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Financial Goals

This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 2)

September 23, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Lucie Bland, about her financial journey from graduate school to self-employment. Lucie was severely underpaid as a PhD student, and she felt such guilt and shame around spending that she became terrified of money. Her money mindset didn’t improve when her income increased several-fold as a postdoc, and it wasn’t until she discovered the Good-Better-Best goal-setting framework that she started to heal her relationship with money. She now describes herself as a money boss. In this second half of the conversation, Lucie describes the Good-Better-Best goal-setting framework and how she applied it to personal finance as well as other areas of life. She also shares how mastering her personal finances enabled her to take the leap into self-employment.

Listen to part 1 of this interview!

Links Mentioned in the Episode

  • Lucie’s Website: luciebland.com
  • Lucie’s Free Guide to Writer’s Block
  • Personal Finance for PhDs: Speaking
  • Personal Finance for PhDs: Help Out

PhD self-employed money boss

Teaser

00:00 Lucie: Money is so interesting because it’s where you have a conflict between all your limiting beliefs and your trapped emotion and your resources that are linked to survival. That’s why money triggers our fear centers so much. It’s the modern-day saber-toothed tiger that’s coming to eat us.

Introduction

00:24 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode six, and today my guest is Dr. Lucie Bland, a self-employed PhD living in Australia. Lucie has such an amazing story to tell that I’ve split it into two episodes. Last week’s and this one in this episode, Lucie shares how she relied on the Good-Better-Best, or GBB, framework when she decided to become self-employed. She also illustrates her current practice of personal finance now that she is a self-described “money boss.” She proposes many ways PhDs can use the GBB framework with respect to income, personal finance, research, and other areas of life. Without further ado, here’s the second part of my interview with Dr. Lucie Bland.

Lucie’s Self-Employment Journey: Using GBB

01:19 Emily: Okay. Now we’re going to resume talking a bit more about your self-employment journey. So you’ve already told us that you went through this period of re-evaluation where you’re taking time off from your postdoc, then you went back part-time to your postdoc, which didn’t work out very well because it’s very difficult to do research part-time. And you also had a side job as an editor for some time. But then you were saying that you sort of realized that you really wanted to be self-employed and wanted to have more control over your work, control of your schedule, I assume that self-employment would offer you. So let’s talk more about this GBB model and how you used it in this journey towards self-employment.

02:02 Lucie: Yes. Basically, when I was using GBB in the budgeting I realized that my “Good” goal, or my minimum viable income, is 33,000 Australian dollars, which is actually not that much. It basically means that I need to make $50,000 minus tax, which is a very realistic start for a business. And especially kind of as we talked about before, I still have a lot of savings. So doing these highly-paid postdocs enabled me to have the financial security to then go on and do my business without taking a loan, without taking a lot of risks in many ways. And so using that GBB framework enabled me to make a really intentional decision and actually a very low-risk decision to start my own business.

Two Forms of Runway: Savings and Part-Time Work

02:56 Emily: Yeah, so I was highly involved in the personal finance community, the personal finance blogosphere in 2011 to 2015, I would say. And I watched a lot of other people in that space move from being employees to being self-employed. And ultimately, I did this as well. And the term that we used for what you did was to give yourself a runway. So you gave yourself two kinds of runways. The first was by having a good amount of savings from having that higher income for a number of years. So you knew that you could have no income coming in for some period of time and you would be fine. Or you know, a lower than ideal amount of income. And the other runway you gave yourself was working this part-time position, having the side job, experimenting with how much you would need to work for other people but still be able to fulfill what you wanted to do and ultimately you could drop those things off as you were able to take off with your business income and no longer need those need the runway.

03:52 Emily: Right. So, two forms of runway. Just for anyone considering self-employment or considering maybe even doing another job that’s lower-paid. Any kind of transition like that, giving yourself some runway. Here’s a great idea, whether it’s through savings or side jobs or whatever it might be. Yeah. Anything else you want to say about using that model and your transition to self-employment?

Taking the Time to Experiment and Make Mistakes

04:16 Lucie: Yes. And you know, I think you make very good points about using the two different types of runway. And for me, in a way where doing the postdoc part-time worked really well in that it gave me time to know what I wanted to do. Because it did take me two years, two whole years to figure out what I really wanted to do. And that’s very typical of any career transition if you read the career-coaching literature. So it gave me time to set up my business and know what I wanted to do. It gave me that time where I was only working part-time hours to set things up behind the scenes, make lots of mistakes, go down lots of rabbit holes and not have that pressure of things having to work out immediately in the sense that, now, I’m in my first year of business. But really, I’ve been doing this for almost two years. I know how things work a little bit better. So again, probably a theme that’s coming through this interview is that I’m actually a little bit risk-averse in many ways. But I was much more comfortable making that decision to jump into my business. Having had just a little bit of legs under that idea and a little bit of knowledge, some numbers through my GBB goals and my budgeting other than flying by the seat of my pants, which is not really me.

05:32 Emily: Really what you’re doing, in all those different approaches that you just mentioned, is giving self-employment or your business, the ultimate business idea that you settled on, the best chance it could possibly have. Because like you said, when you’re first starting out with a new venture, you have to do a little bit of experimentation. You have to bumble around a little bit and make some mistakes. And if you have given yourself no runway and it has to work within two months or whatever it is, you have to make enough money to start sustaining your lifestyle within that short period of time. It doesn’t give your business really the room to evolve and grow and succeed. And so, yeah, I definitely would say that if you’re serious and very, very aspirational about becoming self-employed, you need to build that into your plan, right. Build some bumbling around and some mistakes into your plan.

06:21 Lucie: Yeah.

What Does Your Business Look Like Now?

06:22 Emily: And so what did you ultimately come to, you know, through this period of experimentation, what does your business look like now?

06:29 Lucie: Now I run an editing and coaching business and I’ve got three arms to my business. I’ve got editing, coaching and writing workshops. And the advantage with professional services businesses, like yours and mine, is that they have very low expenses, and in a way, they’re quite low risk. They do require some work in terms of to make it more leveraged or passive. You know, I need to evolve my business model in terms of I can take holidays and not have to be working all the time. Because otherwise, I’m just my own boss that’s still the slave to working every day. But for me, it’s a much better balance.

07:09 Lucie: And I would say that I definitely went from surviving to thriving. And that’s where being really intentional and self-knowledge is critical in the sense that when I did this career-coaching with this What Color Is Your Parachute?* book, one of the things I realized was that creativity and freedom or some of my core values. If I’m not getting this in a job, then being self-employed, you have ultimate control, you have ultimate freedom. And so there are lots of reasons why for me this is the best choice. And I think for people who would be listening to the podcast, then any self-knowledge that you have about your own values, about your own preferred work environments can only enhance your decision-making. Regardless of whether you want to continue in academia or do something else. It’s like your minimum viable income, but for your personal happiness.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Professional and Personal Development

08:06 Emily: Yeah, exactly. I did a lot during graduate school. I would always pay attention when the career center or professional development stuff sent out emails about workshops and events they were doing. And I was always like, yeah, if I can go, I’m going to go, and did a lot similar to you. Like self-exploration, guided exercises, little tests and stuff to help me figure out like what was the work environment that I wanted and so forth. And it was funny because at that time, it didn’t at all occur to me that self-employment would’ve been a good fit. And yet, I’m really enjoying it now. I’ll link to a post in the show notes about how I think that PhD research and self-employment actually have a lot of overlap in terms of the skills that you learn in one can apply to the other. But what you were just mentioning about kind of being your own boss and managing your time and so forth. I think that there is room for another loose interpretation of the Good-Better-Best goal framework there. Like “Good” might be working 40 hours a week, every single week out of the year, “Better” as being able to have a little bit more freedom and flexibility with your time, and “Best” is being able to have so much stuff outsourced and have people on your team that you can take time away from your business whenever you like. There are so many ways that Good-Better-Best framework I think can be applied outside of just how much money do you need to make to fund your lifestyle. Right? It seems so flexible.

The Many Applications of the GBB Framework

09:29 Lucie: Yeah. It can actually be applied to anything. So, for example, for a PhD student or a postdoc Good-Better-Best: How many papers do you want to publish this year? For me, I run writing workshops. How many people do I want in my writing workshop? What’s the minimum to make it viable? What would be a better goal that I would be happy with? And what would be the best that I would be completely chapped with? What’s your Good-Better-Best for losing weight or gaining weight or eating better. So, it can be applied literally to any form of goal-setting. And it actually makes any form of goal-setting much more realistic in that life is not black and white. It’s not like we meet or we fail at reaching our goals. And this gradation actually enhances motivation. That’s why it works so well for different areas, because once you reach your Good goal, you really want to reach your Better goal. Versus with traditional goal-setting: If you reach your goal, then what’s left?

10:27 Emily: Yeah. I love that you stated it that way, that you brought that up. I was thinking the exact same thing that it’s not a black and white success or failure with a razor-thin line in between the two for whatever your goal might be. As you were saying, there are gradations there of success. And even sometimes failures can be reframed as successes, you know, if you can see them the right way and so forth. So, I really love that. I think the audience members hold me to that, but I think I may try to figure out how to apply this Good-Better-Best framework within the teaching that I do within personal finance. Because I do talk about goal-setting and about financial goals. But as you were saying, it can be so demotivating to not reach a goal.

11:08 Emily: And yet you also want your goals to be very lofty, right? Like you want to be able to strive for something. So, it’s again about self-knowledge, about knowing what’s going to work for you. Do you want to strive for something and maybe not quite reach it but feel good about it? And know that you’re going to focus maybe on that Best goal? Or, do you want to set something that you know you can succeed at and then you’ll be motivated to move on from there? Well, that’s the “Good” goal. I feel like this is a good framework for people of many different kinds of mindsets toward goal-setting. So, I don’t know. I’m really excited about this. I’m really excited about learning about this framework.

Applying GBB to Research Life

11:40 Lucie: And I think one aspect where I really wish I had known about Good, Better goals when I was doing my postdoc was exactly about how many papers to publish. Because especially within research, there’s this kind of like runaway consumption model in that you need to do more and more and more and more. And if you never put a note on it, you’ll never reach it. And it’s very frustrating. Versus I feel that if now I was working in research again, I would definitely set myself Good-Better-Best goals just so I would know when to stop and relax and take a break.

12:17  Emily: I love that. Have you had any other thoughts about that? How you would apply GBB to research life for those who are still in it?

12:27 Lucie: Yes. So definitely in terms of your income and your budgeting, any of your key performance indicators, your grant income. More and more of academic life is measured with numbers, whether we like it or not. But because it is done this way, we better get on board with it. You can even apply the GBB to your h index if you really want to.

12:52 Emily: I was just thinking that. Yeah.

12:54 Lucie: But there again, it’s about, you know, having that realistic benchmark and then that motivational benchmark and that dream benchmark rather than having these unattainable goals. That makes it much more attainable and then you can discuss it with your supervisors or with your peers. And then for me, I wish I would not have gotten so run into the ground, in the sense that if you reach your “Best” goal, maybe you can take the foot off the accelerator.

How Can People Work with You? *Free Gift*

13:24 Emily: Yeah. And not get to the point like you did where you just had to throw up your hands and say, I have to take a complete break and escape from this for a while. Is there anything else that you’d like to tell us about your business? Like who do you work with or how can people work with you?

13:40 Lucie: Yeah. So, I have a website. It’s called luciebland.com. L u c i e b l a n d. And I have a blog where I blog about everything, academic writing and productivity. So you might have guessed, I’m really into goal-setting. I’m actually a certified coach, and so I work professionally with people to help them reach their goals. Especially their publication goals in a kind of holistic manner. And so I love to blog about evidence-based techniques to reach your goals. And I will send out a little gift and surprise that I would like to offer to the listeners of this podcast. I have a free Guide to Beating Writer’s Block. Everyone suffers from writer’s block one moment or another. And so I have a really nice free guide that recaps the different techniques that you can use to beat writer’s block. And you can get that at luciebland.com/write. So that’s w r i t e. And so you can go and download that for free. And I always kind of keep it to my side if I ever feel my motivation lacking I always refer back to these little exercises.

How Are Your Personal Finances Now?

14:46 Emily: Yeah, that’s great. Thank you for that. And we’ll link to that as well from the show notes. So if you want to go there first, that’s fine. So, when we started talking about doing this interview, you described yourself as a money boss or maybe it was an aspiring money boss–you’re getting to be towards the money boss state. And so there was this huge difference between the mindset that you had towards money during your PhD and where you are now. And so can you talk a little bit more about how you’re managing your personal finances right now, how you’re using the GBB framework and your personal finances? And just more about the healthy point that you are at or that you’re developing at this moment in comparison with where you were a few years ago.

15:33 Lucie: Yeah. Well, I think that really the proof is in the pudding in that five years ago, I was never looking at my bank accounts and I was completely in the dark about anything financial. And now, I make extremely detailed 2-year cashflow projections using that GBB framework. And I feel good. I feel good about it now. I enjoy it. And that’s why I’m on this podcast because I’ve actually become a personal finance nerd. So, you can see the extent of the transformation, both in practical terms and in terms of mindsets, and especially now both, given my background as a coach. So, when I trained as a coach, I worked with a lot of clients who had money issues because money is so interesting because it’s where you have a conflict between all of your limiting beliefs and your trapped emotion and your resources that are linked to survival.

Money: The Modern-Day Saber-Toothed Tiger

16:30 Lucie: That’s why money triggers our fear centers so much. It’s the modern-day saber-toothed tiger that’s coming to eat us. And so there’s a perfectly logical explanation to why money is so difficult to so many people, both for the people who are really in scarcity mindset or the people who own that runaway consumption type of spending. And so what I love about the GBB goals and the budgeting is that, for those of us who are scientists, it really taps into our experimental tendencies. So for me, going from being scared of my finances to budgeting, I took it with a lot of self-love and self-compassion in that, “Okay, I’ll just see how it is.” Had a glass of wine because I couldn’t bear to look at my expenses without a little treat, and “I’m going to tweak a few things. I’m not going to change everything all at once. I’m just going to see how it is.” As if I was running an experiment in the lab. Like, what’s working, what’s not?

17:34 Lucie: What can I change next month? What can I change the month after that? And getting kind of that objective perspective with the numbers removes that emotion. Because we’re not going to go from fearful to excited all at once. You know, going from fearful to curious is a very good progression. Maybe then you become curious about your money, curious about how it functions, what other little tricks you can use. So, for example, I went through a phase where I would change all my electricity and gas providers and my phone. I went through all the things very methodically, with my personal expenses. Yeah, the gas bill.

