Living On a Budget?

[Carly Rae Jepsen]

Hi everyone--sorry if this is the wrong section; I have a question about what life is like on a stipend for graduate students. From what I've seen, grad schools adjust their budget depending on the cost of living in the area, but I wanted to ask what life is like on a grad student's budget. I received an offer with health insurance and a 16,000 yearly stipend, which according to my calculations 2/3 of that would go to rent and utilities (it's not an expensive area). 

Is 2/3 of your stipend going towards rent and utilities common for grad students? What adjustments have you made since starting grad school?

In undergraduate I had financial aid that went towards campus housing and cafeteria food ,so I'm unexperienced and worried about adjusting to paying rent, utilities and other expenses on my own. Just looking for any advice and general comments that will help me plan things for August 

[fuzzylogician]

I strongly recommend that you ask to be put in touch with current students in your prospective program. Finances can vary greatly across programs and locations, and the best information will come from people who are receiving a similar stipend to yours in the same location. 

[TakeruK]

Second the above advice to talk with current grad students in the program to see what their life and expenses are like. Remember that some people may have different expenses, income sources or savings. Sometimes it's a tricky topic to raise, but when I was a student I tried to be as direct and honest about my personal finances as possible, even though these topics are generally "socially taboo". But sometimes people at the same school with the same stipend have a wide range of living conditions because of income sources like a partner that earns a lot that supports them, family that supports them, saved income from a previous career, as well as extra expenses like supporting a family, sending money home to their family in a foreign country, paying off previous loans etc. Most students I met during visits were honest with me about how they live and I have tried to do the same for students that visited my program. Sometimes you have to ask directly and it might be awkward, but at the same time, it can be an important piece of information about the next 5 years of your life.

That said, our grad student government did survey some schools around the country to find out what fraction of students stipends are going towards rent/housing. Our motivations were to petition our school to raise the minimum stipend because stipends have been going up at a slow rate ($1000 every 2 years) while rent increased much more in the last 4 years (average rent went up by $250/month from 2012 to 2016, which is $4000 per year more). We ended up getting a $2000 increase in a year where we would normally get a $1000 increase. So that was nice, but still have not yet covered the gap.

Through this survey, we found that many students in similar grad programs to ours spent around 30% to 50% of their stipend on rent. So I think 2/3rds of your stipend on rent is pretty excessive. You probably know that the "recommended" amount is 1/3 of your income on rent, but to be honest, unless you are in a low cost of living area, this is not very realistic for grad students living on their own. Where I did grad school, the typical one bedroom rent is about 2/3 of the stipend. Most grad students find a 2 bedroom place and share with another student and this drops the average cost to around 35% of stipend. Grad students who can actually get down to the 1/3 recommendation do so by sharing a house with 3-5 others, or they might be couples (with two incomes) sharing a 1 bedroom, or they were able to get subsidized student housing (approx. half the market rate).

For students in my field, life on a grad student stipend is usually described as "enough to pay the bills but not much more". For a single student with no extra expenses (healthy, not supporting a family, no loans to repay), I think a student in my field should be able to end up a few thousand dollars per year after necessary minimum expenses if they share rent and cook their own food. Everything that is "discretionary" spending comes out of this small sum, e.g. eating out, taking trips, visiting home, cell phone bills, buying a car or car maintenance, etc. and whatever is left goes into savings. Again, this is for the typical student in my field as stipends do depend a lot on field, and it's not counting extremely low/high cost of living areas.

Finally, one note about budgeting/comparing stipends. A lot of people want to take the total stipend value and multiply or divide it by some cost of living factor. e.g. They might compare a $16,000 stipend in one area vs. a $18,000 stipend in an area that costs 25% more and say well, that $18,000 stipend has the buying power of only $14,400 when compared to the $16,000 area. But I don't think this is a fair way to compare stipends unless you happen to also want to stay in the area you do grad school forever (which is rarely the case). In the end, in terms of future financial stability, the only number that matters is how much money you have left (or owe) once you graduate, since ending up with $2,500 (or whatever number) in the bank after graduation is worth the same whether that was in NYC or Laramie, WY (just example cities).

So, instead, I think the better way is to take each stipend offer you have and subtract out all the costs you know you will have to pay. Make sure this is still a positive number. I think it's pretty safe to directly compare the "discretionary income" amount because to be honest, it's usually quite low so small differences like how much a bottle of wine costs in one place compared to another is not going to make a big difference. But if you want, you can also subtract out the amount of discretionary spending you would like to spend in order to achieve the quality of life you want. Hopefully this is still a positive number. This number is basically how much you can save each year (or how much you will go into debt each year). You can definitely directly compare this number since its spending power has nothing to do with where you do grad school.

