Personal Finance for PhDs

Live a financially balanced life - no Real Job required

budget breakdown

This NDSEG Fellow Prioritizes Housing and Saving for Mid- and Long-Term Goals

by

In this episode, Emily interviews Lourdes Bobbio, a graduate student in materials science at Penn State and NDSEG fellow. Lourdes breaks down the top five expenses in her budget: housing, food, taxes, utilities, and subscription services. She explains the financials systems she has put in place to reach financial success during her PhD: targeted savings, automated transfers, quarterly estimated tax, high-yield savings accounts, and taxable retirement investments with a roboadvisor. Lourdes has decided to prioritize her housing within her budget, but still balances that expense with plenty of saving for her future wedding and retirement.

Links mentioned in episode

NDSEG fellow budget goals

Teaser

Lourdes (00:00): Being able to pull some money from my fun fund instead of from my budget for the month is kind of nice because I can still have a nice experience but not have to worry about that taking away from like going out to dinner with my friends or going on a date night with my boyfriend or something like that.

Introduction

Emily (00:20): 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 11, and today my guest is Lourdes Bobbio, a graduate student in material science at Penn State and NDSEG fellow. In this budget breakdown, Lourdes lists her top five expenses, details her financial goals and their underlying systems, and gives her best financial advice for her peers. She shares with us how she has successfully navigated the challenges of quarterly estimated tax, irregular expenses, and her lack of IRA access. You won’t want to miss her concluding insight into the psychological benefits of budgeting. Without further ado, here’s my interview with Lourdes Bobbio.

Please Introduce Yourself

Emily (01:07): Thank you for joining me on the podcast today. My guest is Lourdes Bobbio, who is a grad student at Penn State University, and I’m just delighted to hear her budget breakdown today. So we’re gonna dive into that right now. Uh, Lourdes, would you please introduce yourself a little bit further to the audience?

Lourdes (01:24): Sure. Uh, thanks again for having me, Emily. I’m really excited to talk with you about my finances as a grad student. Um, so like you mentioned, I am currently a fourth year grad student at Penn State University, which is located in State College, Pennsylvania. Um, and I am in the material science and engineering department at Penn State.

Emily (01:45): Yeah. Excellent. Are you single? Your household is just you?

Lourdes (01:48): Yes, I currently live alone by myself, so.

What is your income?

Emily (01:51): Okay, excellent. Just wanna get that structure upfront there. Um, so with the budget breakdown episode, I’m basically gonna ask three super high level questions and we’re just gonna dive into those and see where it takes us. And the first one is, what is your income?

Lourdes (02:08): Um, so I am currently on the National Defense Science and Engineering graduate Fellowship, so I make $38,400 a year, which breaks down to $3,200 a month. Um, so yeah.

Emily (02:23): Yeah, very nice income for our grad student and congratulations on winning that, winning that fellowship. That’s excellent, okay, so that’s your income. Um, I imagine it goes pretty far in state college.

Lourdes (02:35): Yes, it does.

What are your five largest expenses each month?

Emily (02:37): So yeah. So tell us about your five largest expenses, what you’re paying for each one of those so that anyone else can get some, you know, local insight.

#1 Expense: Rent

Lourdes (02:45): Yeah, so yeah, like you mentioned, state College is a college town, so the cost of living is fairly low compared to any of like the major big cities. Um, I grew up in near Washington, DC and then went to my undergrad in Boston, so I’m kind of was very accustomed to the more high cost of living, so coming here was definitely a big change. Um, um, so for my five largest expenses, I would say my top one is definitely rent. Um, I live in the downtown area of state college, so I pay a little bit more in rent and I also live on my own, um, with no roommates. And so that’s something that another sort of factor that factors into the higher cost of rent. And um, it’s something that I determined that I valued a lot. I valued being close to campus, being able to walk, um, to work every day, um, being close to like the restaurants and stuff like that. And then also being able to live on my own. Um, and so one of the reasons why I did choose to live closer to campus is because I don’t have a car, so I actually don’t have any car payment or insurance that I have to spend money on. So sort of the money that I would normally spend on that, I sort of put it into the, my sort of rent budget category. 

Emily (04:05): Yeah, that makes a lot of sense to me. Um, so first living near DC and then Boston. Have you ever owned a car?

Lourdes (04:12): No, I have never owned a car.

Emily (04:14): Okay. So this is a kind of a natural choice for you to say, okay, I’m moving to state college, I don’t currently have a car. You know, did you ask yourself, how can I set up my life so that I don’t need a car? Is this a common thing for grad students not to have a car?

Lourdes (04:27): No. I would say a majority of the grad students do have cars here. Um, I don’t think it makes it a little bit easier. Um, just in terms of, since state college, if more, if you wanna get out of state college, I would say because state college is small, there is sort of a limited amount of stuff to do that’s within walking distance and within the public transportation sort of, um, area. Um, so if you wanna sort of go away for the weekend or something, then having a car is a lot more useful. Um, but I have never had a car, so I didn’t feel the need to get one. And there’s an abundance of housing close by to campus and like I mentioned, there is a fairly good bus system, um, throughout the local area, um, that I can use if need be. So

Emily (05:15): Yeah. Um, a couple more specifics about the place that you live and did I catch, did you say the amount of money that you’re spending on rent?

Lourdes (05:22): No. Um, so I spend about $1,500 on rent a month. So it’s definitely the higher.

Emily (05:28): Sounds a little high to me. <laugh>.

Lourdes (05:29): Yeah, it’s definitely on the higher end. The apartment I currently live in, um, is a one bedroom with like, it’s called an office space, so it’s like a smaller, can be a second bedroom. And there have been times when I’ve contemplated maybe getting a roommate, but I really value having that sort of space of my own. And, um, so the reason that, um, this sort of came about is because when I first got here, so the way, because this is a college town, it runs very much on the school schedule. So as a grad student, sometimes when you get accepted and then finally learn about like, you know, finding housing and such, the big cycle of finding apartments is kind of over like, that really happens in like October, November, December. And so when you’re figuring out your grad school decision, that’s more in the spring.

Lourdes (06:19): And so there was, when I was first looking at a place to live, there was sort of a limited number of like, number of places downtown that I could live. And since I wasn’t gonna be bringing a car, that’s something that was important to me. And so, um, I did find this place. I’ve lived in the same place for my whole time in grad school. Um, and so for the first year when I wasn’t on a fellowship, my parents actually were helping me out a little bit, paying for rent. Um, and they also lived close by, um, in the DC area, so they would come to visit a lot and they liked having that sort of like that second office space bedroom to be able to stay over. Um, and then when I did get my fellowship, I sort of evaluated, um, that also came at a time for my parents when they were no longer gonna be able to help me just because of some of their own personal finance issues. And so, um, I sort of had to evaluate whether or not I wanted to move or not, and I sort of decided I liked where I was and with my fellowship I could afford it. Um, so I decided to stay where I was.