Easy Ways to Make Extra Income

18:33 Lucie: And then another thing that really helped my mindset, especially for people who suffer from a scarcity mindset, is I started generating lots of money from random places. I became a lot more inventive with how I generate income. For example, over the weekend, I worked at festivals during my postdoc. Most postdocs don’t do that. Just work at festivals to make a little bit of cash. I sold a lot of my unused furniture and unused clothes. So, I just started to have these random little pockets of money that would come from kind of very odd places. And then that increased my belief that I could make money easily. Money is not that difficult to make. There are lots of places where we can make money, so I can imagine some people being on Airtasker or even driving Uber, et cetera. There are actually lots of ways to make little pots of cash in this day and age. And so both kind of doing the budgeting, revising my expenses, and creating these additional pools of cash really increased my confidence.

Commercial

19:26 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes, conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Frugal Experimentation

20:15 Emily: I wanted to add kind of two further examples to what you were just saying. One is frugal experimentation. You said that you can take sort of an experimentalist approach towards managing your money, and this is something that I’ve talked about as well. If you’re looking for ways to reduce your expenditures, or like you were saying earlier, not necessarily reduce what you’re spending but rather shift from using your money in ways that don’t give you as much satisfaction towards ways that do give you more satisfaction is a better way of thinking about it, right? Rather than just spend less everywhere. But if you are looking for something that you don’t care about spending money on too much, how can I spend less and less in this area? So I can redirect my money elsewhere. You can run what I call frugal experiments.

20:56 Emily: And so I think this is what you were mentioning. You would find a frugal tip somewhere online or whatever from a friend, and just try it out in your life. And what I say is to try it for 30 days. So it’s really giving it a good shot. Seeing if you can make it habitual and make it mindless and easy for you, and then go ahead and evaluate what was the actual effect. How much money did you end up not spending in that area that you didn’t care so much about? Was it worth the effort that you put in? Were you able to make it a habit? Were you able to make it easy? And if the answer is no, it didn’t reduce my spending enough to make all that effort worthwhile, well then just go back to whatever you were doing before. You can just easily reverse it.

21:35 Emily: And so you can do maybe, you know, one frugal experiment per month and just take like sort of a playful approach to it as you were saying. It’s not do or die in every single one of these things. You don’t have to change everything about your lifestyle in one fell swoop, but you can just take these small areas and make a change. And if you don’t like the change, then just go back. No big deal. So that’s one comment I wanted to make. And the other one is about finding other ways to earn or finding that money would start coming your way once you were thinking about it a little bit differently.

Having a Plan for Windfall Money

22:09 Emily: And what I did during graduate school, again, when our incomes were lower and it was very important to me that we used our money in the best way possible. I was very careful that I had a plan for any, what I might call windfall money that came my way. So it could be receiving maybe a gift, a birthday gift or something. Or it could be, I occasionally would participate in studies, like clinical trials. Very minor stuff. You know, psychological surveys, that kind of thing. If I made $10 from that, okay, well I would always have a plan for where that money was going to go. It wasn’t something that went into my general checking account to be just floating out there and who knows where it went. It went towards what we were using, targeted savings accounts. So it went into my target savings account for travel usually, or one time we were saving up for like a camera purchase for a DSLR. And so we would put in the extra money that we found into that savings account for that ultimate goal.

23:10 Emily: And I think having a plan for where that money was supposed to go, to help me use my money in a way that was most satisfactory to me, really made me pay more attention to all those little ways that money came to me. Whether it was from earning it or whether from, I don’t getting cash back on something, right. I had cashback credit cards, like just having a plan for any of those little non-salary income sources of money. Having a plan for what to do with it made sure that I was using it in a way that felt most optimal for me. And so I really love that you said that example as well. And maybe money was coming your way from time to time earlier, but you just weren’t paying attention in the right way to it to be able to use it in a way that was satisfactory.

23:53 Lucie: Yeah. And what I love about your example, Emily, is the actually you were almost using GBB. Because when you talk about your camera in your savings account, you know, to me that’s like your “Better” goals. And so, you were intuitively using a similar system by putting all that windfall income into these very specific goals.

Anything Else About Being a Money Boss?

24:14 Emily: Yup. That’s probably why I’m so excited about the framework is that it’s a way of sort of crystallizing how I was thinking about things already in a way that will help me communicate those ideas better with other people. Anything else you want to say about becoming a money boss or how you are a money boss? How you behave as a money boss now?

24:32 Lucie: So definitely this in terms that I’m spending more time being more future-oriented. So for example, now thinking of buying a property having these two-year cashflow projections, dreaming to the multiple six-figure business. All of these things now are within reach because I can actually monitor my progress to them rather than feeling stumped. And the other thing that has happened, which is surprising me a lot, is that I’m teaching basic business finance to other entrepreneurs, which seems really odd. But I’m actually doing it. And so, teaching other people how to do cashflow projections, how to manage money in their business. And so for me, especially lots of everything that we’ve talked about in this conversation, is a complete turn around.

25:24 Lucie: I had the skill set to do that. My training in biology was in specifically statistics. I was a computational modeler. So, money should not have been so difficult to me because I know how to deal with numbers. But it was the emotions attached to it that were blocking me. Versus now, I can really feel that my mathematical skills or my decision-making skills, I can use them to the best of their effect because basically my conscious mind and my subconscious mind are in the same direction. And now, I can head towards the future and make these better longterm decisions and also help other people make decisions like that.

26:10 Emily: Yeah, I love that point. I mean sometimes I hear that personal finance is intimidating to people because it is about numbers. Kind of. They think it’s about numbers. But really, I mean especially if we’re talking about PhDs, the level of mathematical ability is a very low bar to be passing to be successful in personal finance. It’s really all about mindset and emotion and understanding your values and self-knowledge and all the things that we’ve been talking about in this conversation. That dwarfs the ability, in terms working with numbers, to be successful in personal finance. Of course, it helps if you’re comfortable with math and everything, but it’s not what’s holding you back basically if you’re not feeling successful in that area.

Start Frugal Experiments Today

26:54 Lucie: What I would say as well to anyone listening is to start doing these frugal experiments. Start doing it now. And that’s not because I want to scare anyone out. But now especially that I work with business owners a lot more: people who can manage their money well will always be catered for, and you’ll definitely have a leading edge over anyone. Actually, very few people manage their money well. And so, if you can have both these mathematical skills that most of us would have in the academic world. and the willingness and the right mindset to manage your money. And if you can do it as soon as possible, let’s say in your late twenties or whatever. The rest of your life is going to be so much easier because of things like compound interest. And so it’s really worth kind of pulling the BandAid off and starting small today. Let’s say, looking at your phone bill and how you can optimize that, and then just gradually looking at all the other elements.

27:59 Emily: Yeah, I think you put that so well. And I could not agree more. Start today. And it doesn’t have to big, it doesn’t have to be scary. Have a glass of wine, like you said, whatever it takes for you to be able to look at your account transactions or whatever it is that your starting point needs to be. Just start, and start small. And the earlier you do it, the more you’re going to benefit really throughout the rest of your life. So as we sum up here, how do you think that PhDs can use the GBB framework with respect to personal finance and with respect to other areas of life?

How PhD Students Can Use the GBB Framework

28:35 Lucie: Yes, I think that the main two ways that PhD students can use the GBB framework are first, in terms of budgeting their expenses, or trying to align that concept of what is “Good” or what is the minimum viable income that you need. And kind of either reducing your expenses or rejigging your expenses to some things that provide higher value. And if this is available to you, also diversifying your income. Unfortunately, now we’re in an increasing world of casualization of the academic workforce. So a lot of people are working smaller contracts and having kind of little pools of money, and the GBB framework is great for that. But also for people who might have a more stable income, there are lots of opportunities out there to make more money if you wish. And so, once you’ve costed out what your dreams are going to cost you–your savings account, your camera, and your holidays–then really it’s up to you how you reach that goal. And for me, it’s a motivation to work hard because I enjoy doing it and especially with the Best goal, that’s where you can allow yourself to dream big. And I can imagine as well that having that GBB framework comes in extremely useful when negotiating for jobs. Because once you have that number in mind, it’s crystallized in your head. I need that number. I would like that number. I really, really want that number. And it’s up to you to make it happen.

Look at the Numbers and What Works For You

30:07 Emily: Yeah. Excellent point. I think something that may be useful for someone who’s in a really, really tight spot with money, maybe it’s during graduate school, like you were really not making a sufficient income for where you were living. If you are allowed to take on outside work, if it’s permitted by your contract or you think you can get away with it, whatever the situation is. I think it could be really useful to actually look, as you were just saying, at what is the shortfall that I have between what I’m making right now and what that minimum viable income is. And if I did this type of work, how many hours would it actually take to make up that shortfall? Because I’m thinking that maybe a lot of PhD students in that situation don’t need to work an additional 20 hours per week at the pay rate that they can gain using the skills from their PhD.

30:59 Emily: Maybe they’re going to be able to make a very decent hourly rate. Maybe it’s $20 per hour. Maybe it’s $50 per hour. Maybe it’s $200 per hour depending on what their skill sets are and what the market is. But really looking at, okay, well if I just worked an extra two hours a week or five hours a week, maybe I can make up that shortfall and it would make such a huge difference to your general sense of wellbeing in your life to be able to do that. This is just basically an argument for looking at the numbers and looking at potential income in certain areas as we’ve been talking about throughout this entire episode. And again, trying to figure out what is it really going to take to make that amount of money. And maybe it’s not as much effort or not as much time as you were thinking it would be when you were just sort of hiding your head in the sand about it.

Diversification of Income: Side Hustles

31:45 Lucie: Yes, that’s excellent advice. And as you say, a lot of PhD students have a lot of skills that are very much in demand. For example, tutoring or teacher relief, et cetera. Even my editing job was something I could do from home anywhere and that any PhD student with superior English could do and would pay quite well. And so there are lots of opportunities both online and offline to make these extra little pools of money. And as you say, it might only be like two or three hours a week.

32:17 Emily: Yeah. So I think that was using the GBB framework on your personal finances and on budgeting. That was the first suggestion. What was the second one?

32:26 Lucie: Ah, yeah, the second one was to diversify your income.

32:29 Emily: Ah, okay. Yeah. Great. I love both of those suggestions. And really the diversification of income strategy is not just one for PhD students as you did during your postdoc. Or even maybe if you had had a regular job at that time, you were just experimenting and you were exploring with other types of work that you could do. And eventually, you were able to hit on what is now your business and what is really bringing joy and satisfaction in your life. But without sort of stepping out of your current status, without stepping out of your comfort zone, you wouldn’t have taken that journey and been able to get to this point. So again, a theme coming up again is experimentation, whether it’s with new types of work or frugal strategies or what have you.

Additional Benefits of Side Hustling

33:10 Lucie: And I think there are a lot of other benefits to having a side hustle experimenting beyond the extra money. You know, there are lots of talks that most PhD students don’t stay in the academic world and need to translate their skills to industry or the business world, et cetera. And experimenting and having a side hustle is the perfect way to do that, in addition to earning more money.

33:34 Emily: Yeah, if some of the different topics we’ve covered in this episode have peaked your interest, listener, please go to the show notes because I have written about so many of these things in different ways. I’m going to add a lot of links there to different articles I have that you can go to explore deeper and of course also visit Lucie’s site. You want to mention it again, Lucie?

33:53 Lucie: Luciebland.com. L u c i e b l a n d.

33:58 Emily: Yeah. Especially if you want more content around what she is specializing in. Lucie, it was such a pleasure to talk with you today, and I’ve learned a ton from this conversation. I’m sure the listeners have as well. Thank you so, so much for this interview.

34:10 Lucie: Thank you, Emily.

Outtro

34:12 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

This PhD Healed Her Scarcity Money Mindset Using a Goal-Setting Framework (Part 1)

September 16, 2019 by Meryem Ok

In this episode, Emily interviews Dr. Lucie Bland about her financial journey from graduate school to self-employment. Lucie was severely underpaid as a PhD student, and she felt such guilt and shame around spending that she became terrified of money. Her money mindset didn’t improve when her income increased several-fold as a postdoc, and it wasn’t until she discovered the Good-Better-Best goal setting framework that she started to heal her relationship with money. She now describes herself as a money boss. In this first half of the conversation, Lucie details her financial journey from underpaid PhD student to well-paid postdoc and how she needed to take a break from full-time employment to set herself on the right career and financial trajectory.

Listen to Part 2 of this interview!

Links Mentioned in the Episode

  • Lucie’s Website: luciebland.com
  • Personal Finance for PhDs: Speaking
  • What Color is Your Parachute?
  • Good-Better-Best with Megan Hale
  • Financially Navigating Your Upcoming PhD Career Transition
  • Personal Finance for PhDs: Help Out

healed money mindset

Teaser

00:00 Lucie: I did go to some extent through that transition of seeing not money as like an enemy or something that needs to be hoarded, but something that can be used as an investment for a good life. When I was doing my PhD, I was not future-oriented. I was in survival mode.

Introduction

00:21 Emily: Welcome to the Personal Finance for PhDs podcast, a higher education in personal finance. I’m your host, Dr. Emily Roberts. This is season four, episode five, and today my guest is Dr. Lucie Bland, self-employed PhD living in Australia. Lucie has such an amazing story to tell that I’ve split it into two episodes. This one and next week’s. In this episode, Lucie talks us through the roller coaster of her financial journey from severely underpaid graduate student in London to well-compensated postdoc in Australia to not having an income to starting a business. Lucie describes herself during graduate school as “terrified of money,” And that didn’t automatically improve when her income more than tripled and her cost of living dropped. We discuss the intentional steps she took to heal her money mindset, including the goal-setting framework that she now applies in her personal and professional life. Without further ado, here’s the first part of my interview with Dr. Lucie Bland.

Will You Please Introduce Yourself Further?

01:26 Emily: Thank you so much for joining me on the podcast today. We have a really delightful set of episodes ahead for us. It’s going to be a two-parter. My guest today is Dr. Lucie Bland and so I’m going to kick it right over to her right now and have her introduce herself to you a little bit further.

01:44 Lucie: Thank you, Emily. Thank you for having me on the podcast. My name is Dr. Lucie Bland. I’m an editor and writing coach and I help researchers and writers get published.

01:54 Emily: Yeah, that sounds really exciting. Can you tell us what your background is?

01:59 Lucie: Yeah. I graduated from Oxford University with a degree in biological sciences and then I did my PhD at Imperial College, London in Ecology in 2014. That’s when I finished, and then I moved to Australia for two postdocs in conservation science. The first one at the University of Melbourne and the second one at Deakin University. And now for about a year I’ve been running my academic editing business, which I now do full time. So very much serving the academic community, but I’m no longer directly a researcher.

02:34 Emily: Yeah. Well, we are in the same boat in that respect. Can you say right away up top what your website is?

