The Biggest Financial Lessons I Learned During Grad School

8/10/2021

Graduate school is a significant investment of both your time and money.

Each student differs in their distinct financial circumstances while they are on their academic journey. If you feel a bit overwhelmed when it comes to money matters, don't worry... you aren't alone! Managing your finances can be stressful as a graduate student when you are juggling so many responsibilities — including tuition, housing, books, transportation, and basic necessities — and have a limited income (have you seen the stipends?).

It really wasn't until recently that I really got into financial literacy and I am now a personal finance nerd working towards financial freedom without sacrificing the things I love. I love empowering others to discuss and build their own wealth and am passionate about making sure all students (especially BIPOCs and women) are on top of their finances. Here are some lessons I've learned along the way.

I truly believe that you do not need to work in finance to be good with your personal finances! Many are intimidated by financial matters - I know I was, I used to leave the "money stuff" to my ex - but I believe that with the help of financial literacy and money management tools, we can all take control of our financial situations. It isn't easy - it's taken me quite a bit of time (and that's coming from someone whose parents taught her to save whenever possible). But I think financial literacy is something that can be developed from books, podcasts, Googling, and asking family/friends or those who do work in finance (like a finance coach or advisor).

I could go on a rant about how I think these tools should be free to all students... and unfortunately not every university is equipped to have them available. Some strategies I've learned along the way--

Budgeting

Living within your means is critical as you pursue your degree, especially with such a meager wage. I've created a spending tracker where I allocate my transactions (rent, utilities, groceries, travel, etc) and reflect on how I spent my money each money. I then create a personal budget that balances my necessities (rent, utilities, groceries, car insurance) and my wants (make up, a concert, going out to eat) against my income.

Learning how to budget well is a process that will take time - and mistakes (big and small) will occur and that's okay!

Have money remaining after you subtract your total monthly expenses from your income? Consider saving some (some financial advisors suggest 10%) towards an emergency fund. consider saving a portion of it in an emergency fund.

Emergency Fund

An emergency fund is a bank account with money set aside to pay for large, unexpected expenses, such as:

Unforeseen medical expenses.
Home-appliance repair or replacement.
Major car fixes.
Unemployment.

Why do I need an emergency fund? Emergency funds create a financial buffer that can keep you afloat without you needing to take out a loan or use credit cards (aka get into debt).

Many experts recommend building such a fund in any amount between 3-12 months of your total monthly expenses. As of August 2021, I have about 6-7 months saved up and hope to get to about 9 by the end of the year.

Some general tips

In deciding where to go for graduate school, take into account not just the expenses you might incur from tuition or other fees but the cost-of-living from one city to the next. There are cost-of-living calculators available online to help you make realistic comparisons .
Sometimes your gym membership fee is included in your semester tuition. Check that out and take advantage of it if possible!
Take advantage of student discounts at on- and off-campus stores.
Moving somewhere? Be careful about those "rent-to-own" programs at furniture or whiteware stores. They may not tell you that the annual percentage rates (APR) can run pretty damn high.
Carpool or use public transportation to get to campus. Sometimes the public transporation cards to currently enrolled students are much cheaper than regular fares so keep an eye out.
Shop online to get the best deals on textbooks. Many online retailers (like Amazon, Chegg, Abebooks, and Ebay) offer substantial savings on textbooks. Make sure to compare the prices offered by different retailers... or maybe rent the book for cheaper.
Meal planning and cooking at home can be a more budget-friendly option than eating out all the time.
Avoid overspending when out - those "small" expenses quickly add up!

A quick note before going into this next section: There is a certain privilege for all of the above, but especially this part, that I must acknowledge. It's a bit hard to think about the future when you are struggling to keep food in your belly or a roof over your head. Not everyone has the luxury to save aside money (even a few dollars) to have an emergency fund let alone invest. Each of our financial situations are different. Keep that in mind as you read this, and any other finance-related articles about building wealth.

What about... investing?

By far one of the biggest impediments about investing during graduate school is the fact that the very low pay makes it so only a fraction of students can even consider investing. I couldn't fathom investing until I was in a very exceptional position (for transparency: I moved in with C and his family during the pandemic and they graciously made me not pay much because they knew my student wages and some big costs lobbed my way).

During this time, I really got into getting on top of my finances and after listening to some financial podcasts (see below), I decided to dip my toes into micro-investing and started very small ($5). And while it may seem silly, investing even a small amount of money on a regular basis can have an enormous impact on your future (just look up what 'compound interest' can do for you).

For now, my goal is to buy and hold exchange traded funds (ETFs) long term and am aiming to achieve financial freedom within the next 25 years! (Psst, there are index funds and ETFs that reflect the entire stock market or the S&P 500, among numerous others.)

Investing is about far more than just numbers to me, but about giving my future family financial security. If it is something you are interested in looking into, I suggest doing so!

Books I've Been Loving

Money habits

Atomic Habits by James Clear
$1000 Project by Canna Campbell
The Barefoot Investor by Scott Pape
Broke Millenial Talks Money by Erin Lowry
Get Good with Money by Tiffany Aliche
You Are a Badass at Making Money by Jen Sincero

Investing

Mindful money by Canna Campbell
The Easy Way to Invest by Josh Gausden
The Intelligent Investor by Benjamin Graham

Property

Smashed Avocado by Nicole Haddow

Melissa Cristina Marquez