med school at that point. And I thought, you know, what’s the rush? Let me work. I like research. Let me work in research and just figure things out. And just realistically, in terms of a PhD, it helped me figure out what I wanted to research for a PhD, what I wanted to get out of it, why I’m even doing it. But even after that, just taking the designated time for working and kind of settling into a bit of adult life and gaining an income, I really learned a lot and matured a lot mentally, emotionally, and as we’ve talked about financially.

00:34:35:07 Ariel: And so, I think those two years were really key for me to set myself out well for the rest of my time in grad school. And I can’t imagine like going straight from undergrad into grad school. I feel like that would be a complete whirlwind. So, that’s another thing I like to tell a lot of friends thinking about whether they want to take gap years or not, I think that’s like a really good time to kind of just figure things out on your own and plan out, you know, everything across the board or just, you know, just figuring out what you want to do.

00:35:02:17 Emily: And I know we already talked about you like starting your practice of budgeting that period of time, but were you also able to come into graduate school with some savings? 

00:35:12:11 Ariel: Yeah, I saved good chunk just because again, the habit. So, I think going into graduate school, I would save just general savings monthly however much I wanted to. I hadn’t invested at that point because I knew I wanted a little bit more of like a safety net coming into grad school to have on hand.

00:35:32:03 Emily: Yeah, that makes so much sense. And it’s, Ooh, it’s a lot easier to build that emergency fund when you are making a little bit more rather than, you know, having to build it up once you start graduate school. Of course, there’s no time like the present. So, start if you haven’t started already with that emergency fund, but it’s really giving yourself a leg up to have done it when you had a higher income before. So, that sounds awesome. Ariel, it was such a pleasure to talk with you. Thank you so much for volunteering to come on the podcast!

00:35:55:22 Ariel: Yeah, thank you so much. This was really great!

Outtro

00:36:02:23 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! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.