02:42 Lucie: My website is luciebland.com and that’s spelled l u c i e b l a n d.com.

02:49 Emily: Yeah. And any other personal details you’d like to share, maybe where you’re living now or is your household just you?

02:56 Lucie: I live in Melbourne with my boyfriend and our Burmese mountain dog that you might see in the video if he comes around.

03:05 Emily: Yeah. Enticement to hop over to YouTube and watch this on the video instead of over the podcast. Okay. So we have this great story that I know a little bit about already, so bring us back to your time in graduate school. What was going on with you financially at that time, both in terms of like how much money you were making and also what was your relationship with money?

Lucie’s Evolving Relationship to Money

03:30 Lucie: Yeah, my money situation, my relationship to money when I was doing my PhD was very different to how it is now. I was living in London, one of the most expensive cities in the world, and I was earning 13,000 pounds per year, which is 16,000 US dollars. And I would spend 650 pounds a month on rent, which is 60% of my income. And I remember that time reading a report that said that your level of basic socioeconomic level can be determined by how much you spend on rent, and the higher it is the poorer you are. So that was a little bit depressing to me. But despite having these really high expenses and that really low income, I was really not wise about money at all. My money strategy was to bury my head in the sand. I was paid quarterly, which would mean that I would run out of money every quarter.

04:27 Lucie: And I didn’t have a savings account. So normal accounts could be very regularly in the double digits and I just didn’t know how that would happen. And when I moved to Australia, I experienced a very different money situation in that my income pretty much tripled. I was paid $80,000 a year and I lived in a really funky flat on my own in the hipster part of town. So I kind of went from rags to riches, but I very much kept my very Scrooge-y lifestyle and I still didn’t budget. It did mean that I was saving $20,000 a year because my expenses were really low cause I would still collect vouchers and coupons and have that very “PhD student” lifestyle. But I wouldn’t say that my budgeting skills or my approach to money improved in any way. It was just that my income was higher.

05:26 Emily: Gotcha. Yeah, that’s a great overview, and I think it’s one that’s going to be relatable to a lot of people within the audience. Most of my audience is in the U.S. and the cost of living differences can be so wide between, you know, New York and San Francisco versus certain cities in the Midwest that are quite a bit smaller. And so a graduate stipend can also kind of be all over the map and it doesn’t necessarily correlate with higher stipends in higher cities necessarily. Sometimes that’s the case and sometimes not. I’ve interviewed several people on the podcast who live in high cost of living cities but have an okay kind of income, maybe double or more what you just mentioned, and others where that’s completely not the case. A much, much lower income. Actually, I want to go back a little bit further and talk about your mindset from even before you started graduate school. Would you say that you grew up middle class, or what was your mindset about money or the socioeconomic status you had prior to entering graduate school?

Money Mindset Before Grad School

06:34 Lucie: Yes, so I was definitely middle class. Especially my father had a very relaxed and confident approach to money and to some extent my mother as well. But in a way they hadn’t taught me any budgeting skills at all, which is a little bit sad, but kind of looking a bit backwards again. And that has really influenced my money story. My French grandparents grew up under German occupation and under rationing and that really influenced their mindset around money and around the use of resources. And to some extent, even in my kind of middle class nuclear family, especially, my mother could also have that very Scrooge-y or scarcity mindset. And I remember my grandparents still drinking chicory, which is a coffee replacement that’s made from the root of a plant, that French people used to drink under the German occupation.

07:30 Lucie: And so they still had some of these relic habits of, you know, we don’t know when the next meal is coming. And so you’ve got to finish off your plate, you’ve got to use all your resources in a very savvy way, which in many cases can be a good approach. But I think that as a child, I really internalized that. And one of the funny stories in my family is that at the age of 10 or 11, I signed up to this website, it was called scrooge.com and got lots of vouchers and was very obsessed with using those and not spending any money. So, I’m quite conscious that my personal money story and approach to money, well to some extent determined by my socioeconomic level or being from a middle-class family, was also influenced by lots of other family patterns that predated that.

Money Mindset During Grad School

08:20 Emily: Yeah. So I guess we could suffice to say that in some ways you were unprepared for being in graduate school on that kind of income and in that expensive city. In other ways, you had maybe some skills and some mindsets that would be, I hesitate to even say helpful. I mean helpful to survive, but maybe not helpful to be sort of healthy mentally overall towards money, especially later on once you have that income increase. So when you were accepted to graduate school and you knew what that stipend was going to be, and you knew more or less where you’d be living and that it was going to be 60% of your income going towards rent, what were your thoughts? How did you approach that situation? Did you think, “well, I’m just going to have to make this work. I’ll do it somehow”? Or did you consider debt? And I don’t know if that was even really an option for you.

09:14 Lucie: The thing is I didn’t even know that I was going to spend 60% of my income on rent because I hadn’t calculated it at all. I was completely in the dark, and no, that was not an option. I’ve never had a loan or credit card. Again, different countries have different approaches to that. And for me, I was just going to have to eat pasta. That’s how short-sighted my thinking was. To some extent, I could have considered a student loan, which I might not have been eligible for as a French person. But you know, my thinking was not even that advanced.

09:54 Emily: Right. And so once you did find out, once you did secure housing and you knew how much of your stipend was going to be eaten up by rent, what was your plan at that point, and kind of how did you get through it? And I guess this might be sort of advice in sort of how to keep expenses low. Although of course in the overall arc of this conversation, that’s not really what we want to be talking about. But for those years, how did you get by?

10:19 Lucie: I probably spent very little money on food, and I did go out a little bit, but I wouldn’t do anything that was fun. You know, I would probably not go to the cinema. I probably would not go to expensive parties. One of the things I did in London, I had a bike and I would be very savvy about whether I would take the tube or the bus. The bus was cheaper, and so everything became a decision. And if the decision presented itself to me, I would always take the cheaper option. So, I didn’t think long-term about do I need to build savings? Do I need to think a bit longer term? It was extremely short-term.

10:57 Emily: Was thinking long-term even an option though?

Short-Term versus Long-Term Vision

11:01 Lucie: At that stage, I wasn’t thinking long-term at all because I just couldn’t. I didn’t have the funds to do it.

11:09 Emily: Yeah. It’s not really a personal oversight. It’s just this is how the day-to-day is passing by of thinking about these really minute decisions around money, which are so important to whether you’re going to stay in the block for the month or the quarter. So you were surviving by being extremely frugal in many areas and not spending much on entertainment. I wonder, were your classmates living in a similar manner?

11:39 Lucie: Yes. Yes, we were all living in house shares in London. In quite difficult conditions with lots of issues with housemates, with landlords, with boilers breaking and not getting repaired. Like in a way it was a very kind of low-income status. And I remember kind of looking in awe at some of the PhD students who might be a little bit older who might have worked before and had a bit more savings or maybe had a partner who could support them, who lived in a real adult flat and had furniture that they bought new rather than scavenged from the streets. And to me that was very much a vision of the long-term future. It’s definitely not something I was doing then.

12:27 Emily: Did you find that it was helpful to have that comradery with some of your classmates? Did it make getting through this experience a little bit more bearable?

12:37 Lucie: Yes, and to some extent, even people who would start their first job in London. So, not a PhD student, would probably be on a similar income. And that was 2010. It was post-global financial crisis. So actually some people had decided to do a PhD or go to graduate school just to avoid getting a job. Because there were so few jobs. So that was kind of the economic climate of the time, which has improved slightly now, but we were all very much in that same mindset regardless of whether someone was starting, you know, their first teaching job or was doing your PhD or had a job in admin or in sales at a small company. None of us were making the big bucks.

Money’s Impact on Lucie’s PhD Perfomance

13:20 Emily: How do you think that being–it sounds like very consumed with thoughts about money and decisions around money on a daily basis–do you think that had any effect on your scholarship?

13:34 Lucie: Do you mean how I performed during my PhD?

13:37 Emily: Yeah. Like, let’s say your income was double of that, and you had an easier time with money, there was less stress there. Do you think that you would have done better?

13:49 Lucie: I actually think the opposite in that because I couldn’t do that much outside of going to work and coming back home, I worked really hard. And that’s what I would just do. I had a very traditional existence of cycling to Uni, doing my PhD, and coming back. And I think that to some extent doing my PhD, was a release from my money worries, and that’s why I worked so hard on it. So that could be my specific experience.

14:18 Emily: Yeah. I don’t know if that’s generalizable. I mean, I’m happy to hear that you thought it was a positive effect on your work. But I remember when I was interviewing for graduate schools that I heard that argument from–I interviewed in a city that didn’t have a whole lot going on. A very, very small city, rural–and the argument was kind of, well there’s nothing to do here except for our work. And the weather is really tough in winter. And so we just work, and that’s all. Versus if you lived in a very exciting city or one where there’s just a lot more fun activities going on, you might be more tempted to get out of the lab and go to these other things. But we’re talking about living in London and having that attitude. So, I’m a little bit surprised by that. That you were able to kind of “tunnel vision” on just your work during that time.

15:07 Lucie: Yeah. I think that in that case, it’s very much necessity is the mother invention or this dictates how you behave.

15:16 Emily: Yeah, exactly.

15:16 Lucie: And that’s why I was very relieved when I moved out of London, came to Australia where the cost of living compared to London is lower. You know, it’s kind of insane to say. Australia has a reputation for being expensive, but I found Australia very cheap.

15:32 Emily:  Yeah. Let’s talk about that transition now. But first, how many years were you in London doing your PhD?

15:38 Lucie: Four years.

Financial Life as a Postdoc in Australia

15:39 Emily: Okay. So that’s plenty of time for this to become a very ingrained mindset and approach towards money. So, you finish up and you’ve accepted a postdoc in Australia. Tell us about that. Tell us about the money that you’re making and where you’re living and so forth.

15:55 Lucie: Yes. I was very excited to come to Australia to come to Melbourne. As I said, I would be making $80,000, which was way more money than I’d ever made. I could afford to live on my own, which was a big thing in a really nice little flat in the inner city. I bought a car, I bought new furniture, you know, things were going really well. But what I noticed as well was that I did keep a lot of my former habits in the sense that, for example, Melburnians are big fans of their coffee. All the postdocs would go to the really nice coffee shops and have take-away coffee and bring it back to their office while I was very purposefully making instant coffee in a little kitchen so as to avoid buying coffees. And most of my decisions were like that in that I still got reclaimed furniture from the streets. I would do most of my shopping at op shops, which is very eco-friendly but there is a limit to how healthy that is as well. And so, even though my income was higher, I had still kept that mindset of trying to keep my cost of living as low as possible. Not really from a conscious intention, but just because that was the only thing I knew how to do.

17:13 Emily: Yeah, it sounds it’s actually hearkening back to your example from your grandparents, right. Even the coffee, specifically. So this is really interesting to me to talk to you about this transition because it’s something that I think about a lot and that I talk about quite a bit as well of how should PhDs manage their money once they’re out of graduate school. And I think the standard personal finance advice that I often say as well is live like a college student. And that’s the general advice, and the way it applies for graduate students that I say is “continue at your graduate student lifestyle for as long as possible.” Even though, once you’re making this higher income, to kind of make up for the lost time and the lost income from the previous years, so that’s a time when you can be building up savings and starting to invest and so forth.

18:05 Emily: But I trip over that advice sometimes a little bit. And especially in a case like yours, because if your lifestyle was so constrained, due to your graduate income, that’s not good advice any longer, right? You should increase your lifestyle as your income goes up, and still do all the things you want to, you know, be saving and so forth, investing or paying off debt, whatever it is you need to do. But if you have been consumed and shutting out large portions of your life because of lack of money, that’s not something that should continue. So I’m really glad to have your example as one that is counter to the advice that I usually give and the advice that many people would probably hear once they are seeking out personal finance content. So, can you talk a little bit more about that change? Once your income is higher, how did you start changing how you were using your money and thinking about your money?

Money Change #1: Saving Toward Retirement

19:05 Lucie: The first decision that I ever made about my money, that was a very good decision, which was based on the advice of one of my friends who’s a financial advisor, was that when I started my postdoc in Australia, we’re very lucky that we have 17% of our salary be put into a superannuation fund by our employer. So the employer adds to our salary 17% and puts it into a fund for our retirement. But we can make additional pre-tax contributions. And I made the maximum pre-tax contribution, which was 9.5%. So, I basically had a quarter of my salary going into a super every month, and that was not increasing my lifestyle. That was making a very conscious decision about investing in my future. And that was pretty much the little seed that then grew not into expanding my lifestyle but into this view of investing in myself in the sense that I can invest in savings, I can invest in my super, but I can also invest in my own wellbeing, not because I’m being frivolous, but because it pays off.

20:17 Lucie: It pays off, let’s say to have a gym membership, to have a yoga membership, to have healthy social relationships, et cetera. And so I think that I did go to some extent through that transition of seeing not money as like an enemy or something that needs to be hoarded, but something that can be used as an investment for a good life. And that was what I’d seen in some of these older PhD students in London who were maybe buying a property, et Cetera, that they were investing in their future. Versus when I was doing my PhD, I was not future-oriented. I was in survival mode. Versus this increase in salary opened up for me the possibility that I could plan for a future.

21:01 Emily: I think you put that so well and I want everyone listening, if you’ve resonated with anything, Lucy said so far to go back a minute or two and listen to that–what you just said, over again–because I think it was so, so insightful and well-put. As you were saying, the first intentional money decision that you made after this income increase was not about just going crazy and spending because you’d been so restricted for so long and just splashing out on everything. But rather, being able to think about really changing how you even viewed money. What you said was in viewing it as being able to invest in yourself and having an enjoyable and healthy lifestyle overall rather than trying to hoard it as much as possible because there was such a scarcity, you know, before that point.

21:52 Emily: And I did want to add a slight translation for my, my listeners in the U.S. So, our equivalent to what you did was, when you got your higher salary, basically we would call it “maxed out your 401(k),” which in the U.S. is $19,000 per year. So if anyone’s listening who has started a new post-PhD job and you’re wondering what to do with that lovely salary bump, maxing out your 401(k) is an excellent thing to do. For the reasons that Lucy just mentioned, that it is an investment in yourself and it’s an investment in your future.

Commercial

22:25 Emily: Emily here for a brief interlude. Through my business, I provide seminars and webinars on personal finance for graduate students, postdocs, and other early-career PhDs for universities, institutes and conferences, associations, etc. I offer seminars that cover a wide range of personal finance topics and others that take a deep dive into the financial topics that matter most to PhDs, like taxes, investing, career transitions, and frugality. If you are interested in having me speak to your group or recommending me to a potential host, you can find more information and ways to contact me at pfforphds.com/speaking. That’s p f f o r p h d s.com/speaking. Now back to the interview.