Emily (07:24): Yeah, definitely your decision making process makes sense to me. And the thing is that if you hadn’t won that fellowship, I mean, I think you would’ve had to move, right? Like it’s compared to a, you know, base sort of stipend. Yeah, it is quite high, but hey, you won it and it’s working out and you can afford it. Um, that’s, yeah, that sounds lovely. And so the reason I’m asking a little bit more about the transportation issues, um, is, is because it’s really sometimes the trade off makes sense to not own a car and then to to pay more in rent, um, but to have the proximity and to have the access to public transit and all of that stuff. So, um, I’m sort of lumping together your, like what we would talk about under transportation, under like the housing stuff. So one more question about that is, you know, you mentioned it’s, it’s easy enough to get around town. Um, what do you do about getting out of town? Like, do you not go or do you only travel with other people or do you rent a car or like, how does that work?

Lourdes (08:21): Um, so I have a, uh, long-term boyfriend. We’ve been dating for a couple of years, so usually when I go anywhere, we go together and he has a car. Um, so that’s usually how that works out. Or sometimes with friends, uh, I would say maybe half of my friends have a car, so we’ll plan group trips together and go places I hardly ever go anywhere just on my own. Um, so

#2 Expense: Taxes

Emily (08:43): Yeah. That makes sense. Um, okay, so let’s move on to your second largest expense.

Lourdes (08:50): Yeah, so for that I would say sort of, I’m not sure if I categorize it as an expense necessarily, but um, because I’m on a fellowship, um, that doesn’t take taxes out, I sort of charge myself the taxes that I would have to pay on my fellowship at the end of the tax year. Um, and so that’s sort of one of the next biggest expenses on my list of expenses and something that I take into account at the beginning of the month when I get paid, I make sure to take out that money right away and set it aside in a savings account so that when I do have to make those quarterly estimated payments, um, I have that money set aside, I don’t have to worry about trying to scrounge it out from somewhere. So,

Emily (09:27): So you just mentioned several really important things, right there for, um, fellowship recipients to consider. So first, uh, PSA <laugh>, if you’re receiving a fellowship, it’s fairly likely that your university is not withholding tax on your behalf. Mo- vast, vast majority of universities work that way. So you are withholding tax essentially for yourself instead of relying on your employer who is not your employer, um, to do that for you. So awesome system. Can you tell me a little bit more about how, you know, mechanically you actually do that? Logistically?

Lourdes (10:01): Yeah. So, um, do you mean in terms of calculating or actually set, setting aside the money? Okay. Yeah. So when I first got my fellowship and sort of realized that no taxes were gonna be withheld, I sort of had to go through the whole process of, um, I think it’s the 1040, um, es worksheet to, uh, where you input your income and it sort of takes you through the steps of sort of figuring out how much you’re gonna owe at the end of the year. And so, um, I did that and got the total amount that I would owe. And then since I also read that you would be paying these quarterly, um, divided by four, or I guess I divided the whole thing by 12, um, and then would set aside that amount of money per month. And so the way I do this and the way I do all my budgeting is on a spreadsheet.

Lourdes (10:58): Um, and so I have this budgeting spreadsheet, um, that has the entire year sort of planned out for me. So I do like a 12 month, um, overview of the year where I plan. And since I know how much I’m gonna make every month, it’s very steady. Um, I have that amount sort of as the top line, and then from there I take out taxes and then any my savings and then utilities, those types of, um, bills, um, that I know I’m gonna have to pay. And then, um, sort of from there calculate how much leftover spending money I have. But that’s effectively, so I calculated how much I would have to pay, um, each month if I were getting with like basically how much I had to pay the whole year divided by 12, and then put that into my budget spreadsheet to calculate, and then I set it aside in a high yield savings account so I can, can earn a little money off of that, um, until I have to pay it each quarter, um, to the irs. So

Emily (11:59): Yeah, I just, that’s just a perfect embodiment of, of how to handle this, the, the way that, that I think is the best way too. So I’m glad we both came to the same conclusion there. I mean, from, I’ll just review a couple things. So one, you figured out what your quarterly estimate tax would be by using Form 1040-ES, which is, um, for those of you who don’t know, it’s not something you ever have to submit to the federal government, but it just helps you figure out how much the IRS does expect you to pay throughout the year. Um, if anyone needs extra help with that, I do have a workshop on it that’s available year round, and so I’ll link that in the show notes. Um, so you use that to figure out how much you need to set aside every single month, and it’s just, it’s just another line item in your budget as you were describing.

Emily (12:42): Yep. And you have, I I would expect an automated transfer set up, um, like after you’re paid, it automatically transfers to a separate, as you said, high yield savings account. Yeah. And sort of the, the upside to paying your own quarterly estimated tax is that you do get to build it up for a few months before you send it into the IRS, uh, compared to the timing of, you know, withholding. And so, hey, you get, you know, month two, three extra of that little, you know, 2%, you know, interest rate or whatever you get on your savings account. So, um, I love that idea. Do you mind sharing who you bank with to find that high yield savings account?

Lourdes (13:16): Yeah, so, um, I bank with Discover Online Bank. I also have a credit card with them, so it kind of makes it easy. Um, and then I’m also, so that’s sort of where I put a lot of my long-term savings. And then I have a, uh, checking account with just a local credit union. Um, and that also has a savings account that has a little bit more of my, my short term savings goals, um, which I think I’ll talk about a little bit later.

#3 Expense: Food

Emily (13:39): Yeah, sounds perfect. Um, okay. Ready to move on to the next item?

Lourdes (13:43): Yeah. Um, so next item would definitely be food. Um, both groceries and going out to eat. Um, I definitely spend more on going out to eat than I would like, but I don’t necessarily feel bad about it because I generally budget for it and I know how much I can spend, so I don’t, it usually evens out in that the amount of, if I’m not buying groceries every week and going out, it’s a little bit more than I wouldn’t spend if I were buying groceries. But because it’s sort of budgeted into my overall budget, I don’t necessarily feel guilty about going out to eat.

Emily (14:19): I, I really love that I also experienced that same like, sort of psychological side effect of budgeting, which is before I kept a budget, I would maybe feel some guilt about discretionary spending, going out, making, you know, going shopping, things like that because I didn’t really have a good idea about how we would fit into my overall, you know, cash flow. And I’d be like, okay, well did I just like overdraw myself for like the end of the month? So budgeting really for me ended up being, um, a freeing exercise and something

Lourdes (14:50): I agree.

Emily (14:51): Not experience guilt anymore because as long as I knew it was in balance and I stayed within the budgeted amounts, I didn’t have to feel guilty anymore about the discretionary spending. So I’m really, really glad you mentioned that.

Lourdes (15:01): Yeah, and for me it’s also like a way, um, to get together with my friends. Generally at the end of the week we’ll go out to eat or go out for drinks and it’s just a way to unwind, um, with, and like a way to socialize. So again, it’s something that I definitely, I value, I place importance on that, so

Emily (15:21): Yeah, absolutely. Did you tell us the amount, the amount you spend on food?