[SerenityNow!]

The advice above on budgeting is great and something I wish I had considered while doing my masters degree!

I had a stipend while earning my masters degree and earned essentially exactly the amount of money I needed to live decently in the small city I lived in. With decently being defined as no problem paying rent and buying food with a little left over to occasionally go out to dinner/drinks and maybe one relatively cheap vacation a year (e.g. sharing an airbnb with 6 people for a few days in NOLA) but definitely a big downgrade from the life I was living while I was working!

Two things I found helpful when transitioning to living on a budget:

1) track your expenses in June/July - yes the cost of food/rent/everything is location dependent BUT doing that told me I was spending too much on clothes and cocktails and would probably need to cut back when I got to school, instead of getting a rude awakening that some people get towards the end of their first month at school. It will also help you build the habit of tracking your expenses and figure out whether you like doing it manually, in excel, mint, or another budgeting app so you don't have that added stress right when you are starting school.

2) This one is somewhat unpopular/controversial but in my second year of my masters degree I got a 2nd job. I was already a TA and working in a lab but I got a job one weekend day a week working at a coffee shop as a barista. It is a super easy and mindless job and I made an extra ~4K which doesn't on its face value seem like a lot but when you are earning 16K it is essentially a 25% increase which is huge! Having that extra 4K let me put more money in savings, go to on an international vacation, and generally made it so I really never had to worry about money. I know most people don't get other outside jobs but I really enjoyed doing something other than graduate school, it helped me meet people outside of my program, and I think gave me a much more balanced attitude towards school. I also had friends who were spin instructors and other similar jobs on the side. With that being said, I did this during a masters program not a PhD program so take this with a grain of salt.

[Carly Rae Jepsen]

Thank you so much all for your advice! It really helps puts things into perspective. The task of figuring out finances at first seems daunting, to say the least, so I really needed to talk about this.

[rising_star]

Definitely talk to other grad students. Find out if there are any fees you'll need to pay out of that stipend. When I was applying, I found that fees ranged from $25/semester to $800/semester. That's a huge difference and can really affect how much of your stipend you have to live on.

What I found is that average rent isn't necessarily what you will (want) to pay. You may live with a roommate to save money. You may be able to find cheaper than average housing (I certainly wasn't paying the average rent one could find online when I was in my PhD, even when I lived alone). Similar things apply for utilities. I mean, I don't mind being warm-ish so I would set the a/c to 80F in the summer, which saves a bunch of money when you're living in the southern US, just to give one example.

I worked a second, off-campus job during my MA, which gave me money to travel to see friends, to pay for a car, etc. During my PhD, I tutored in the on-campus tutoring center (pay was like $10/hour but the scheduling flexibility was awesome). I also taught teach summer courses for extra income. It's worth investigating whether that $16K/year is over 9 months or over 12 months. If it's for 9 months, you should ask current grad students and the program about the opportunities available in the summer to earn additional income (which could be by picking up TA/RA work, dogsitting/housesitting for professors, etc.). Another option, if you're on a 9 month contract, would be to consider off-campus summer employment, e.g., a paid internship.

 

[Glasperlenspieler]

If you're asking about Chapel Hill (which I'm guessing you are from your signature), then one certainly shouldn't need to pay $10,000 per year for rent and utilities assuming you're willing to share an apartment/house with one or more other people.

[Elephas]

I've not started graduate school nor have I ever lived on "a budget" specifically but I Currently have a spreadsheet that I'm using to detail everything with projected costs and using it to compare stipends vs cost of living in the town and actually going on appt websites to do pricing in the local communities etc. 

I started with the "basic college budget" from excel and customized it with these headings(many are blank but i left them just as ideas of things to track: 

Income:  Stipend , After-tax wages from a job, Financial help from family, Fellowship ,
Other (child support, public assistance, gifts, etc.)
Monthly Expense:

"Room and Board":Rent, mortgage, or dorm room , Food (groceries or meal plan) , Utilities (heat, water, electricity)

Tuition & Fees:Tuition you pay, Fees you pay

Books & Supplies: Textbooks, School supplies

Transportation: Gas, maintenance, Vehicle payment, Transit fares, Travel at holidays

Discretionary: Savings, Retirement, Internet, cable , Credit Card, Snacks, dining out, Clothes, Entertainment (movies, dates, concerts)

Other Expenses:Insurance (car, health, renter's), Loans, Security System