Money Change #2: Impulse Shopping

23:13 Emily: So were there any other changes that you made, after that point, after starting to think about the long-term with respect to retirement? What other changes did you start making?

23:24 Lucie: Probably the next change that I made, which was not a good change, and that happened in my second postdoc, was that I started to impulse shop, and that was entirely related to the stress that I was under. So for, as you said, for a few years I managed to keep my spending quite low, and to have that fairly frugal lifestyle. But then after years of PhD, years of postdoc being put under a lot of pressure, I was starting to struggle, and I could see that being reflected in my spending. And I very quickly knew that this was an issue. So it wasn’t that I was being frivolous in being released, I was using that kind of as an emotional Band-Aid. And that kind of was one of the alarm bells that told me that maybe I need a bit of time off or to think about why I was in academia and what I’d wanted to do. Because one of the symptoms of this was how I was sending my money, which was not really in accordance with my values, and that was quite troublesome to me.

24:31 Emily: Yeah. I think that’s also very common behavior, whether people can afford it or not. So, coming to impulse spending just to emotionally relieve some kind of stress or difficulty or pain that’s going on. So, yeah. Can you tell me more about, having recognized that issue, what then did you do? You just mentioned you took some time off from your postdoc.

Leave of Absence from Postdoc

24:56 Lucie: So I think this was kind of part of a larger quarter-life crisis in the sense that the pressure had been mounting probably since the first day that I started my first postdoc in Australia. And now that was three years later of full-time work with a lot of international travel, a lot of publications. We’re all familiar with that kind of lifestyle. And I just didn’t know why I was in research anymore. I felt really lost and kind of, as we talked about before, I could not see my future in it. And I didn’t know if it was because I was too stressed or confused or because it was genuinely not what I wanted to do. So I was very lucky that I could ask for a six-month unpaid leave of absence from my university and kind of take a little break from all my responsibilities. Because, especially in my first postdoc, I think I must have supervised four or five students to completion. I think I kind of bumped to a lecturer role very quickly. But that amount of responsibility, and then it kind of caught up with me a few years later, was like, well, I’m going down this route very quickly. Do I want to continue with this route?

26:16 Emily: Yeah, really in many jobs, many workplaces, there is a great deal of just going with the flow and some inertia. And you can get to a point where your job duties are not at all kind of what you expected or what you signed up for, but it evolved. So that’s amazing that you made the decision and also were able to say, “okay, hold on a second, I need to take some time to figure out where I really want to go next.” And this is maybe a little bit of a naive question, but were you able to fund that period of being away from your job because your expenses had been so far below your income for the previous years?

26:53 Lucie: Yes, I had a lot of savings at that point.

26:56 Emily: Yeah. And, what I say quite a bit, that money gives you options. And so, you’d been earning quite a lot and saving quite a lot for those few years, and then you had the option to take a step back and have that time to reevaluate. So, what did you do with that time off?

Personal and Career Development Journey

27:16 Lucie: First, I had a holiday to see my parents in Europe, which was great. And I think the first two or three months of the six-month period, I was brain dead. I was recovering. I was watching TV, doing all of these silly things that people do when they finish their PhD. But I’ve seen that quite a lot in first or second postdocs in that people who don’t take a break between their PhD and their postdoc tend to get hit at a later date with trying to cope with all that change. I had also moved to Australia by myself and so I think it just all caught up with me a little bit later. So, I spent a few months resting and relaxing, and that’s when I started to coach myself. I became very interested in these personal development and career development books.

28:09 Lucie: I started to use a career coaching book that’s called, What Color is Your Parachute? It’s a very famous career coaching book.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

28:16 Emily: Yes, I’ve read that.

Part-Time Editing, Part-Time Postdoc

28:18 Lucie: Yeah, it’s great. And basically, I figured out that probably a very good job for me, which matched to actually want I wanted to do as a child–I wanted to be a writer. And what I was enjoying, what I was really good at as an academic was publishing. And kind of putting these two things together, I was like, “well, getting a job as an editor would be quite a good fit.” And I got a small job with a big global editing company, editing research papers, writing research papers, kind of being a writer for hire. And I really enjoyed that but it paid very little, and I was just starting out. And I could see with the budgeting that I had started doing when I was off work–because that was another really great habit that I’ve gotten into–was that just having that editing job was not gonna cut it for the type of life that I wanted. And that kind of spurred that decision to go back to my postdoc part-time. I was also not sure whether I wanted to quit academia completely. I thought that maybe if I worked part-time, I could cope with the challenges of academia better because I would have reduced hours. Then I could do my editing job as well. So that was the plan in that period, which would be to do the postdoc job part-time and the editing job part-time, and then together it would make a healthy income.

29:52 Emily: I love just how intentional you were with all of those decisions. The series of decisions that you made there, in trying to align your career with what you really wanted to do. And also, you briefly mentioned, but starting to budget is a major, huge leap in one’s personal finances. And that, it sounds like, sort of contributed to the career planning. Right? How much money do I actually need to make to fund the lifestyle that I want and then how can I redirect my career to make sure that I make that amount of money? And is that how it worked out? Did you find that the half-time postdoc position was lower stress, and was that a good situation that you were then in?

Backfired Plan: Full-Time Work for Part-Time Pay

30:35 Lucie: In a way that was a complete failure, in that I was doing full-time work for part-time hours and part-time pay. And I’ve heard that story a lot with other people, in that research is a job that is difficult to do part-time. And a lot of mothers, a lot of people who would want to work part-time for lots of reasons, find it challenging. After a while, I did end up quitting the editing job because it was too much in that postdoc responsibilities would come during my editing hours and would influence the quality of my work at the editing company. And because I was an employee of the university, they kind of took it as this is your priority, and your other job is not a priority. And that was quite difficult to manage. And also at that time I would realize that having my own business would enable me to make the kind of money that I want it to make from editing instead of working for an editing company. And so that spurred my decision to quit the editing job and to start my own business. So, as you’d mentioned, some of these decisions were intentional, but also some of them were just due from the decision to go part-time, in a way, backfired.

32:02 Emily: Yeah. So, did you end up not staying part-time for very long? How long did you stay at that part-time?

Going Full-Time into Self-Employment

32:09 Lucie: I stayed part-time for a year. And then I went full-time with the business. I had a few months to start the business when I was still part-time at the university. And that gave me a little bit of a cushion. And then again with the budgeting, I realized within three months that actually with the business, I was making enough money to not need the Uni job, which I then let go of. It makes it sound like a very drastic and calculated decision. There was a lot of kind of emotional decisions that went into it as well because I love research and I continue in a way, but I knew that having my own business would be a better decision for me for the lifestyle that I want to have, for the type of people that I want to surround myself with, etc. And finances were I guess one of the drivers of that decision. But there were also lots of other things that went into it.

33:08 Emily: Yeah. I have many of the same thoughts around and motivations around becoming self-employed. So, we’re going to talk plenty about your transition to self-employment in the second part of this two-part series. But before we do that, I wanted you to introduce this Good-Better-Best framework that you started using. I believe during this period when you were taking a break from work and when you started budgeting. What is that framework, and how were you using it?

Good Better Best (GBB) Framework

33:40 Lucie: Yes. So the framework that I was using at the time along with my budgeting is called Good-Better-Best goals. And it’s a framework that was devised by business coach Megan Hale. So when I was on my break, I just sucked up a lot of books and podcasts on how to be an entrepreneur. And usually these guys have much healthier attitudes to money. People have worked really hard on their money story and their finances to be at a stage where they can own their own business. And so that GBB method relies on defining Good-Better-Best benchmarks in terms of income generation. So, your “Good” goal is your minimum viable income. It’s the minimum of amount of money that you need to survive. Probably, my income when I was a PhD in London was even below what could be called a minimum viable income because it came with so much strain.

34:40 Lucie: A “Good” goal in the GBB framework is your basics, your rent, your bills, et cetera. Your food, and maybe something that you find really important–a little bit of going out or a Netflix subscription, but it really doesn’t go overboard. It’s pretty much the minimum that you need to have a relatively happy life. Then it gets very exciting when we go to the “Better” and the “Best” goals because then we start to cast out some of these big dreams that we have. So, for example, for me and my “Better” goals, I’ve got things such as buying furniture, buying a new dog, going on holiday. So, that’s when your lifestyle starts to improve and increase. Like you were mentioning, with having a postdoc that has better pay. Usually, people get to that “Better” benchmark where they can start to save money. They can work towards these big dreams. And because they cast it out in advance, it’s very motivational in the sense that, let’s say budgeting or restricting your income and things that you don’t like. It comes natural because you want to reach these other goals. Instead of feeling restricted, you’re just moving your money around to enable going towards the things you really want.

35:56 Lucie: And then the “Best” goal really blows your mind in the sense that if you could make that much money, it would be almost unfathomable. And you could afford so many different things. So, here you can cast a lot of these bigger dreams like buying a house or going on very luxurious holidays, et cetera. And so because you have these three benchmarks, you can always assess where you are in this very logical and objective manner. And maybe that’s something we’ll go into the next episode. It helps you get out of this very emotional attitude to money or this very fear-based attitude to money because then they just become numbers in a spreadsheet. They are in an order: Good, Better, Best. And then you can address them in this objective manner rather than having no numbers or this nebulous idea in your head that your dreams are never going to come true because they are too expensive, versus when you know exactly how much it’s going to cost, you can start working towards it.

Expanding the GBB Framework for Personal Goals

36:59 Emily: Yeah. I think you explained that very well. So, the source that it came from for you and the way that you first learned about it is very oriented around being self-employed or being a business owner in terms of having variable levels of income and a degree of control over your income. If I make this amount that’s going to keep the lights on and my life’s going to be okay. If I strive for this amount, then the next levels I could unlock in my lifestyle, and then, okay, the third level is even well above that. But given your history, coming as a PhD student and then as a postdoc, how did you massage this framework into something that you could use maybe in your personal life and not just as an aspiring business owner?

37:46 Lucie: Yes. Well, first, just defining the “Good” goal. This is applicable to anyone in the sense that most people actually don’t know their minimum viable income. And that would change their decisions on what type of job to take, what city to move to. They might think that a certain city is too expensive or a certain job doesn’t pay enough, et cetera, versus if you have a really good handle on how much you actually spend. For me, I’ve done personal budgeting for more than a year, so I know my yearly fluctuations. That enables me to make much more informed decisions about every aspect of my life. Because if I want to go for job, let’s say I’m not self-employed, I would know what this job would allow me to do and whether, let’s say I would be ready to move to a cheaper area or to a more expensive area. And the GBB goals would put that into context.

Financially Navigating a PhD Career Transition

38:47 Emily: Yeah. I actually love that you brought that up in terms of evaluating your next position. If you’re getting out of graduate school, going to a postdoc, going to another job. This is actually something that I’ve talked about in some materials that I released in the summer of 2019, which if you want to check that out, you can go to pfforphds.com/next. N e x t. And that’s about putting a job offer, a salary offer that you receive in the context of the local cost of living for the new place that you don’t live yet. And there’s ways to do that without having tracked your own spending like you’re talking about. Like trying to figure out, okay, how does this new city’s cost of living compare to where I currently live, what I currently make, what would I be making there? How does it compare?

39:27 Emily: But it’s much, much more powerful if you actually do what you’re talking about and have tracked and budgeted for yourself wherever you’re currently living. And it gives you so much more information for then evaluating that next salary offer. And like you were saying, okay, maybe in graduate school, you’re able to spend at the “Good” level. Or maybe you’re not. Maybe you’re at an insufficient level and it’s even below what you would consider to be a “Good” level of spending. You’ll at least have a handle on that. You’ll know where your current salary and current expenditures relate to that, “Good” or “Better” or whatever it is level. And that will help you evaluate, as you were saying, the next position that you might be offered. Or in your case, well, how much money do I really need to make to make this leap into self-employment, which will be so much better for me and you know, x, y, z other areas. But can I do it financially? It helps you evaluate that. Am I getting that right?

40:21 Lucie: Yes. Completely.

Final Advice for a Healthier Money Mindset

40:23 Emily: So, something that you mentioned when we were first talking about doing this interview was that you had used this GBB framework to heal your mindset towards money. So, that’s this period that we’ve been talking about. And when you’re really facing your numbers and starting to budget and so forth. What advice do you have for another, let’s say PhD student currently who is struggling both with a low income and with an unhealthy mindset towards money?

40:53 Lucie: Yeah. My main advice would be to start taking action now in the sense of doing very basic budgeting because not knowing where your money’s at makes things worse. We think when we’re putting our head in the sand that things are better because we’re not looking under the hood but it actually makes things worse. And the reason why it’s important to take some form of action really early on–and this thinking is corroborated by forms of therapy such as cognitive behavioral therapy–is that by changing your behaviors, you actually change your beliefs. It doesn’t really work the other way around. You won’t wake up tomorrow with another set of beliefs about money. It’s about taking action. And then this informs our beliefs and how we evolve in relation to money. And so by taking small actions such as when I started, which was very simple, which was just to print out my bank statement and then put a little circle around the expenses that brought me a lot of joy or a lot of value and then a little cross with the ones that I was not so sure about. I was like, maybe that’s wasted money. And then just gradually adjust your spending so that you only have the little circles. And that can help you towards what is your minimum viable income, what’s your “Good” goal without all the extraneous bits that you spend money on but actually you don’t enjoy that much.

42:14 Emily: Yeah, I absolutely love that advice. It’s sort of increasing the efficiency of the use of your money. So, I think that’s wonderful advice for that student.

Outtro

42:23 Emily: Listeners, thank you so much for joining me for this episode. Pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There, you can find links to all the episode show notes, a form to volunteer to be interviewed, and a way to join the mailing list. I’d love for you to check it out and get more involved. If you want to support the show and my business, please go to pfforphds.com/helpout. There are plenty of ways to do so without laying out any of your own money. See you in the next episode! And remember, you don’t have to have a PhD to succeed with personal finance, but it doesn’t hurt. The music is Stages of Awakening by Podington Bear from the free music archive and is shared under CC by NC.

This PhD Government Scientist Is Pursuing Financial Independence: Part 2

July 22, 2019 by Jewel Lipps

In this episode, Emily interviews Dr. Gov Worker, which is the moniker used by a PhD scientist and FIRE blogger. FIRE stands for Financial Independence and Early Retirement. As a PhD, Gov Worker’s motivation for and path to FIRE are different than most and specific to his high degree of training, and he thinks other PhDs should consider FIRE as well. In this second half of the conversation, Gov Worker shares what his family is doing to achieve FIRE, how being a PhD has affected his FIRE journey, and his financial advice for early-career PhDs.