Lourdes (15:24): Yeah, so I usually spend about $200 a month on food between groceries and going out to eat. Um, maybe 200 to 300 depending on the month,

#4 and #5 Expense: Utilities and Subscription Services

Emily (15:35): So. Yeah, it seems pretty reasonable even with a healthy, you know, eating out, uh, budget in there. Uh, okay, so what’s the fourth expense?

Lourdes (15:43): Uh, so honestly, aside from those major expenses, I don’t really have, oh, utilities obviously, um, utilities and, um, subscription services. Um, I’ve recently cut down a little bit on my subscription services, um, just because, um, I realized that there were some that I wasn’t using utilizing nearly as much as um, I could. And so I’ve cut them out, but I spend usually about, um, 30 to $40 on electricity, um, per month. And I have it budgeted as $40 because that’s usually the highest it ever goes. It’s usually in the thirties range. And then my subscription services, I think amount to about $25 a month, um, between Netflix, Spotify, the typical ones you’d expect. <laugh>,

Emily (16:34): Um, yeah, I was just gonna say what made the cut. Okay, so Netflix, Spotify, anything else?

Lourdes (16:38): Um, audible actually made the cut. It was one of the higher ones and I realized that I, I love to read and audio books for me are a great way to, um, be able to read while doing lab work very easily. Um, but I realized I was accumulating five, six credits that I just wouldn’t spend. So that’s almost, uh, it’s about $15 a month and I was like, I’m clearly not using this. I realized that sort of every year at the beginning of the year, I sort of evaluate my budget again, and that’s when I decided that I’m clearly not using this. I haven’t used it for the last six months, it’s, it’s gotta go. So, um, that helped cut that, cut that down a little bit. Um, so yeah.

Emily (17:20): Yeah. I just love that you mentioned that you do have a periodic reevaluation of your expenses. Um, and, and even, you know, earlier when you mentioned, you know, your rent, like after your first year of graduate school, you reevaluate and said, okay, is it worth being here? I mean, whether or not you decide, yes, it’s worth it or no, it’s not, it’s the reevaluation that’s so valuable and needs to happen over and over again. Just make sure that you’re still happy with your situation in every, every which way. So I’m glad that you, you know, sort of have it in your, in your calendar, in your mind, um, to happen every single year. So that’s awesome. Um, yeah. So is, is that all the five expenses? I think we got through them, right? 

Lourdes (17:57): Yeah, so, um, I’m lucky that my apartment complex actually has internet and cable included. Um, and so I don’t have to pay for those. I probably wouldn’t have paid for cable anyway, just ’cause I don’t watch that much tv. Um, but it is nice to have the internet included ’cause that can get pricey. Um, especially since here there’s really not, there’s two major internet companies and not much competition, so it gets pretty pricey. Um, so it’s nice to have that included.

Emily (18:27): Yeah, good to know that that is included in that rent. So it, it sounded high at the, at first, but then, you know, breaking it down, it definitely makes, uh, more and more sense.

Commercial

Emily (18:38): 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 currently doing to further your financial goals?

Emily (19:08): Okay. So we’ve talked about your spending. Um, let’s talk about financial goals.

Lourdes (19:13): Yeah. Um, so I have short-term, midterm and long-term goals and, um, the way I sort of, um, break these down, um, I have sort of two different savings accounts that I use to break these down. Um, so I have a savings account that’s with my credit union, um, that’s connected to my checking account. So I put a lot of the money that I save for my short term goals in there, and then my more midterm and long-term goals go into the high yield savings accounts. And so, for example, some of my short-term goals, um, I have, uh, just a general travel fund since I don’t have a car. If I wanna go home, um, to visit my parents, I take a bus that takes me straight to DC um, but I save up some money, especially near the holidays, it can get kind of pricey. So sort of saving up throughout the year for that. Um, I put maybe like $15, $20 a month towards that fund. Um, and then I have a, um, gift fund as well. So, um, mainly for Christmas, but also for any gifts that come up come up throughout the year. Um, definitely getting to the age where I get invited to weddings quite frequently, so having that sort of there means I don’t have to dip into my just general daily monthly budget and can have a separate fund for that. Um, and then I have what I call a fun fund, which is for more higher price fun experiences. So we have a lot of times Broadway shows come through, um, state college, um, and, um, those are usually a little bit more expensive. They’re like 60 to $70. So being able to pull some money from my fun fund instead of, um, from my budget for the month is kind of nice because I can still, um, go to have a nice experience but not have to worry about that taking away from like going out to dinner with my friends or going on a date night with my boyfriend or something like that. Um, and also most recently, um, I also really like to bake. And so I saw a deal online, it was like a one day deal for a hundred dollars on a KitchenAid mixer, which is a pretty good steal in my opinion. Um, ’cause I’ve been like, I’ve seen the prices for those, they can range like three, $400. So I was able to sort of buy that and take advantage of that deal without sort of having it impact my whole budget. Um, so that’s sort of what my fund fund is for. And those are some of sort of my short term financial goals, I suppose. 

Emily (21:47): Yeah, let’s, I I just wanna say, you know, I, I love this system. Um, I talk about it frequently. I call it, um, a system of targeted savings accounts. Another term is sinking funds. That’s more of an accounting kind of term. Um, but yeah, the idea is just, uh, projecting as best you’re able, what your expenses are going to be irregularly, right? So something that comes up once a year, a couple times a year, um, and starting to save up in advance for those different categories. And it sounds like you’ve both, like you’re, you both have expenses that you can pretty well anticipate, like you mentioned travel, okay, it’s gonna happen around the holidays. I know approximately what amount it’s going to be in. You can save up for that pretty easily, but it also sounds like you have, um, with your fun fund <laugh>, that’s a little bit hard to say with your fun fund. Um, you have like, okay, it’s, it’s just something that you have the money there, there’s a certain amount of it that you’re saving every single month. And it’s more like as opportunities come up and you’re like, yeah, I wanna do that, this is the fund that you can draw on. Um, so again, it’s not impacting your monthly cashflow, it’s not necessarily something you’ve planned out, but it just is something that allows you to capitalize on opportunities when you see them. Like when you saw this sale for something, you’ve been thinking about buying for some time and tracking the prices for. So I really love that you have both like a, a proactive, like predictive element of this as well as a reactive like, okay, I know there’s just gonna be things that I wanna do, so let’s plan. I don’t know what it’s gonna be, but I’ll be able to do it, you know, when you see it, right?

Lourdes (23:14): Yeah, exactly.

Emily (23:15): So let’s talk about those, um, mid and long-term saving goals now.

Lourdes (23:19): Yeah, so some of those, um, so my boyfriend and I, we’ve been together for about three and a half years. And so, um, he already graduated from grad school this past, um, just this past week actually.

Emily (23:33): Oh, Congratulations to him.

Lourdes (23:35): Yeah, and I’ll be graduating in a year. So we’re thinking about, um, getting married soon and so sort of planning for a little bit ahead for a wedding since I know those can get quite expensive. Um, just putting away like a a hundred, a couple hundred dollars a month, um, towards that. And then also more long term a house is something that I definitely would like to purchase in the future. Um, this is definitely, like I said long term, um, but putting a little bit of money away each month for that and just seeing that sort of fund grow. Um, I really like having that. I have a little tracker in Excel, just a little graph that, uh, like you can see it sort of grow and it’s nice to see that and sort of gives me a goal to work for in the future, just like continually working and not having to worry about it, like when it becomes a shorter term goal.

Lourdes (24:23): And so those are some of sort of like my mid and long-term goals also, um, because I am on a fellowship, I have to pay out of pocket for my health insurance. Um, and while my fellowship does reimburse it somewhat, um, it’s not as much as if I were a regular like on a, uh, research assistantship. Um, and so it’s still quite expensive, but obviously very important. This is actually something that just, um, came up in terms of like my financial life last August because I was gonna be, um, taken off my parents’ health insurance and so I needed to sort of figure that out. And, um, thankfully at the time, I have an emergency fund as well, aside from these sort of sinking funds, um, I have an emergency fund of about, uh, $12,000, um, just set aside. And so I was able to pay for my health insurance no problem.

Lourdes (25:19): And there was some issue in getting reimbursed by my health insurance, um, which could have been an issue if I hadn’t, like if it was money that I needed to live on, but thankfully it was just money that I had set aside for this exact purpose where it’s something that I hadn’t exactly planned and hadn’t really thought of, um, but was able to pay for. And so, um, now knowing that and knowing I’m gonna have to pay for my health insurance in this upcoming August is when we have to renew it. Um, I’ve been saving aside money for that every month as well, so I can pay for that. So.

Do you have long term goals?

Emily (25:55): Yeah, what a perfect use of an emergency fund. Um, I, I kind of, I thought about what exactly is the definition of an emergency, you know, before, and to me an emergency is something that is both totally necessary, a necessary expense and also, um, unanticipated. So you knew you were gonna come off your parents’ insurance, but you did not know I would imagine what the premium was gonna be and that there were gonna be these issues with the reimbursements and so forth. So, and of course it’s a necessary expense has to be paid on time, you can’t mess around with that. So it’s just wonderful that you have that, um, fund already available for you. So do you have any other long-term goals?

Lourdes (26:31): Yeah, so I actually am also currently saving for retirement. Um, and so I was able to for one year max out my Roth IRA, um, before I, I was on my uh, fellowship. Um, but since then and since at that point I learned that I was no longer eligible to contribute to my Roth ira, I have been investing in just a general taxable brokerage account. Um, and I haven’t been contributing as, um, much as I would’ve probably to my Roth IRA just because I know that is tax deferred, but I still do try to put in a hundred or $200 a month into that, um, as sort of a very long-term goal and to try to keep that investment going even though I don’t have the tax advantage vehicle of the Roth IRA.

Emily (27:21): Yeah. So just to expand on that for another moment because this is something that, you know, I get plenty of questions about. Um, so first of all, your eligibility for an IRA depends on you having what’s called taxable compensation or earned income, which in terms of grad student pay means W2 pay, which is usually termed as an assistantship, uh, TA, RA. So you having the NDSEG fellowship, um, doesn’t count as taxable compensation or earned income. Now at that point, a lot of people who I talk with, um, throw out their hands and say, oh, well I have this higher income, I don’t have access to an IRA, I guess I won’t say for retirement. And obviously as someone who’s very, very pro investing and especially for retirement and especially at a young, as young and age as possible, um, I’m like, no, no, no. Like you can, you can go ahead, it, it can’t be inside an IRA, but you can still do it. And so I’d really love for you to talk a little bit more about how you, um, came to this understanding and found, you know, the, the way that you’re, you know, you’re using a tax taxable brokerage account, but a lot of people don’t even know what that is. So like how did you find out about this and how did you decide you know, where to open and so forth?

Lourdes (28:33): Yeah, so when I was sort of, when I got my fellowship and when I sort of learned about all the implications of that in terms of like taxes and um, investing for retirement, that’s when I also learned that um, I would have, if I wanted to invest it would have to be in a taxable account. And so I did a lot of research, um, in terms of um, I guess what brokerage I wanted to invest with. And because at the time I didn’t feel very knowledgeable about um, picking funds or ETFs or anything. I had money in a Roth, IRA, um, with Vanguard, they make it easy to have target date accounts, but I wanted to try to see if I could try something else, um, and decided to go with a, a robo-advisor, an online robo-advisor. So I currently invest with uh, Wealthfront and um, have enjoyed the experience so far, um, and just find it a very easy way to get a broad, um, a broad portfolio in terms of the different stocks that I’m invested in.

Lourdes (29:38): They sort of, um, you take a little quiz with a risk assessment and sort of I’m a little bit on the higher end and just because I’m young I know I can have that risk factor, um, and sort of um, went that route. Um, but I did a lot of research in terms of sort of what I felt would be good for me, um, and how much time I was willing to put into it. And I think maybe in the future I might move this money to somewhere with um, lower fees. I currently don’t have to pay any fees because I’m under a certain amount of money, um, which is nice. Um, but if I ever were to continue to um, uh, add money to this account and I went over that uh, threshold, I might decide to move it to somewhere where I would have, I wouldn’t have to pay an advisory fee.

Emily (30:24): Yeah, I’m really glad you you provided that detail because I learned something new. So these roboadvisors, I’ve looked into a few of them. Wealthfront is one of the prominent ones. Um, and people often ask me about using roboadvisors, so I’m really glad that you can speak to this a little bit. Um, and as you said, it’s a really, um, easy solution. You answer a few questions about yourself and they come up with a portfolio recommendation. I do in general think that it’s kind of overkill, especially for someone who is investing inside an IRA, um, and is just going for retirement and sort of a simple thing what you were already doing inside your IRA, but to me it actually makes a lot of sense once you switch to using a taxable investment account that, um, an advisory service with a little bit more of a hands-on approach can do some tax optimization for you.

Emily (31:11): So it actually makes a ton of sense to me. Um, and it’s great news actually that, you know, for now you are not being charged an advisory fee because that is really the main, as I’m sure you learned in your research, the main downside to using a RoboAdvisor or any other sort of slightly more expensive service is the fees. The fees don’t sound like very much, you know, maybe 0.25%, something like that doesn’t sound like a lot, but it adds up quite a lot over time. So it’s really exciting to me that you were, you know, able to do this without a fee. I mean, that’s kind of the best of all the worlds, right? Do you mind sharing what is that ceiling under which they don’t charge the advisory fee?

Lourdes (31:45): Um, I believe it’s $15,000. Um, and then if you refer people it, they will as a bonus, they’ll, um, increase it. I don’t know by how much, um, for each person you refer, but I think that is just the base, um, baseline ceiling for a no fee.