Further Listening: This PhD Government Scientist Is Pursuing Financial Independence: Part 1

Links mentioned in episode

  • Financially Navigating Your Upcoming PhD Career Transition
  • Personal Finance for PhDs Podcast Hub
  • Volunteer as a Guest for the Podcast 
  • Government Workers Pursuing FI (Financial Independence)

financial independence government PhD

Teaser

Dr. Gov Worker (00:00): When you do save any, any dollar you save, like buys you a little bit of freedom or a little bit of flexibility or some options. And that’s why I think that’s why I’m just such a big believer in the whole movement. Um, if it’s getting more people to think about and save some money that then they can use to like free themselves up to what they really wanna do.

Introduction

Emily (00:27): Welcome to the Personal Finance for PhDs podcast, a Higher Education in Personal Finance. I’m your host, Emily Roberts. This is season three, episode nine, and today my guest is Dr. Gov Worker, which is the moniker used by a PhD scientist and FIRE blogger. FIRE stands for Financial Independence and Early Retirement. Gov Worker and I had such an engaging and in-depth conversation that I’ve split it into two episodes last week’s and this one. In this episode, we discuss what his family does to pursue FIRE, how being a PhD has affected his journey, why other PhDs should consider pursuing FIRE and his financial advice for early career PhDs. Without further ado, here’s the second part of my interview with Dr. Gov Worker.

Did you make any changes to your lifestyle and spending when you decided to pursue financial independence?

Emily (01:18): Let’s go back to this question of, of how are you pursuing FIRE? You’re natural savers. You’ve been living within beneath your means for quite a long time. Did you make any changes, uh, when you decided that you were going to pursue FI?

Dr. Gov Worker (01:32): Yeah, and I think it’s been continual changes for the past nine months because I’ve been reading a lot. I’ve been learning a, a bunch and trying to been optimizing. So I think we’ve tried to switch more towards contributing or saving in, uh, tax favored accounts like your 401k or even your health savings account. You can save money there, shelter it from taxes, and then if you don’t need it for, well, there’s a whole whole bunch of things you can do with a health savings account. So we’re saving quite a bit of money in after tax accounts. And even prepaying our mortgage is like an after tax savings. Um, so we’ve switched a lot of our savings around, so we’re saving that in tax, tax deferred accounts, um, like 401Ks. And, um, we went through our expenses. I think one of our, the, like, the best thing you can do if you wanna get started is just tracking, um, every, every purchase you make. Um, so we do that in an Excel spreadsheet and I think there’s a lot of services where you can like track your finances, but for me, knowing that I’m gonna have to type something in a spreadsheet really makes me think about the purchase. So there’s something, there’s like, you know, if it just showed up on a computer screen, um, on like Mint or Personal Capital, that whatever, it just kind of goes through my head, but like having to write it down is powerful. And so we, with like tracking expenses and other stuff, we, we were able to cut quite a bit of money that we were spending kind of unconsciously or subconsciously or not getting, and, and our lives has, our lives haven’t gotten worse. We don’t feel deprived. We still spend a lot of money on things we really care about. Like I take piano lessons, my daughter takes piano lessons, my daughters take piano lessons. Like we really enjoy doing that, so we spend money on it. And yeah, we could reach financial independence, you know, maybe a few months earlier if we didn’t take piano lessons or something. But that’s not, that’s not what it’s about for me. It’s about, hey, we’re spending a whole bunch of money on like childcare from like three to 4:00 PM if, whereas if we switched our schedules, we could not have to pay for childcare for that thing and spend more time with our kids. Well that, that’s kinda like a win win-win. I mean, okay, it’s like tough if you both have meetings then and there’s headaches, there’s trade offs, but I think a lot of times we’re told like, Hey, you deserve it. Just do something easy. Like yeah, have somebody help clean your house or have somebody come watch the kids or you work really hard, it’s worth it to pay somebody like a few bucks an hour to do this for you. And sometimes that’s true and sometimes it’s not true. So I, I just really want people, if they’re interested in this, to like look at what they’re spending and then think about how much joy they get from that and try living without something. And if it, if you feel deprived, then like add it back in. But at least you know what it feels like to not have that.

Can you comment about high savings rates in the FIRE community?

Emily (04:51): I think we’re gonna go into this a little bit more, um, in a moment about maybe looking at your lifestyle as a grad student and then your lifestyle, maybe post-graduate school and thinking, can I still live the way that I did as a graduate student? Um, a little bit longer. But before we get there, um, I wanted to to ask you about savings rates because one of the things that’s really, um, notable and also intimidating about the fire movement is that people post these incredible savings rates. I save 50% of my income, I save 75% of my income, I save 85% of my income. Um, those things can also seem like fairly unattainable, but this isn’t a very important part of pursuing fi, which is to have, you know, a lot, a lot of money going into savings investments, um, and also dramatically lowering your living expenses. So you create this big, big gap between your income and your living expenses. So you can have that high savings rate. And also so that your ongoing living expenses, let’s say once you reach financial, financial independence, um, your living expenses being lower means your nest egg has to be a little bit smaller. Right? Did I get that right? And, uh, can you, can you comment a little bit about these savings rates?

Dr. Gov Worker (06:04): I would just like to say that if you see a savings rate, unless they explicitly say how they calculate it, it’s really hard to know how much they’re actually saving because some people include the amount of mortgage principle they’re paying each month as in part of their savings rate. Some people, I mean there’s the numerator and the denominator, right? So are you normalizing to like your gross income? Are you normalizing to your post-tax income? Some of the savings, your savings are pre-tax, some are post-tax and if your, you know, employer gives you a like 401k match, is that money you saved or is that just money that appears? So these numbers that people publish, there’s a wide range of what it actually is. So don’t, don’t get intimidated by those numbers because they could inflate ’em or I mean, not inflate ’em, but it could be misleading. So yeah, you got, you’ve gotta try to save as much money as you can and, and live on as little money as you can and still be happy with your life. And that ultimately determines how fast you will achieve this financial independence. Um, so for us, our savings rate isn’t like 90% or any of these impressive numbers, but daycare is a huge, huge chunk of our income. Our mortgage is another huge chunk ’cause it is a 10 year, uh, mortgage. So I haven’t really calculated a timeline to financial independence or anything like that. That’s not super important for me. ’cause I know in five years my youngest one will be in school and we’ll have the house paid off and our expenses will drop. I mean, those things consume like, I don’t know, 60 to 75% of our budget is just daycare and housing and there’s nothing we can do about that. Um, that’s just the stage of the life we’re in. Um, and so if I like compare myself to like a double income, no kid family, um, that’s putting away 90% of their income, that that doesn’t really help me think about my path to financial independence. So I, I mean, I know savings rate’s a key thing on how fast you achieve fi and if you start, if you start down this path, you can choose your own method of calculation and come to your own consensus about it. But it’s not, it’s comparing or seeing those numbers isn’t, isn’t really super duper helpful, at least to me.

Emily (08:37): Yeah. Thank you for pointing that out because, so I, maybe this is a misconception that I have, but I see that, um, okay, my savings rate is X and my time to fi is, is Y, um, as kind of core integral to the way people talk about this sort thing online. Not that necessarily everyone has to do it, but it’s a very popular thing to do. Um, and I really couldn’t relate to that because the listeners probably know, like I rent, I live in a city that I’m not interested in living in long term. So it’s really hard for me to see beyond, well, at some point I need to purchase a house and then maybe I can think about, you know, what this FI thing is. Um, so it’s hard for me to see beyond that. So similarly to you, I think that I have this, you know, transition point for you, it’s, you know, my children out of daycare and the house is paid off, then we’ll see, you know, what the calculations are. Until then, let’s just work, do good things and not worry too much about the savings rates. I think I’m in a similar spot to that. Just, you know, work on being solid financially, uh, for the time being until we get past this unknown point and then, uh, then we’ll see if we can do those calculations.

How does being a PhD affect how you think about financial independence?

Emily (09:44): So I’d like for you to speak, um, a little bit more specifically as to how being a PhD has affected, uh, your journey to FI or the way you think about FI or the journey there too.

Dr. Gov Worker (09:57): Yeah, I mean, I think on a super simple level, like I didn’t get my PhD until I was 27. Um, and there are people that I know in the fire community, they’re like retiring at age 30 or younger, right? So if you, if you’re getting a PhD, you’re not gonna be one of these early fire people because

Emily (10:17): By the way, getting a PhD at 27 early side, very,

Dr. Gov Worker (10:21): Yeah, Right. I I should have clarified that. So I, I guess speaking for myself and I, I do know that was on the early side, but so say at the earliest you’ll be 26 or 27 with your PhD, it’s unlikely that you’ll be able to retire at 30, um, because Right, you don’t have that many years to work, so you don’t,

Emily (10:43): Unless you are Jacob Lund Fisker from Early Retirement Extreme. Just wanna throw that in there. Go ahead.

Dr. Gov Worker (10:49): Okay. Yes. Okay.

Emily (10:51): I do not recommend following his route, but if you’re interested, Dr. Jacob Lund Fisker early retirement Extreme, another father of this movement.

Dr. Gov Worker (10:58): Yes, exactly. Um, so now that we’ve got that out of the way, um, I think, so I had a later start entry date into the workforce that’s common with PhDs. Um, I think getting a PhD was helpful in pursuing fire in that as a graduate student, I had to learn how to live really lean. And so I was comfortable with, um, not inflating my lifestyle as much as other people that I got my undergraduate degree with, um, and then saw what they were doing. Um, and then once I did graduate, my salary is much higher than the median salary. So I think those are things that help, um, what’s kind of more difficult as you interate, but I think those are just like the nuts and bolts. I think a lot of it more has to do with this identity factor because unlike someone that just gets an undergraduate degree, um, and a and has some broad knowledge in a general field, getting a PhD or, or getting an md I know that, uh, there’s several medical doctors who, who are in the fire community and have written really great stuff about this too, is that you, you, you’re really invested in your field because you, you spent so long obtaining this knowledge. And, and so when I think about, I definitely want to achieve financial independence because there’s some parts of my job that are really stressful and especially travel with, uh, having a young family and now having to, the higher you rise in science, the more you have to travel <laugh>. Um, and I think nobody ever talks about that, but, um, you know, early retirement is gonna be different for someone with a PhD because they have invested this years of knowledge and even if they really hate their job, like there, there was some spark that led them to pursue a PhD at some point and to obtain this field of knowledge. And so letting go of that is gonna be a different emotional process for someone that just, um, enters a field to just earn as much money as possible and as little time as possible and then leave. Yeah, so there’s an emotional aspect, uh, as well.

Commercial

Emily (13:24): This summer I’m putting forth extra support for PhDs undergoing career transitions into grad school, a postdoc or a real job. If you’re moving on to the next stage in your career or thinking about it, please visit pfforphds.com/next to check out my articles, webinars, and coaching program. Allow me to come alongside you during this transition to ensure that you set yourself up for financial success.

Once you have financial independence, do you think you’ll still use your PhD knowledge?

Emily (13:54): When I think about, um, academia like Ivory Tower academia, you know, there’s this stereotype that academics shouldn’t care about money. They shouldn’t money grub, they shouldn’t be concerned about their salaries or benefits, whatever. They should live the life of the mind and, and that’s it. Um, but I, but the best way to not care about money is to have enough money that you don’t need to be concerned about it. Um, so I actually really think that becoming financial independent is very, um, compatible with someone who wants to, you know, pursue scholarly work, for example, and not be, um, I don’t know, not be tied to like obtaining grants or, you know, whatever the normal stuff that comes with like a job once you reach fi if you decide to retire early, like, do you think you might still do anything with, um, you know, this knowledge you’ve, you’ve taught, fought hard for over time, or do you think you’re gonna be leaving that behind?

Dr. Gov Worker (14:48): No, I mean, when I think about my happiest times in the past 10 years since getting my PhD, there’ve been times when I’ve been on like a sabbatical. So I’ve been in a new environment, I’ve been working with people I know in the field professionally, but not close because we didn’t work together ’cause of distance. And so there was like this aspect of travel, there was this aspect of collaborating with new people and there was this applying my knowledge to like projects I cared about without having these administrative duties, which consume a lot of my time and are where most of my job dissatisfaction is. So I haven’t allowed myself to think too, too much about early retirement, but I could easily see, and if you don’t have to worry about money, then you can like, you know, travel to work with that colleague for six months or a year and not have to worry about having your salary covered. Um, and so, I mean, I could see easily and really enjoying doing like a series of like little sabbaticals with people, um, that I like working with. And I’ve like, uh, worked with on sabbatical before, um, I could see working as a consultant in my field. I mean, there’s a lot of things that I think I would like to do if I, if I do achieve early retirement that involve this part of me that spent all this time to gain this knowledge, um, that aren’t this traditional like ivory tower or, you know, achieving academic success or, you know, publishing papers in the, the highest tier journals or, you know, winning the most prestigious grants. You know, I just feel like, yeah, yeah, you could do that, but that doesn’t gimme as much satisfaction as, you know, really working on a really cool paper with somebody. Um, and it would be great to be financially in a point where I could work with people, um, but not have it be tied to these heavy things. But that being said, there’s a lot of other things I’d love to do. Like I love playing piano, I love doing all these other things. And so I had a chance to experience this. There was the government shutdown, um, earlier this year, so I had like more than a month of time off. And I think pursuing FIRE was really great because the first day of the shutdown I looked at, um, my accounts and I realized, well, okay, well if we don’t change anything, I’m good for several years without bringing in income, I don’t need to worry about buying groceries or anything. So I think that’s a really great reason to pursue FI because um, it gives you this peace of mind if something does come up I have this month to experience what I would do if I didn’t have, um, paid job because when the government shuts down, you have to hand in your laptop, cell phone, everything gets like locked up and you’re forbidden from interacting with work at all. And it was so magical to just have the time to focus on my passions and my family and like be right there and the kids came home from school and have like meaningful conversations and pursue leisure activities, which I think is really important. And our society minimizes the value of leisure. Um, and so I think I could easily achieve financial independence and also leave this all behind and really just focus on, uh, what, you know, being more intentional, living more in the moment and really enjoying the whole of myself, if that makes sense. Yeah. Sorry for the really long answer.

Emily (18:37): No, that was, that was really lovely actually because I found a lot in there that I can identify with. Um, and maybe the listeners have as well, like, especially about when I was in grad school and actually before I even started grad school and I was looking at the structure of academia and thinking to myself like, I love being at the bench. I love doing the work. I am not interested in having the job that my advisor has. You know, like, how do you stay in science and stay doing the work? Like at that, at the time, uh, I did a year at the NIH as a postbac and I was looking at the postdocs, and this is a bit naive I realize now, but I was looking at the postdocs and thinking, that seems like the best job. Like, I wanna be a postdoc, you know, you know, forever doc, right? I mean, no one actually wants that, but I really liked the idea of, um, staying doing the work and not having to do all these things that come with career advancement, which as you said, you’re kind of, you almost need to take, um, to stay in the field. But I just really love the idea of you, um, maybe finding a way to have all of this balance that you want in your life between your, the personal stuff you want to spend time on and also working when and how you want to, uh, when it, when it tickles your fancy. Right. Um, so I don’t know, maybe there are other people out there who can identify with, with something in there.