Emily (32:05): Yeah, that is awesome to know. Do you want to share your referral link?

Lourdes (32:11): Um, can I send that to you?

Emily (32:13): Yeah, absolutely. Okay. So we’ll pop that referral link into the show notes and you’ll help Lourdes and you’ll help yourself if you are already interested in wealthfront, Hey, why not? She’s giving you a tip about not having that advisory fee at the lower balances. So win, win, win, I would say all around.

What is your best financial advice that you’d share with your peers?

Emily (32:28): We will just conclude with me asking you what is your best financial advice that you would share with, um, your peers, whether that is another grad student, another fellowship recipient, someone else living in state college, anything along those lines?

Lourdes (32:42): Um, I would definitely say sort of speaking to what you mentioned earlier is not be afraid of having a budget. I know a lot of people think of having a budget or something constricting and something that will make you not like spend, not be able to spend money because you’re, you’re on a budget, but really it’s a very freeing thing, especially as a grad student where you’re on sort of a limited income. Um, being able to see where your money is going and sort of be in control of that, um, definitely makes you feel more free in terms of the things you can do on a day-to-day basis or, um, on even like a longer term. You sort of get this sort of freedom that, um, I think is really valuable and makes finances just seem less scary.

Emily (33:32): I’m in total agreement with you about the benefits, the psychological benefits of budgeting, as well as the actual, uh, financial benefits. So thank you so much for sharing that and uh, for joining us today. I’m really, really glad that you, uh, yeah. That you came on the podcast.

Lourdes (33:46): Yeah, thank you so much for having me. I really enjoyed speaking to you

Outro

Emily (33:50): 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.

An Unfunded Summer Didn’t Deter this PhD Student Thanks to Her Creative Side Hustle

by

In this episode, Emily interviews Bailey Poland, a rising second-year PhD student in rhetoric and writing at Bowling Green State University. Bailey earns a stipend of just $14,000 for the academic year, but manages to live a comfortable life thanks to her disciplined budgeting and two side hustles. Unlike many of her classmates, she devoted her first summer as a PhD student exclusively to research, relying on her side hustle income and savings from her stipend to tide her over until the next academic year started. Emily and Bailey discuss in detail Bailey’s housing choice, frugal habits, and unique Patreon side hustle that complements her graduate work.

Links mentioned in episode

unfunded summer PhD

0:00 Introduction

1:26 Q1: Please Introduce Yourself

Bailey Poland is a second year PhD student in the Rhetoric and Writing program at Bowling Green State University. Bowling Green is a city in Ohio, located to the south of Toledo, Ohio. Bailey’s stipend is $14,000 per academic year. Additionally, Bailey earns $460 per month from Patreon and $150 quarterly from copy-editing a music magazine focused on Texas. She is the only person in her household.

Bailey’s PhD stipend does not include summer funding. She budgets savings over the academic year in order to meet her expenses over the summer.

3:25 Q2: What are your five largest expenses each month?

Bailey’s largest expenses are rent at $600 per month, car payment at $200 per month, health insurance and fees at $400 per month, food at $150 to $200 per month, and car insurance at $112 per month.

4:14 #1 Expense: Rent

Bailey rents a two bedroom apartment for $600 per month. She says this rate is higher than other options available in Bowling Green. She looked at options for rent at rates of $350 to $450 per month, but these apartments were in poor quality or clearly undergraduate housing. Bailey used to own a house, so she approached her apartment search with those expectations.

Bailey’s apartment is in downtown Bowling Green. She walks to campus, so she doesn’t use her car or have a university parking pass. She drives to the grocery store, but she lives above a coffee shop. She thinks she is in the perfect location. She lives by herself in the two-bedroom apartment, so she sleeps in the smaller bedroom and uses the extra bedroom as her office and library.

6:18 #2 Expense: Car Payment

Bailey pays $200 per month for her car. She has a 2017 vehicle that she bought new. She traded in her older Toyota Corolla when she bought her new car. Due to unfortunate family circumstances, Bailey received money from inheritance and estate closure. She used this money for her car payments. She has stayed ahead of interest and has gotten ahead on payments.

8:06 #3 Expense: Health Insurance and Fees

Bailey pays health and insurance and fees in lump sums a couple times a year. The amount works out to about $400 per month. She uses her credit card to make the payment at the start of each semester, but she pays it off immediately. Her credit card pays back 1.5% so she received a small kickback. Generally, she doesn’t keep a balance on her credit card so she avoids interest payments.

She made her first health insurance and fees payment before she received any of her graduate school stipend. Because she formerly worked as a marketing analyst for global HR and payroll company, she had enough savings available to make this payment when she started graduate school. She chose to go to graduate school because she was much happier in a classroom than behind a desk in a corporate office.

10:25 #4 Expense: Food

Bailey pays $150 to $200 per month for food, which includes groceries and dining out. She plans and prepares meals ahead of time. She cooks two or three times a week and freezes leftovers. She takes food with her to campus.

She has a limited set of go-to recipes. One of her favorites is chile garlic tofu. She says the meal is filling and takes half an hour to prepare. She gets four meals from one block of tofu. She eats lots of eggs, pasta, and rice-based meals. Her vegetarian cooking has increased since she started PhD program.

Bailey learned meal preparation from trial and error in the first few months of graduate school. She figured out which meals took too long or she didn’t like enough to have leftover. She used the Budget Bites website to find recipes. She cooks on the free nights of her week, because she knows which nights she’ll want to eat dinner as soon as she gets home. Bailey is on campus from 8am to 6pm most of the week. The latest she gets home is 7pm or 8pm. She takes lunch and a small snack with her to campus, and she eats dinner at home.

14:51 #5 Expense: Car Insurance

When Bailey purchased her new car, her car insurance rate increased from $85 per month to $130 per month. She has a plug-in for diagnostics of her driving habit, which lowered her insurance rate to $112 per month. She only regularly drives to and from the grocery store, which is a 10 minute drive. She also drives to her mom’s house, which is 30 minutes away and all highway driving.

Bailey says graduate students can get by without a car in Bowling Green. In her PhD cohort, at least one person doesn’t have a car. Busses run regularly to and from campus. Grocery stores deliver for a fee. Local activities are accessible to pedestrians. Bowling Green does not have cabs, Uber, or Lyft. It is pretty rural. Bailey needs a car to leave town to see her family.

18:10 Can you tell us about your side hustles?

Bailey has two separate side hustles. For one, Bailey copy edits a magazine about the country music scene in Texas. She missed doing copy-editing work, so she posted on Twitter that she was looking for an opportunity. Someone from the magazine responded to her and said they’d pay her to copy edit. Bailey has had this side hustle for three years. She receives $150 every few months and she has learned a lot about a topic that is unfamiliar to her.