Do you think other PhDs should be thinking about FIRE?

Emily (19:57): Um, do you think that other PhDs should be thinking about FI, thinking about fire or pursuing it?

Dr. Gov Worker (20:04): Yeah, I think everybody should think about FI. Um, because even if you don’t achieve full financial independence, there’s so many benefits that come just from having a year’s worth of expenses saved up and know that they’re accessible. Um, I’ve seen not, not PhDs, but people I know socially that are in really toxic jobs but can’t afford to quit because they’re, you know, essentially living paycheck to paycheck. And that I think is, is really sad. Um, so I think FI or at least trying to get in better financial shape is for everyone. If you want to, if you want to try to achieve this early retirement and save, you know, 75% of your income plus or minus, you know, 25% or something, um, you should definitely do that. And I think there’s gonna be a lot of benefits that come along the way. And for me, even once I started pursuing FI, mentally, I was so much happier in my job because I knew that it didn’t have to be permanent and I wasn’t locked into my job. So I think mentally even just committing to this idea has benefits. Uh, saving, saving money and creating financial space has so many benefits, like mental benefits, like, you know, spiritual benefits. I think it’s just, it’s just so important to, to try and start down this path and that not everybody needs to achieve early retirement. Not everybody needs to retire by 30. There’s a lot of great voices in this kind of community. And so when I think about, when I think about fire, it’s more of an alternative path to pursuing happiness rather than this, you know, really hardcore eating rotten bananas ’cause they’re cheaper, you know, struggle to, you know, quit early, if that makes sense.

Emily (22:08): Yeah. And I think, um, I mean, looking at the fire movement as it exists online, at least that I’ve seen, um, very extreme stories get a lot of attention. Um, and maybe the ones that are more like yours, which is like, okay, I’m, I’m a family man living in the Midwest and I’ve got three kids and, and this kind of thing. Um, they don’t necessarily look as flashy, but there can be still so much personal satisfaction that’s found in, you know, living the way you want to and having freedom and having options along the path to fi and after you achieve fi.

What are the next steps for someone who wants to start on FIRE?

Emily (22:45): Um, so let’s say that, you know, there’s someone listening, um, a grad student, a postdoc, another PhD who has a real job, um, and they’re like, Hey, I want some of the things that you talked about during this episode. I wanna have these, these feelings and this, this freedom. Um, how should that person get started? What next steps should that person take?

Dr. Gov Worker (23:05): Yeah, I would say, um, the first thing to do would be, um, to get familiar with the fire movement, um, online. Like I said, there’s a lot of great bloggers, there’s a lot of great books that are being published, um, recently, um, on this topic. And I think to just try and continue living your graduate student lifestyle in your first job and saving as much of that as possible. Um, and if you’re listening to this and you’re like, oh, I don’t wanna pursue fire, that’s never gonna be me. Like, I just wanna make sure that like, no matter what you do, like, like absolutely a hundred percent, um, before your first paycheck comes, set up your 401k contribution to get the most of your employer max. Like, ’cause that, that is just so important. And, and as your salary grows with time, that will scale. And, and so like even if the rest of this podcast doesn’t apply to you, please just set up your 401k to get the maximum of your employer match. ’cause that’s free money. And if you want to pursue fire, then like, yeah, put as much of it in there as you can continue to have roommates if you had roommates in graduate school and are used to that and think you could do that for longer. Um, and just not, yeah, I think not try to buy into what your peers are spending their money on, because unless it makes you happy, there’s, there’s no reason to to spend money on it.

Emily (24:34): Yeah. This is the, this is the keeping up with the Joneses thing, right? Oh, well I am 30 years old, I’m 35 years old. That means that I should be using my money in this way. That means I should have this kind of car and this kind of house. Um, and that’s all fine if you can afford it and if you’ve, if that’s something that you really want, but don’t go down that path just because you see other people doing it, right. Um, really just find what’s going to give you the most, um, satisfaction in your life and probably options and freedom are going to give you life satisfaction. So like you said, you know, make it automatic, like contribute to your employer’s, uh, retirement plan and so you never even see that money. Like that’s an excellent first step. I totally agree. Anything else you wanna add on that?

Dr. Gov Worker (25:20): Um, no, I just, I just really think that, I really liked how you put it. Um, when you save money, you’re really buying yourself options or flexibility that you might want later on. And when I think about my life now, um, and my job, I just, I wish I had more time and money money’s not, not that important. And actually career success isn’t that important, but when you’re in graduate school, it’s like a pressure cooker that you need to like apply for these, you need to be fully devoted to your field. And people question that all the time in academia and, and I just, you know, it’s kind of a shame that you spend all this time in this like high intensity environment and realize, whoa, really if I could have anything in this world, I, I wish I had more time to spend, uh, with people I love or doing things I love or these other things that aren’t necessarily my job. And so when you do save any, any dollar you save, like buys you a little bit of freedom or a little bit of flexibility or some options. And that’s why I think that’s why I’m just such a big believer in the whole movement. Um, if it’s getting more people to think about and save some money that then they can use to like free themselves up to what they really wanna do.

Where can people find you online?

Emily (26:43): I think we need to end it right there. That was wonderful. Thank you so much for, for joining me today, Gov Worker, where can people find you online?

Dr. Gov Worker (26:50): I’d love to interact with any listeners who are interested in learning more about the fire movement. The best way to do that would be to check out my blog, uh, which is at, uh, governmentworkerfi.com. I’m also quite active on Twitter, so you can tweet at me as well. Um, my Twitter handle is @govworkerfi.

Emily (27:09): Yeah, that would be amazing. So hopefully at least a few people will find their way over to you and hopefully we’ve sparked some interest in this movement. Um, thanks again for joining me.

Dr. Gov Worker (27:17): Yeah, thank you Emily.

Conclusion

Emily (27:19): Listeners, I’m so glad you joined us for today’s episode, pfforphds.com/podcast is the hub for the Personal Finance for PhDs podcast. There you can find links to all the episode show notes, a form to volunteer to be interviewed, a survey, and a way to join the mailing list. I’d love for you to check it out and get more involved. See you in the next episode. The music is Stages of Awakening by Poddington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing and show notes creation by Jewel Lipps.

This PhD Government Scientist Is Pursuing Financial Independence: Part 1

July 15, 2019 by Jewel Lipps

In this episode, Emily interviews Dr. Gov Worker, which is the moniker used by a PhD scientist and FIRE blogger. FIRE stands for Financial Independence and Early Retirement. As a PhD, Gov Worker’s motivation for and path to FIRE are different than most and specific to his high degree of training, and he thinks other PhDs should consider FIRE as well. In this first half of the conversation, Gov Worker fleshes out the FIRE movement for us, including why the current stereotypes are inaccurate and harmful, discusses what pushed him to pursue FIRE, and details what his family is doing to achieve FIRE.

Further Listening: This PhD Government Scientist Is Pursuing Financial Independence: Part 2

Links mentioned in episode

  • Financially Navigating Your Upcoming PhD Career Transition
  • Personal Finance for PhDs Podcast Hub
  • Volunteer as a Guest for the Podcast 
  • Government Workers Pursuing FI (Financial Independence)
  • Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert Kiyosaki (affiliate link – thanks for supporting PF for PhDs!)
  • Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin (affiliate link – thanks for supporting PF for PhDs!)
  • PFforPhDs S1E11: This Prof Used Geographic Arbitrage to Design Her Ideal Career and Personal Life
  • PFforPhDs S3E7: This PhD Student Is Paying Her US Student Loans with Her Swedish Krona Salary 
  • PFforPhDs S2E7: How to Successfully Plan for Retirement Before and After Obtaining Your PhD

PhD financial independence 1

Teaser

Dr. Gov Worker (0:00): As academics we spend so much of our time identifying ourselves as a as our career like I am an expert in this field or I am like the world’s top person in this and I travel around the world and I talk about this and I got invited to conferences because I am this person I was like whoa I don’t have to be that person anymore I can just be myself and I myself is so much more than my professional expertise and why did I lose sight of that so that  was a really powerful thing to me and that made me that completely changed my life.

Introduction

Emily (0:39): Welcome to the personal finance for PhDs podcast. A higher education in personal finance I’m your host Emily Roberts this is season 3 episode 8 and today my guest is Dr. gov worker which is the moniker used by a PhD scientist and fire blogger. Fire stands for financial independence and early retirement. Gov Worker and I had such an engaging and in-depth conversation that I’ve split it into two episodes this one and next weeks in this episode Gov Worker tells us what fire is what pushed him to pursue it and what his family does to pursue it without further ado here’s the first part of my interview with Dr. Gov Worker.

Please Introduce Yourself

Emily (1:24): Thank you so much for joining us on the podcast today. I have the great pleasure of having a conversation today with someone who goes by the moniker gov worker maybe we should say dr. gov worker and this person gov worker I really wanted to find someone to talk to us about fire which is financial independence retire early which is a really big trend right now in the personal finance movement and it’s actually come up on a couple of our previous episodes one with Dr. Amanda and one with Crista Wathen and so I wanted to find someone who would really speak to this specifically and thankfully, gov worker and I have a mutual connection on Twitter and I found I found him through that person. So Gov Worker thank you so much for joining us this morning I’m really looking forward to this conversation would you please tell us a little more about yourself? 

Dr. Gov Worker (2:15): Yeah thanks Emily, before we get started I should say that I’m speaking in my personal capacity and my views are not representing the government so they’re my own views so I’m a government researcher I got my PhD in 2009 I live in a flyover State and I’m happily married with three daughters that’s kind of having kids or three kids it’s kind of rare for fire so we can talk about that later on I started blogging just a few months ago because I realized well there’s a lot of fire bloggers and there’s a lot of people in the personal finance space pursuing fire a lot of them aren’t like me necessarily in that they have a PhD or that they have a government job and these these are things that make pursuing fire different from typical scenario so I wanted to kind of write content that would help people in these type situations like optimize their decisions for pursuing fire. 

What is FIRE?

Emily (3:21): Yeah I’m I’m so happy to hear that actually matches really well with the reasons why I started blogging about personal finance back in 2011 not my current website but the one  before that some listeners may be aware of my previous site evolvingPF.com and I was getting really interested in the personal finance space at that you know in the couple years leading up to that time and I also didn’t see myself as a graduate student represented in the space not even just as a graduate student but as kind of a lower earner I mean most of the people I saw writing I would say I was in the bottom 1% in terms of incomes of the people I started  writing about personal finance which kind of makes sense few different reasons but anyway so that’s very similar to why I started writing and I’m so glad that you did because as we’ll talk about and you mentioned you sort of defy a couple of the the stereotypes about fire which we’re happy to go into. So first for audience who has no idea what fire is can you give a really brief definition 

Dr. Gov Worker (4:21): Yeah so so fire is an acronym for financial independence and early retirement I guess they switch the R and the E. So in my mind those are two really separate goals but they kind of get lumped in together as one acronym and one movement.

Emily (4:36): When I first started started learning about personal  finance being financially independent meant being financially independent from your parents it was like a young adult goal right so go into what each of these things means please. 

Dr. Gov Worker (4:48): Right so financial independence is a state of being where you have passive income so that’s income that your money is making for you that exceeds your living expenses so I mean in that essence like even if you retire at 62 and live off of Social Security you’re I guess in some ways  financially independent at that age because you’re not earning money and you’re living off of income that you don’t have to work for so that’s passive income and in the fire movement it’s it’s kind of roughly the rule of thumb is if you have 25 times your living expenses saved that you can generate enough returns on your investment to live comfortably off withdrawing 4% so 25 times your expenses or 4% of your liquid net worth that’s kind of this financial independence and some people debate whether it should be 25 or 30 or some multiple but you can look up a whole bunch of stuff on that but this idea is that you amass a pile of money and that money makes money and you live off of what that money makes for you and it could be through like rental properties it could be through stock market returns it could be through like dark arts I don’t know but you the like goal of the fire movement is to save enough money that your money works for you and you don’t have to work for a living you don’t have to you can work but it doesn’t have to earn money so you could do things that don’t make money like blogging or something that you really enjoy doing and create things but it doesn’t have to it could be disassociated from a paycheck because your money is earning your living expenses. 

Financial Independence vs. Early Retirement

Emily (6:35): Yeah and there’s the there’s the key difference between financial independence and early retirement right in early retirement you are committed to not working anymore whereas in financial independence it’s just an option can work more you cannot your good either way is that right?

Dr. Gov Worker (6:50): Yeah and I mean I think there’s kind of a joke in the fire movement about this internet retirement police that like if you do achieve financial independence and you quit your main job so like if I stopped becoming a government researcher because I reached financial independence but I was still earning income doing other things and you know internet trolls might say I’m not really retired so early retirement is kind of a weird nebulous thing that I don’t feel is very well defined but I guess my goal is to achieve financial independence where I don’t need to work if I don’t want to and then I can make a decision well do I want to work part time do I want to work in an academic lower stress environment once you achieve financial independence you have a whole bunch of options available one of which is like completely quitting your profession and walking away forever which is an early retirement but you could do like a phased retirement or some part-time work or something in your field that’s different so I think just achieving some space between oh I need this paycheck to live and working because you have to and working because you want to is really important and so even if you’re not pursuing early retirement I think it’s really worth trying to pursue fire because even if you don’t reach financial independence say you’re starting off with a lot of debt or starting off from a different space and you do you think financial independence are away if you work towards that even just getting you know six months salary saved up gives you options if you’re in a toxic work environment and so I think if fire doesn’t resonate to you as a listener like don’t just shut off the podcast because there’s a lot of good that can come from working towards getting in a better financial space and that’s why I think the movement is so important for everyone even if early  retirement is not for everyone. 

What Are Some of the Stereotypes Associated With FIRE?

Emily (8:51): Yeah great point because when I first heard about this movement in I don’t know 2012-2013 something like that it was it was I don’t even think the acronym fire was being used at that time because really people were talking about early retirement and I wrote a post for my site that was like early retirement I don’t care about that that’s not for me and I’m gonna dismiss this whole movement but actually I had a commenter on that post come back and say well no Emily like you are pursuing financial independence you might not be pursuing it particularly early or whatever but obviously by wanting to generate more financial security for yourself being aggressive about saving for retirement you are pursuing financial independence so don’t dismiss this movement and frankly it’s based on some of the stereotypes that I heard about the movement at that time which we can discuss so these stereotypes that you see let’s still see in the media today are like well fire is being pursued by young male single childless tech workers engineers that kind of thing it’s not for people who have lower incomes it’s not for people who have families it’s not for people who live in high cost of living areas so I note I mean brought this up earlier like let’s dispel some of those stereotypes. 

Dr. Gov Worker (10:11): Yeah I mean I think you put it very kindly but I mean you know I would say like a single white male who learned to code and got a really high paying job and it may be even anti-social so like doesn’t even fully understand these like things that people want to spend money on and there’s nothing wrong with spending money on things on the path to fire if that’s what brings you happiness it’s about in my mind financial independence is about spending money on what makes you happy and then like not spending money on other things just because other people spend money on them so I think the stereotype and then these people like not only are they in the mainstream media but are on social media and comment I think there’s a lot of this like bootstrap mentality that like well I you know I make all this money and so if you don’t do it then you aren’t working hard because I was able to do this which ignores a lot of privilege and other factors that go into this and if you start if you want to find out about fire and that is like the first resource you find and it doesn’t resonate with you there are tons of people pursuing financial independence or fire and you just need to find a story that resonates with you because there are stories about you can find peoples that are blogging and being really open about destroying mountains of debt they have student debt credit card debt any kind of debt and those stories are really powerful. You can find like you know there’s a lot of diversity in the bloggers and so everybody’s got these really great stories and you just got to find one that resonates with you and helps you that you can put yourself in you’re like that person shoes and like he’s like yeah they’re doing these things and we’re going through the same problems and that’s inspiring me to like work on my my finances and I just if I could like help anyone on this podcast just fine tell them that there’s somebody out there that’s probably writing a story that’s very similar to their is they should like go find this person and not just immediately get turned off right away by this fire because like early retirement sound so extreme and you’re like oh I can never do that I have that or I can never do that like I’m first-generation college or I could never do that because I grew up in this really bad neighborhood like there’s people who are who are writing about you know those exact situations and I just I just want to let people know it’s way more inclusive than you might think of if you just hear it like off the news or something. 

What Led You to the FIRE Movement?

Emily (12:51): Yeah we hear so much in academia in science about the importance of having models and mentors who you can identify with on some of these you know demographic factors for example so I so appreciate your point that like yeah don’t get turned off by you know one random article that you read that only features you know this type of person like there’s so many different types people in this movement and it’s important for everyone really so let’s let’s go down to into what more specifics about you especially with you as a PhD because you know it was a little bit hard for me to track down a PhD in the fire movement who was willing to talk about this so I really want to have that aspect modeled for our listeners of how a PhD can pursue fire or at least how you are as a PhD. Let’s let’s start with what led you to this movement in the first place? 

Dr. Gov Worker (13:48): Money Magazine did a feature about the fire movement last year and that was kind of the first exposure I’ve had to it I know I know people have been writing about this like mister money mustache is the most famous he started in 2011 and I just had never run across that I mean I’ve always been interested in finance like I got exposed to like the Rich Dad Poor Dad* books in like high school and was always thinking about he’s really big about passive income but his books are kind of like if you think hard enough it will like money will magically come to you or something but I mean that kind of had this idea and I was like my wife and I are natural savers but it never occurred to me that you could like retire early until I read this feature then I read Your Money or Your Life* which is like the key cornerstone book it was written I think 30 years ago by Vicki Robin it’s awesome and that book completely changed my life because at the time I was extremely stressed in my job I was kind of experiencing burnout I was having to travel a lot and I think like in academia or when you’re getting your PhD like it’s just always implicitly assumed that you’re gonna like try for like landing a major like r1 university job or like the whole mindset of my PhD experience is like you need to be the top of your field and if or like you need to at least try to be the top of your field and if you don’t get there well that’s okay because but it’s never an option just be like well I want to spend time with my family or I want this right it’s all about being the best and I worked really hard on that for a decade and it wasn’t and I guess objectively I achieved a lot of career success you know recognition and accolades and that kind of stuff but it wasn’t fulfilling because it it wasn’t ultimately what I wanted but it was really hard for me to see that that wasn’t what I wanted until I achieve career access success and then realizable why did I just spend a decade pursuing that. Reading that book just really helped me rephrase things there’s a key concept in this book that like your job is just the place where you exchange your time for money and I was like whoa like because as academics we like spend so much of our time identifying ourselves as a as our career like I am an expert in this field or I am like the world’s top person in this and I travel around the world and I talk about this and I got invited to conferences because I am this person and I was like whoa I don’t have to be that person anymore I can just be myself and myself is so much more than my professional expertise and why did I lose sight of that so that was a really powerful thing to me and that made me that completely changed my life so that was kind of how I discovered fire and how it impacted me.

[* This is an affiliate link. Thank you for supporting PF for PhDs!]

Personal Finance

Emily (16:56): Yeah of course I want to add in something in response to that though first which is that I had sort of a similar experience in a different way during graduate school when I was learning more and more about personal finance because one of these I mean really the bedrock concept in all of personal finance is regarding understanding what your own personal values are and aligning your use of money with your values with what brings you the most satisfaction in your life and I totally agree with you that inside academia inside you know work in science um our identity does become so closely tied with our  profession that it’s difficult to remember that you are a whole person needs and desires outside of that and for some people their professional accomplishments and career success is the most important thing to them but that’s not everybody within academia and I think for me learning more about personal finance and realizing this caused me to do some more introspection and it’s one of the reasons why I you know decided not to pursue a more traditional career following graduate school and why instead I’m doing this because I really love this you know helping other people in my community make the most of their money so I just I really resonate with that it sounds like our exposure to the subject area even though there are slightly different variations and personal finance really caused a similar kind of change in both of us.

Commercial

Emily (18:28): This summer I’m putting forth extra support for PhDs undergoing career transitions into grad school a postdoc or a real job if you’re moving on to the next stage in your career or thinking about it please visit pfforphds.com/next to check out my articles, webinars and coaching program allow me to come alongside you during this transition to ensure that you set yourself up for financial success.

What Are You Doing on Your Path to Financial Independence?

Emily (18:58): So yeah I’d love to now dive into more about how one pursues fire you know should one want to so specifically for you what are you doing on your path to FI?

Dr. Gov Worker (19:11): Yeah so let’s see so a couple things so we before even kind of pursuing the FI path my wife and I are always very frugal like back when you could really coupon things like local newspaper did an article about my wife’s like incredible couponing skills and we’ve always lived way below our means because we didn’t really feel the need to to keep up with things so like we both ride our bicycles to work so we don’t have to pay for parking or cars or stuff we have a 10-year mortgage which were pre paying and anytime we had gotten a raise so when we started off our marriage I got married young when I was still in graduate school and my wife was working at that time and we had like absolutely no money but every time we got a raise we would just say well we’re living just fine so we would save the raise in some account like a savings account or sometimes we increased retirement accounts or other things and so we’re always just used to when we got an increase not increasing our standard of living and it would always seem like we’d be doing really well financially and then have a baby and then like a huge percentage of our salary would then go to daycare and kind of bump up that way so in many ways we’re still living well we have improved their standard of living since like the depths of graduate school but not not by much and every time we get a raise or a bonus or anything it’s like how can we save it and so that was what we had always done and that’s what fire people would tell you to do of course the fire people are gonna say like save it in retirement account but since we weren’t necessarily focused on that goal we would save it up for like improving something on the house or maybe taking a vacation or just saving it in a emergency fund or something else so that that that stuff all kind of came naturally to us.

How Did You Manage to Keep Your Living Expenses in Check When You Did See an Increase in Income?

Emily (21:19): I want to go a little bit more in depth about a couple things you just mentioned one is the time when you were in graduate school so that’s gonna speak to a lot of my audience right now currently in graduate school. Can you just talk a little bit more about how you managed to keep your living expenses in check when you did see an increase in income because I do think there’s a tendency to you know when you let’s say get out of training sounds like your wife had a regular job maybe she was experiencing raises more frequently than you did as a graduate student but like when you get that next position out of  graduate school and there’s a big bigger bump in your salary how were you not just like I’m gonna go like wild and really raise my standard of living spend all this because there’s all this pent-up demand or desire. 

Dr. Gov Worker (22:16): Yeah I think it was probably I think the first part of your your comment did kind of address that so my wife my wife had a traditional job or non I mean she’s highly educated as well but when I was in graduate school she was working and so I think my graduate school I wasn’t as destitute as if I were single and just living off of my stipend it it also happened that I transitioned from graduate school into a job in the same city in which I graduated so we didn’t need to move or anything so we were already living in a house at that time in the city and my wife was making money so it was kind of a real just well now I’m gonna go here instead of over here and it didn’t it wasn’t a wholesale change so it wasn’t like I was was really really stretched and then got a job across the country and like oh I’ve got my first job and my first salary at you know I’m gonna go crazy it was really nice to have that bump I mean we were really stretched because we had my daughter about two years before I graduated and so day care was a huge cost and and that kind of stuff so it give us some financial breathing room and I did get my first job and then getting kind of promotions you know throughout my career since then has just given us more more breathing room. You know I look back at my time in graduate school as and maybe this is like selective bias and filtering out like bad experiences because I know graduate school is very tough not just financially but emotionally as well but I do look back on a lot of the things we did socially then with you know just happy fond memories of kind of pulling together with this community of graduate students who is all kind of struggling and like having a really good time like that and now that we’re removed from graduate school and we’re professionals and we have kids and like the social interactions we have are like a lot different from those times and so kind of keeping that you know framework and community together of people going through similar situations I think is really key thing to like keep in mind. 

Emily (25:00): That was great actually and I I just wanted to talk a little bit more about you know you’re reflecting on that time to kind of make your current situation a little bit more relatable to my audience because I mean you could look at someone you know several a decade out from graduate school who’s on this path to financial independence and think like what like that’s so far distant from where I am I could never achieve that I’m just a graduate I’m just a postdoc whatever it is at this time but that’s why I wanted to like sort of make this connection to you back at that time so it sounds like you were living in maybe a little bit better than the average guide student lifestyle because of your your wife’s job and having these wonderful low-cost experiences in social life with your fellow grad students which I really love and miss as well. And then as you guys were increasing in your salaries at work you only slightly maybe increase your standard of living you didn’t really move at least it right away it sounds like and really you just sort of kept living more or less the same life style that you had during graduate school. This is something that I have talked about before on the podcast for instance my interview with Dr. Brandon Renfro we talked about really trying to keep lifestyle inflation lifestyle creep in check when you receive those raises so it’s just good to have an example of someone who did that. 

Outtro

Emily (26:21): Listeners I’m so glad you joined us for today’s episode pffordphds.com/podcast is the hub for the personal finance for a phd’s podcast. There you can find links to all the episodes show notes, a form to volunteer to be interviewed, a survey, and a way to join the mailing list I’d love for you to check it out and get more involved see you in the next episode. The music is stages of awakening by Poddington Bear from the free music archive and a shared under CC by NC podcast editing and show notes creation by Jewel Lipps.

How to Start Grad School on the Right Financial Foot

April 15, 2019 by Emily

Starting a PhD program is, professionally and personally, one of the most exciting times of life. You’re meeting people who will be your peers and advisors in the coming years whose research interest align with yours, getting acclimated to a new university and city, and of course starting a fresh school year. However, many first-year PhD students, as they’re going to happy hours to get to know their cohorts and buying their textbooks, are thinking to themselves: “Am I going to make it until my first paycheck arrives?” Financially speaking, starting a PhD program is one of the most challenging times of life as well.

The financial challenges of the transition into a PhD program are myriad and the resources are likely to be few. Moving to a new place and starting the school year are expensive endeavors, and sub-optimal decisions around housing and transportation may reverberate in your finances for years to come.

I present this article not to discourage you in what should be an invigorating and hopeful experience, but so that you have time to prepare for its unique financial demands. Starting grad school on the right financial foot means that you are poised for financial success throughout your PhD instead of reeling from the initial financial blow and playing catch-up for months and years to come. Here is what you can do in the months leading up to your transition into grad school to start in a place of financial strength.

grad school right financial foot

Draft a Budget ASAP

It’s vital to put your stipend offer in context as early as possible. The number may strike you as generous-for-a-stipend or meager, but until you know something about the local cost of living it is rather meaningless.

The best way to get an idea of how far your stipend will go is to start drafting a budget and use approximate numbers until you lock in various aspects of your living expenses. Two starting points are the Living Wage Calculator and the estimated room and board from your university’s financial aid office. Neither one of these numbers will prove to be totally accurate (I hope they are both overestimates of what you will pay) but it’s a start for the triangulation.

Your draft budget should include:

  • The income tax you expect to pay,
  • Your necessary expenses, i.e., housing, transportation, utilities, groceries, household consumables, clothing, etc.
  • Your discretionary expenses, i.e., restaurant and bar spending, travel, entertainment, etc.), and
  • Your education expenses, i.e., tuition and fees required to be paid out of pocket, course supplies, etc.

Further reading: How to Read Your PhD Program Offer Letter

To a degree, you can use your current expenses (if you track them) to estimate what your future expenses will be, possibly with an adjustment for the shift in the cost of living.

It’s quite difficult to drill down into the specifics of what you will spend in a job/life that you’re not yet in, especially if you are not currently tracking your expenses. Therefore, you can use placeholder percentages to help you estimate your expenses and guide your decisions. For example, the Balanced Money Formula states that you should not spend more than 50% of your net (after tax) income on all of your necessities together (including minimum debt payments). This is a challenging benchmark for grad students to adhere to, especially in high cost of living areas, but it illustrates how important it is to keep your necessary expenses in check to the greatest degree possible.

Further reading:

  • How to Create Your First Budget as a Grad Student
  • The Power of Percentage-Based Budgeting for a Career-Building PhD
  • How Fellows Should Prepare for Tax Time at the Start of the Academic Year

Thoroughly Research Your Housing Options

Housing is by far the largest expense in virtually every grad student’s budget, and first-year PhD students are expected to make this enormous financial decision with little to no insight into the local area. The result is that graduate students often overextend themselves in their housing costs, which are financially, logistically, and emotionally difficult to change.

Starting grad school on the right financial foot means locking in your fixed housing and transportation costs at a reasonable level for your stipend. The general rule of thumb is to spend no more than 25-30% of your net (after tax) income on housing. This guideline proves impossible for many if not most PhD students, who may be paid too little, live in an expensive area, or both.

Further reading: How Much of Your Stipend Should You Spend on Rent?

Particularly in those challenging housing markets, the best course of action to find the most suitable housing (even if you spend more than the guidelines) is to start your search early and thoroughly research your options. I recommend starting your research with a housing survey conducted by your university or graduate student association (if one exists) and senior grad students who are paid a similar stipend to what you will be (e.g., 3rd years and up). From these sources you can ascertain the price range you can expect for housing and potentially tips on the best locations, housing types, and even specific complexes or landlords to pursue.