For another, Bailey uses Patreon, the crowdfunding platform for artists and creators. She receives $460 each month from Patreon. She got started after she defended her Master’s thesis and she quit her corporate job earlier than she had planned. She was working at a bookstore and she needed more income. Some of her friends had Patreon, so she was familiar with the platform. Bailey started by doing live readings of The Rhetorical Tradition, like live tweeting her readings with funny commentary. People got invested in her live readings and she transitioned the activity to Patreon. Reading The Rhetorical Tradition was a really long project. She planned in advance and read as much as possible during the summer so she wouldn’t need to read during her first graduate school semester. She planned to post about The Rhetorical Tradition on Monday and Friday, post photos of her mom’s three cats on Tuesday and Thursday, and post an essay style blog post on Wednesdays. She only writes one or two truly new posts per month. With her PhD work, she doesn’t have time to write four or five new posts a month. Recently she has started a new reading series that overlaps with her prelim list for her PhD. She is gaining familiarity with texts in her field, having interesting conversations with her patrons, and making some money.

Bailey has created a very niche platform. Starting a Patreon was a huge leap of faith. She used to be super active on Twitter with a group of 18,000 followers. She authored a book, which helped her gain an audience invested in her thoughts. She trusted that her audience would move with her from Twitter to Patreon. She front loaded the work during the summer, so during her first semester it was more like a passive income stream. Now it serves multiple purposes for her. She finds it fulfilling that her academic work is accessible to the public. Her work lately is archival, and through Patreon she can share what it’s like to work in an archive. Bailey finds joy in her patrons and appreciates that they pay for her to do this work.

26:35 How do your colleagues react to your side hustle? Do they take on side hustles?

Bailey says her colleagues know and are supportive. For example, Bailey did a public series on Patreon that was a reflection on teaching practices she learned at Bowling Green. Her program’s website’s homepage included a link to her series. Generally, PhD students are discouraged from outside work because they should focus on doctoral work, but her department gives no formal prohibition of outside work. Most other graduate students have some other work, though it may not be talked about.

During the summer, other PhD students in her department find jobs. Some find online teaching roles, and one is working in the garden center at Lowe’s Hardware Store. One is going to a writers retreat that comes with a stipend. PhD students with spouses don’t work or find part time work.

29:28 Q4: What are you currently doing to further your financial goals?

Bailey has a 401k from her corporate job that she will roll into a Roth IRA over the next few years. She has investments with Betterment that serve as her long-term emergency funds. She has a high earnings online savings account as her primary emergency fund. Her goal is to have three months of expenses saved, and she is $600 short of her goal. Generally, her goal is to have her retirement well planned. She wants to be in academia long term, but she can’t be certain about this path. She wants security and confidence during her job search. Having savings going into graduate school frees up opportunities.

During her first summer as a PhD student, Bailey is working on archival projects and taking a class. During the school year, Bailey has multiple things going on, like classes, teachers, committees, conference planning. Summer is really valuable to devote focused attention to a project. In subsequent summers, it is possible she will take teaching jobs.

34:30 Q4: What don’t you spend money on that might surprise people?

Bailey doesn’t have student loans. She paid all of her loans within two years after undergrad. She hasn’t taken out any loans for higher education. Because she went to a State school, had scholarship, and finished in three years, she had very manageable loans from her undergraduate education. She took a job after college right away.

She has stopped buying books, which is hard for her personally. Even if she buys used books, it adds up quickly. She tries to keep miscellaneous spending low every month. She used to buy $200 to $300 worth of books every month, now she just buys one book a month. She checks out a lot of books from the library, and she lives less than a block from local public library

She doesn’t spend a lot on hobbies. She likes to cross stitch. This is inexpensive and takes a long time. She can spend $20 on one project that entertains her for five months. She has hobbies that help her relax and are not difficult for her budget.

39:00 Q5: What are you happy with in your spending and what would you like to change?

Bailey’s rent is higher than she wants to pay and is more than what others pay. She negotiated for lower increase rate when she renewed her lease. She’s considering doing a spending fast over the summer because she has no stipend coming in. She wants to minimize the hit that her savings is taking. She can find entertainment in Bowling Green for free. For example, there is a huge arts community and a massive arts festival.

42:12 Q6: What is your best advice for someone new to your city who is budget-conscious?

Bailey recommends that someone new to Bowling Green shops around for a place to live. There a lot of good options. Graduate student housing is affordable and it is easy to find a roommate. She says to look for an apartment as early as possible. She started looking in July, which limited her options. She would have looked earlier if she knew.

She advises new PhD students in Bowling Green to plan on saving. She says make sure you have cushion before you get here. Graduate school is stressful enough without living paycheck to paycheck. You should get rid of debt completely if you can.

44:22 Q7: Would you like to make any other comments on what it takes to get by where you live on what you earn?

Bailey says it is definitely possible to live in Bowling Green frugally and have a good time. She says there is always stuff happening that’s free or inexpensive. Toledo is a twenty to thirty minute drive. It may not be possible to live on the stipend alone, but you don’t need much more. Bowling Green has a low cost of living and is a college town invested in the university community.

45:22 Conclusion

Working Hard and Playing Hard as a Grad Student in NYC

by

On this episode, Emily interviews Nicholas Giangreco, a bioinformatics graduate student at the Columbia University Medical Center. Nick’s expenses in Manhattan are relatively high – such as spending over 50% of his net income on rent – but his stipend still allows him to spend on his priorities and still save money consistently. Nick lived very frugally while he was paying off his student loans prior to grad school, and now applies his thoughtful budgeting skills to enjoying life in Manhattan without breaking the bank or detracting from his research.

Links mentioned in episode

PhD_NYC_playing_hard

0:00 Introduction

1:15 Q1: Please Introduce Yourself

Nick Giangreco is a bioinformatics graduate research assistant at Columbia University Medical Center in New York City. He started his program in August 2016. His post-taxes pay is approximately $1,300 biweekly.

2:58 Q2: What are your five largest expenses each month?

Nick’s top expense categories are rent, health, transportation, and food. His miscellaneous and entertainment expenses are considerably low. He uses a spreadsheet to monitor his spending.

3:38 #1 Expense: Rent

Nick lives in a studio apartment located on-campus and managed by the university. He pays $1,200 for his studio, which is lower than nearby off campus studio apartments that are $1,500 to $1,600 rent. Nick recognizes that he could find housing options near campus for less than $1,200 monthly rent. He mentions his friends who share four bedroom apartments and each pay $600 for their room. Finding a place in New York City is challenging. If you don’t find somewhere on Craig’s List, you may need a broker and to pay the broker fee.

Nick says the majority of graduate students live on-campus. To accommodate the demand for on-campus housing, the university has three tiers of priority consideration for housing applicants. The first priority tier is international students, the second tier is students from outside the New York – New Jersey – Connecticut Tri-State area, and the third tier is students from within the Tri-State area.

According to Nick, living on-campus makes graduate student life easier. Nick has a 15 minute walk to work, and he avoids commuting on the subway. The university gives current residents the first priority to renew leases. Nick plans to renew his lease for his on-campus apartment.