Further reading: Your Most Important Budget Line Item in Graduate School and Why You Need to Re-Evaluate It

A note on on-campus or university-affiliated housing: On-campus housing is attractive for students moving from a distance because it short-circuits this whole decision-making process. But this type of housing was not all created equal. At some universities, the university housing is subsidized, which means there is likely fierce competition to live in it. At other universities, the university housing is more expensive than comparable non-affiliated housing. You won’t know whether university housing is a good deal and worth pursuing until you talk with current grad students.

Further reading and listening:

  • Should I Buy a Home During Grad School?
  • Purchasing a Home as a Graduate Student with Fellowship Income

Go Frugal on Transportation

Alongside figuring out your housing options and eventually committing to something, you need to decide how you will get around town. If you don’t own a car, you might need to buy one. If you already own a car, you have to decide whether to bring it with you or sell it.

Owning a car, even without a car loan, is a very expensive undertaking. Beyond the cost of the car itself, you typically have to pay for insurance, parking, gas, registration fees, inspection fees, taxes, maintenance, and repairs.

If it is feasible to live car-free in your new city and you don’t currently own a car, I recommend trying to live car-free for your first year. You can always reassess and buy a car at a later time if you decide you want one.

If you decide to buy a car or keep the car you already own, make sure you globally assess your expected costs (not just the best-case scenario!) and write them into your budget. An expensive or newer car costs you more not just in the purchase price but in your insurance premiums as well.

Your transportation and housing expenses are necessary to fix in concert to a degree. If you decide to live car-free, you might choose to pay more to live closer to campus or on a convenient bus route. If you decide to buy or keep a car, you can offset some of those costs by finding less expensive and less convenient housing.

Create a Transition Budget

Most graduate students experience what I call the long and expensive first month of grad school, though I have noticed some universities are working to change this pattern. You must prepare for this long and expensive first month prior to starting your transition to grad school.

The expense of the first month comes from your move. First, the moving expenses themselves: your and your possessions’ transportation to your new city plus the cost of feeding yourself and so forth during that time. Second, the start-up expenses for your new place: first (and last) month’s rent and security deposit, deposits for your utilities, furniture, and stocking your pantry. Third, the expenses of a new school year/term: any money that you must pay to your university in a lump sum and the expenses associated with your coursework.

The long first month refers to the length of time from when you move to your new city until you receive your first paycheck. Personally, I showed up for orientation in mid-August and didn’t receive my first paycheck until the last day of September. Of course, that time includes all your regular living expenses, on the back of your moving expenses.

You want to be sure going into the long first month that you can come out the other side without racking up debt. Saving cash in advance to pay for the transition is the best solution, and a transition budget will help you estimate the total cost.

Build Your Financial Foundation Now

Because you have several months between now and your matriculation into your PhD program, you have the opportunity to establish your financial foundation prior to the challenges of this transition. By financial foundation I am referring to saving cash for the transition, saving an emergency fund, paying off debt, and/or investing – whatever is most appropriate for you right now.

If you currently have a full-time job, you have the most opportunity to shore up this foundation, but even as a student or part-time/gig economy worker, it is still possible to a degree. It will be well worth a few months of sacrifice, either in terms of earning more through a side hustle or spending less through frugality, to start grad school on the right financial foot instead of a few steps behind.

Further reading: Financial Reasons to Work Before Starting Your PhD

After you save the money you need for your transition into grad school, consider whether you can pay off any of your current consumer debt completely (e.g., credit cards, car loan, medical debt, IRS debt). While you can defer student loans while you are in grad school, these other kinds of debts will still require minimum payments even while you receive your stipend, so it’s worthwhile to attempt to knock them out completely.

Further reading:

  • Bring Savings to Grad School
  • Eliminate Debt Before You Start Graduate School

If you spend the time and effort now on planning out your expenses and saving money, once you matriculate you will be able to focus solely on the stimulating new people and experiences you encounter instead of experiencing financial stress. Starting grad school on the right financial foot by locking in a good deal on housing and not allowing yourself to fall into credit card debt also sets you up for financial success throughout your PhD. An ounce of prevention is worth a pound of cure.

If you would like to me to work with you on navigating your financial transition to graduate school, please check out my financial coaching program exclusively for rising grad students.

How to Financially Manage Your NSF Graduate Research Fellowship

April 5, 2019 by Emily

Congratulations on being awarded the National Science Foundation (NSF) Graduate Research Fellowship (GRF) (or a similar remunerative, competitive, national fellowship)! Whether you’re a prospective grad student or a current first- or second-year PhD student, this fellowship is a great boon to your research, your CV, and almost certainly your finances. However, you may not yet realize that your finances will become a bit tricky once you start receiving your fellowship. With the help of this article, you can avoid the pitfalls associated with fellowship income and fully capitalize on the benefits.

NSF GRFP stipend

Further listening: The Financial and Career Opportunities Available to National Science Foundation Graduate Research Fellows

The NSF GRFP’s Negotiation Power

I’m sure you didn’t miss this headline info about the NSF GRFP: The fellowship pays you a stipend of $34,000 plus $12,000 of educational expenses to your institution for three years. Awesome! At the majority of universities in the US, that stipend amount is well above what you would be paid if you didn’t receive the fellowship, so you’ve effectively achieved a raise for the next three years.

But the good news doesn’t stop there: Your university/department might confer even more benefits upon you for winning independent funding. If the administration isn’t forthcoming about these additional benefits, it is appropriate to inquire about them.

Independence

Your new outside funding may give you a degree of independence in your research that you wouldn’t otherwise enjoy. This is highly dependent on your field, department, and advisor, but the fellowship may enable you to take your doctoral research in a direction that you advisor couldn’t or wouldn’t have supported without it. Perhaps you could take a risk on a side project, establish a new collaboration, or take extra time to rotate through a lab to gain new skills.

Additional Funding

At many universities, there is a standard offer of additional funding for winning a multi-year, lucrative fellowship like the NSF. This offer could come in one or more forms, such as:

  • A guarantee of funding for additional years
  • A one-time bonus
  • A stipend supplement above $34,000 while you have the fellowship
  • A stipend supplement after the fellowship concludes (e.g., up to $34,000/year for your remaining time in graduate school)

Not all departments offer additional funding to NSF GRFP recipients, but it’s worth inquiring about with your advisor, the administration, and current NSF fellows at your university. Stipend supplements during the time that you receive the NSF GRF are more common in high cost-of-living cities where the departmental base stipend is near $34,000/year to begin with. For example, searching “NSF” in the PhD Stipends database reveals stipend supplements awarded during the NSF GRFP years to students at the University of California at Berkeley, Northwestern University, and Columbia University, while a student at the University of California at San Diego writes that he/she received no funding incentive for winning the NSF GRF.

For Prospective Graduate Students

You’ll never have more negotiation power than you do as a prospective graduate student with an outside fellowship in hand. Unfortunately, you don’t have a lot of time to negotiate as the NSF GRFP awards list comes out approximately two weeks before grad school decision day, April 15.

Further reading: Vote with Your Feet, Prospective Graduate Students

As quickly as possible, you need to clarify if the offers from the universities you are still considering are going to be sweetened at all now that you have your fellowship. If the financial package from your preferred university isn’t up to par with your other offers (after considering cost of living differences), you can tactfully ask if a bonus, stipend supplement, or guarantee of future funding is possible.

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Budgeting with Your Fellowship Income

There are two vital questions you need to ask of your department before you can begin creating a budget for your NSF GRF stipend.

  1. After the fellowship ends, what will my stipend be?
  2. How frequently is my fellowship disbursed?

Accelerate Progress on Financial Goals

In my ideal personal finance-oriented world, an NSF fellow would live on (less than) the base stipend from his department and put all the excess income received toward growing his wealth. There are a few advantages to that approach:

  • Your lifestyle roughly matches that of your peers in your department.
  • You can relatively quickly achieve financial goals such as saving or debt repayment.
  • If your income is set to drop once the fellowship ends, you avoid acclimation to the higher, temporary income and don’t have to make major lifestyle sacrifices once the three years are up.

Some financial goals you could work on during the time you receive the additional fellowship funds are:

  • Eliminating any troublesome debt (e.g., credit card balances, medical debt, car loan)
  • Saving up cash for short-term needs and expenses (e.g., emergency fund, targeted savings accounts)
  • Investing for long- and mid-term goals (e.g., retirement, house down payment)
  • Pay down student loans

Further reading:

  • Options for Paying Down Debt during Grad School
  • Why Every Grad Student Should Have a $1,000 Emergency Fund
  • Targeted Savings Accounts for Irregular Expenses
  • Whether You Save during Grad School Can Have a $1,000,000 Effect on Your Retirement
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Why Pay Down Your Student Loans in Grad School

This strategy is easiest to implement for graduate students who start the NSF GRF after one or more years in grad school. Just put all of your ‘raise’ toward financial goals and don’t change anything about your lifestyle! Prospective grad students will have to be more conscious about setting up their grad student lifestyle on a lower income than they will start out with.

Preparing for the Post-Fellowship Income Drop

If you choose to upgrade your lifestyle with your fellowship stipend, be careful to maintain any long-term financial contracts at a level that will be sustainable for you after your income drops (if it will). The two key areas to watch out for are housing and transportation expenses. While it is possible to reduce your spending in either of these areas during grad school, it is a painful process, so it is preferable to lock in your spending in those areas at a level that you can maintain long-term.

Budgeting with an Irregular Income

Sometimes, fellowships are disbursed to the recipient at a frequency other than monthly, e.g., once per term. This schedule can cause issues for budgeting, which is usually framed as turning over each month.

One of the advantages of an infrequent disbursement schedule is that you are paid at the beginning of the period rather than the end, so the money you need throughout the period is already available to you. However, you may not be able/inclined to use typical budgeting software functions and prefer to set up your own budgeting system.

One of the most useful budgeting concepts for people with irregular incomes is that of fixed vs. variable expenses. At the beginning of your budgeting period, project the fixed expenses that will be paid during the period, such as your rent/mortgage, debt payments, certain utilities, subscriptions, etc. Then allocate your remaining income to your variable expenses at a frequency that is convenient for you. For example, you can estimate the variable utility bills that you may pay monthly during the period, plan to spend no more than a certain amount of money each week on groceries, and give yourself a lump sum of money for entertainment for the entire period to be spent as opportunities arise. In this way, allocate your fellowship disbursement so that you are sure that your expenses won’t exceed your income (leaving some buffer for unexpected expenses).

Income Tax Implications of the NSF GRFP

Your NSF GRFP stipend is subject to federal income tax. (It is usually subject to state and local income tax as well, but there are some exceptions.)

Further reading:

  • Grad Student Tax Lie #1: You Don’t Have to Pay Income Tax
  • Grad Student Tax Lie #4: You Don’t Owe Any Taxes Because You Didn’t Receive Any Official Tax Forms
  • Grad Student Tax Lie #5: If Nothing Was Withheld, You Don’t Owe Any Tax

However, the taxation of fellowship stipends is handled completely differently by universities than assistantship pay.

Tax Reporting

While assistantship pay is reported on a W-2, fellowship stipends are not required to be reported in any particular way.

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A large fraction of universities, possibly the majority, do not report outside fellowship stipends on any official tax form. At most, the fellow might receive a courtesy letter, which is an informal letter stating the amount of the fellowship stipend received during the calendar year.

Some universities report fellowship stipends on Form 1098-T in Box 5 (along with other scholarship and grant income).

A small minority of universities report fellowship stipends on Form 1099-MISC in Box 3.

Whatever reporting mechanism used or not used, the important information to bring to your tax return preparation process is the amount of fellowship stipend paid to you during the calendar year. From that point, the fellowship stipend income is treated the same as any other fellowship/scholarship/grant income, and (possibly after some adjustments) it will ultimately be taxed as ordinary income.

Further reading:

  • Weird Tax Situations for Fellowship Recipients
  • How to Prepare Your Grad Student Tax Return

Quarterly Estimated Tax

While you are required to pay federal and usually state income tax on your fellowship stipend, the vast majority of universities do not offer automatic income tax withholding on your fellowship stipend as they normally do for employee pay. (You should inquire whether automatic withholding is an option and use it if so, but the remainder of this section assumes it is not offered.)

This means that you will receive 100% of your gross fellowship stipend instead of your stipend net of income tax as you would assistantship pay. However, the IRS still expects to receive income tax payments throughout the year, so you will have to look into filing quarterly estimated tax.

Further reading: The Complete Guide to Quarterly Estimated Tax for Fellowship Recipients

As a default position, you should assume you are responsible for paying quarterly estimated tax. It’s possible that you won’t be required to in the year you switch on or off of the fellowship or if you’re married to someone with a high income and high withholding, but even in those cases it’s prudent to check.

The way you calculate your quarterly estimated tax due (and figure out if it’s required of you) is by filling out Form 1040-ES. That form will give you the amount of the payment you are supposed to make four times per year and an estimate of your total tax due for the year. You can make the payment online at IRS.gov/payments or through a host of other mechanisms.

Whether or not you are required to file quarterly estimated tax, it’s a great idea to set up a personal system that simulates automatic tax withholding. Open a separate savings account labeled “Income Tax” and transfer in the fraction of each paycheck you receive that you ultimately expect to pay in tax each time you are paid. Then, draw from that savings account when you make your quarterly or yearly tax payments.

Investing Implications of the NSF GRFP

The upside of receiving the NSF GRF is that your income is most likely higher than it would have been, which means you have an increased ability to achieve financial goals during graduate school such as debt repayment, saving, and/or investing.

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Through 2019, fellowship income, like that of the GRFP, was not eligible to be contributed to an Individual Retirement Arrangement (IRA). However, starting with tax year 2020, fellowship income is eligible to be contributed to an IRA, eliminating the only major downside of receiving fellowship income.

Further listening: Fellowship Income Is Now Eligible to Be Contributed to an IRA!

An IRA is a tax-advantaged retirement savings vehicle. It’s a great idea to use an IRA (or other tax-advantaged retirement vehicle such as a 401(k) or 403(b)) for your retirement savings as it helps you maximize your long-term rate of return by protecting your investments from taxes. As a graduate student, you almost certainly don’t have access to the university 403(b), so the IRA is basically the only game in town for tax-advantaged retirement savings.

Further reading:

  • Everything You Need to Know About Roth IRAs in Graduate School
  • Why the Roth IRA Is the Ideal Long-Term Savings Vehicle for a Grad Student
  • Should a Graduate Student Save for Retirement in a Roth IRA?
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