11:38 #2 Expense: Health

Nick spends a few hundred dollars per month for pilates sessions. He sees a personal pilates trainer in the West Village and pays $100 per session. He goes to physical therapy and rehabilitation at the hospital at Columbia. The copay is $20, which adds up since he has an appointment every week.

Nick’s health insurance does not cover his pilates session, but he likes his personal trainer and gets value out of the sessions. He first tried going to pilates classes at the university’s gym for no charge, but he was dissatisfied with the generalized approach of group classes. He wanted something personalized for his needs, so it is his priority to budget for pilates classes.

14:23 #3 Expense: Transportation

Nick estimates that he spends $200 to $300 per month on transportation and travel, or as little as $100 in a month if he doesn’t leave New York City. He puts $20 on his subway card and adds as needed. Additionally, he takes taxis and Ubers to get around Manhattan. Though taking a taxi to the JFK airport can be expensive ($70), the subway takes two hours. He uses Amtrak to go to his hometown, but those tickets add up. He also looks for cheap tickets from Megabus.

18:55 #4 Expense: Food

Nick spends less than $200 per week on food. In his studio apartment, he has a kitchenette which has a stove but no oven. He doesn’t buy groceries that require baking. He buys non-perishables and items that keep well. Some of his go-to items are sweet potatoes, oatmeal, and popcorn. He takes out $20 per week in cash for use at the food trucks, which only accept cash. He buys gyros for $5 and coffee for $1 from the food trucks. He goes to restaurants or diners once or twice a week.

Nick looks for free food from graduate school events. He is part of a Slack group for graduate students in the department, where people share information about free food. He eats food at seminars, lectures when alumni are invited, and club events.

Nick’s kitchenette does change how he approaches his food budget. When he lived in Washington, DC, he lived in a house with a kitchen. He used to batch cook on the weekend and set aside portions of leftovers for the week. He would host friends for meals. In New York City, he doesn’t have room to host anyone and can’t cook very much. He microwaves sweet potatoes and makes rice and beans on the stove. He keeps leftovers from events. He doesn’t plan his food for the whole week, instead he plans by the day. Nick thinks he could plan better, but right now he needs to focus on his PhD work so he needs the convenience.

30:35 Low Entertainment Expenses

Nick says there is a lot to do in New York City. He doesn’t spend much money on entertainment because he does a few cheap activities. He goes to clubs and university events. He sees plays for $10 on the Columbia Medical Center campus. He saw Spongebob the Musical for $30. Though Nick has friends who go out for drinks every day, Nick doesn’t buy much alcohol.

33:30 Q3: What are you currently doing to further your financial goals?

Nick recently paid off all his student loans. Before starting his PhD, Nick lived in DC for two years. He lived a very frugal lifestyle, and took two and a half years to pay off his student loans. Now, Nick is working on his rainy day fund so he can create a financial cushion in his budget. He spends about $2,300 per month of his $2,600 monthly income, so he puts the rest to savings.

Nick keeps a budget in google sheets to log his expenses. He wants to become conscious of his spending habits. He is looking into passive investing approaches and learning about retirement. Columbia Medical Center provides graduate students the option to invest with Vanguard. Though there is no matching offer, he determine an amount to withhold out of his biweekly check. He called the financial office and asked explicitly about this retirement program applicability to graduate students, and he is considering it.

Nick tries to save $100 to $200 per month for his rainy day fund, and wants to increase this to $300 to $500 per month.

39:14 Q4: What don’t you spend money on that might surprise people?

Nick doesn’t spend much money on entertainment or alcohol. He takes it seriously that he is in New York City for graduate school, so he prioritizes his studies and his work. He doesn’t go to Brooklyn or the East Side, instead he goes to Central Park for free and finds cheap shows at comedy clubs. He uses the subway because this transit option is $20 to $30 less than taxis and Ubers. He will listen to podcasts while he’s on the subway.

43:07 Q5: What are you happy with in your spending and what would you like to change?

Nick is happy with his food spending and his entertainment spending. He has a social life and indulges in brunch with friends on the weekends. He wishes he could save more on rent, but he doesn’t want the responsibilities that come with living in a house. Landlord, roommates, and housing infrastructure problems add extra stress that he doesn’t want to deal with. He wants to concentrate on graduate school, and his studio apartment helps him focus. He also appreciates the security in his building, the community and the convenience. He lives on-campus and one block away from the subway. Ultimately, the convenience of the location is worth the high rent.

46:42 Q6: What is your best advice for someone new to your city who is budget-conscious?

Nick recommends living on-campus. He thinks the Columbia Medical Center bioinformatics graduate program pays well. He says the initial payment for first years is nearly $20,000 as a lump sum, which needs to be budgeted carefully. The Columbia Marketplace Facebook group is useful to find free and cheap items. The Grad Talk list-serve helps you find out about free and cheap items as well.

Nick says to enjoy yourself without going crazy, and to be mindful. Anyone considering New York City for a PhD program should know that grad school can be intense, New York City can be intense, but this is a time to work really hard while making good friends and good memories. Nick coordinates a Meetup group and leads an NYC chapter of an international organization. New York gives you access to broader networks and opportunities.

51:38 How do you budget your biweekly pay? How does it compare to other pay structures?

Nick used to work at the National Institute of Health in DC, where he monthly check. The biweekly pay does not change how he budgets, instead he enters his income twice a month into a spreadsheet instead of once a month. He had enough cushion money in his account to manage expenses, and knows that he will get another paycheck in two weeks. His spreadsheet helps him keep track.

55:41 Q7: Would you like to make any other comments on what it takes to get by where you live on what you earn?

Nick says it’s a great time to be a graduate student in New York City. So many people like to visit New York City, so it’s great for spontaneous reunions with friends. It’s easy to get out of the city if you want. New York City offers many opportunities, and you’ll interact with people from multiple universities, companies, and form a broad network.

57:48 Conclusion

Even in NYC, This Graduate Student Maintains a Super Frugal Lifestyle

by

In this episode, Emily interviews Athena Pierquet, a rising second-year graduate student at New York University in English. In her first year as a PhD student, Athena lived on her $28,000 per year fellowship and save all of her smaller income sources, but her finances are facing a new challenge as she transitions out of subsidized university housing. Despite living in Manhattan, Athena maintains a very frugal lifestyle, minimizing her spending on groceries, transportation, entertainment, and recreation.

Links mentioned in episode

Subscribe on Apple Podcasts, Google Play Music, Stitcher, or Spotify.

Give your feedback on Season 1 and influence the direction for Season 2 through this form.

NYC frugal grad student

0:00 Introduction

1:15 Q1: Please Introduce Yourself

Athena is a rising second year PhD student in the Department of English at New York University. She lives in the Manhattan neighborhood Stuyvesant, or Stuy Town. Her overall income was $38,000 from several university sources. Most of her income comes from the MacCracken Fellowship, provided for all NYU PhD students, which was $27,526 this past year. She received a housing stipend of $5,500. Several scholarships and grants made up $4,000 of her income, and short term research contracts made up $1,000 to $2,000.

2:20 How is your income reported for taxes?

For taxes, Athena has to self report the MacCracken Fellowship and her other scholarships to the federal government. The university provides her a 1098-T form for taxes. Her short term research contracts are reported on W-2, but these are a minor part of her income.

4:08 Q2: What are your five largest expenses each month?

Athena’s five largest expenses are rent, food, books and supplies, incidentals, and going out for fun.

4:28 #1 Expense: Rent

Athena pays $1,100 per month for rent. This cost includes all utilities, except for internet. She shares a two-bedroom apartment in Stuy Town with another first year NYU PhD student. The market rate for her apartment is $3,500 per month, but since the apartment is in a university housing complex, the cost is subsidized by the university. However, university housing is only available to first year PhD students, so Athena is searching for new housing in Manhattan.

For her new housing search, Athena’s budget is $1,200 to $1,300 for a room in a three or four bedroom apartment. NYU will continue to provide a housing stipend of $5,500 during her second year, but in subsequent years the housing stipend will be replaced with income from teaching classes. In general, her income does not increase to cover the new housing costs.

Athena saved much of her income from her first year in anticipation of her move into the cut throat Manhattan housing market. To get an apartment in Manhattan, she needs $3,000 to $5,000 available. Securing an apartment requires payment deposits for first month’s rent and last month’s rent.

9:57 #2 Expense: Food

Athena’s food budget is $100 per week. This category broadly covers anything she purchases to eat. She includes groceries, coffee shops, restaurants, and take-out in her weekly food budget. She plans out her meals and makes grocery shopping a priority. She makes almost all of her food at home and describes some of her meals, such as fully loaded oatmeal and hearty, entree salads. Athena eats at restaurants only two or three times each semester. She has several frugal tips for going to restaurants in Manhattan and getting free food from NYU events.

20:30 #3 Expense: Books and Course Supplies

Athena’s spending on books and course supplies is about $300 per semester. Her expenses for books and course supplies are considered non-taxable income. As a literature student, she needs many books for her work. She estimates that if she bought every book she needed or wanted, she would be spending thousands of dollars. She frequently borrows from the library, gets used books, and finds resources online. Nonetheless, this was tricky to budget for because of different needs for different courses.

24:29 #4 Expense: Incidentals

Athena budgeted for unexpected expenses, which she describes as the impulsive book purchase, miscellaneous fees, and spontaneous entertainment. Since she set her budget week by week, she intentionally put $45 each week for incidentals. Typically, she only had one or two unexpected expenses each month. The miscellaneous category is a place to lose money if you’re not careful, in Athena’s opinion.

27:29 Problems budgeting for taxes while on a fellowship

Athena later learned that the $45 per week that she budgeted for incidentals was really what she needed for taxes. When Athena began first year of graduate school, she didn’t know how much to set aside for taxes. NYU does not withhold taxes for U.S. citizens in their PhD programs, so it was Athena’s responsibility to estimate how much she might owe in taxes and plan for tax season. This is a challenge faced by many PhD students receiving fellowship funding.

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

30:47 #5 Expense: Going Out for Fun

Athena budgeted $20 per week for going out, and spent $280 over one semester on happy hours and other social events. She went to bars with friends about once or twice a month for happy hour, where she would socialize for two or three hours. In her budget, Athena distinguishes drinks at a bar or restaurant from purchasing a bottle of wine or six pack from the store. She notes that at NYU, she has plenty of opportunities to enjoy free drinks and free food at events sponsored by the institution.

Join the Mailing List to Download Frugal Tips for PhDs-in-Training

The download includes 30+ frugal tips for PhDs-in-Training with links to video and additional written content.

You'll receive 1-2 emails per week to help you make the most of your money during your PhD training.

We won't send you spam. Unsubscribe at any time. Powered by Kit

34:36 Q3: What are you currently doing to further your financial goals?

Athena tries her best to live within her means. She only lives off of the MacCracken fellowship, about $28,000, which is her only guaranteed income source for 5 years. She puts her other fluctuating funding sources into savings and does not create her budget from it. Athena has a healthy cash savings account, and every now and then she moves it into an investment account with Vanguard for retirement and index funds that could be used for major purchases in 20 to 40 years. She needs her cash savings for her new apartment, new furniture, and irregular expenses.

38:19 Q4: What don’t you spend money on that might surprise people?

Athena doesn’t spend money on transportation. If it’s less than an hour walk, she will walk to the distance. The $2.75 to take the subway or bus is better spend on coffee, in her opinion. She won’t take cabs or ride share unless she absolutely has to.

She makes use of public spaces with internet access and working spaces, like the New York Public Library. Some people pay memberships to writers’ rooms and co-working spaces, or even a desk at home, but Athena has a list of go-to public spaces to work remotely.

Additionally, Athena doesn’t have a gym membership, and she won’t go to exercise classes. She avoids shopping and costly activities. Though she’s surrounded by high income earners in Manhattan, she reminds herself that she has more important priorities than the high expense lifestyle.

43:56 Q5: What are you happy with in your spending and what would you like to change?

Athena would like to change how she tracks her cash spending. Since some places are cash only, and some only take cards, Athena finds it tricky to document all of her expenditures.

She’s happy with how little she spends on exercise activities. Athena is a long distance runner, so she makes use of the long trails and paths throughout New York City. She has a deeply discounted New York Roadrunners membership, and recommends that others look into student discounts.

47:36 Q6: What is your best financial advice for a new PhD student at NYU who is budget-conscious?

First, Athena says that budgeting and spending conservatively is absolutely a must. Many daily necessities, like laundry and groceries, are more expensive than you might expect.

Second, she says do not buy in bulk! Buying only what you need will save money in the long term, as well as save space in small apartments.

51:17 Find out your summer funding situation

Athena recommends being aware of how you will be funded through the summer. In some cases, you will receive payments for only the nine months of the academic year. Some refer to the first summer after graduate school as the “summer of poverty,” so think about this when you get your offer letter. You may need to save during the academic year to get through the summer, or find summer work. Make plans at the beginning of the academic year.

Further reading: How to Financially Navigate an Summer

52:49 Q7: Would you like to make any other comments on what it takes to get by where you live on what you earn?

Athena says you need to be honest about your financial situation. Seeing wealth around you in NYC does not mean you need to spend like that too, or emulate what you see people doing around you. Athena takes the initiative to suggest more frugal activities, like going to coffee or happy hour instead of more costly brunches and dinners.

Athena does an end of the semester assessment of her budget that she finds highly valuable. She evaluates how she spent her money and considers how she can do better the next semester. It can be difficult to anticipate how expensive things will be ahead of time, so she has gone through a process to try things out and reassess her expenses.

58:00 Conclusion