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Tips for Transitioning to a Low-Budget Grad Student Lifestyle

Graduate student studying.
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For many students, getting through graduate school requires saying goodbye to luxuries like Netflix and Starbucks and making the transition to a low-budget lifestyle. Graduate school, in other words, can be a major financial reality check.

Consider this:

According to Glassdoor, the average base pay for graduate students in the U.S. is only $29,964. Student instructors—meaning those who teach instead of research—earn even less, bringing home an average base pay of just $22,383. In many cities, this is not enough to get by.

Stanford University, for instance, estimates that students living on campus year-round should expect to pay $39,828 annually on living expenses alone while Yale tells graduate students to budget $29,104. This accounts for rent, food, personal items, local transportation, books and supplies and medical insurance and does not include tuition.

Students living off campus, it should be noted, can usually expect to pay even more on living expenses. Stanford tells its off-campus graduate students to budget an additional 10 to 40 percent.

So as you can see, it’s possible that your living expenses will be more than your annual income in graduate school— meaning you may need to get creative with your budget in order to get by.

Here are some practical tips that you can use to ease into this new chapter in your life:

Slash your entertainment budget

Most workers are advised to spend about 10 percent of monthly net pay (take home pay after taxes and deductions) on entertainment like going out to eat or to see a movie. For a graduate student, this 10 percent may be too much. Research, however, shows that millennials typically spend 26.50 percent of their money on entertainment—more than necessities like grocery items (24.93 percent), credit card interest (17.36 percent) and cell phone expenses (16.71 percent).

Be strategic about how you spend your money in your spare time, so that you don’t wind up blowing through your budget early in the month.

Pro tip: Stock up on free shows, movies and music at your local library. There is no reason to pay for media when you can get it for free with a library card.

Think before you eat

How much should you budget for food as a graduate student? The exact figure will vary depending on how much you typically eat where you live. But according to the USDA, the minimum that a single person can expect to spend on food every month in the U.S. is $197. For two people, this jumps to $384.

Remember, though, that the better you eat, the better you will feel. And the better you feel, the more effective you will be in school. So don’t be too frugal on food, or you will only make yourself miserable. You can save money by shopping for groceries instead of eating out, using coupons and resisting the urge to buy unhealthy and expensive snack foods throughout the week. Replace snack foods with inexpensive alternatives that will fill you up and keep you from getting hungry between meals.

Pro tip: Scour the Internet for local deals to save money on food and restaurants. Apps like Happy Hour Finder, for instance, can help you discover free food and cheap drinks in your area.  Local businesses may also offer discounts for students.

Ditch your car

Even if you have a car, it may not be the best idea to bring it with you to school. Gas, maintenance and parking can cost hundreds of dollars every month. Plus, you will be more tempted to take road trips and home visits which will cost you even more money.

Relying on taxis or ride-sharing services, for that matter, can also add up and eat into your budget so use them sparingly. To get around campus, consider buying a cheap bicycle. Or, learn to love walking. The exercise will feel great, you will make friends in transit, and it’s much more affordable.

Pro tip: If you do bring your car to campus, make sure to check with your school to see if you are eligible for auto insurance discounts.

Start carrying cash

Consider avoiding credit and debit cards for small purchases, and start carrying cash. First and foremost, you’ll avoid going deeper into debt—an issue that, if left unchecked, could prevent you from getting ahead after you graduate. Plus, you may think harder about the purchases you are making. If you do carry plastic, make sure it’s a card with a low interest rate. This way, if an emergency arises, such as a car repair or unexpected expense, you can pay the balance in full. Plus, many cards allow you the opportunity to earn points towards rewards.

“Plastic doesn’t hurt like cash,” explains financial expert Dave Ramsey. “Once you’ve spent some quality time with Benjamin Franklin, you’ll think twice before sending him to a cold, hard cash-register coffin. To stretch his life a bit, you’ll shop around, look for deals, and naturally spend less.”

Pro tip: Start an “impulse” fund. Every time you catch yourself wasting money, deposit money into a high-yield savings account. Then, you can look back at the end of the month and see how much you saved. You will be surprised how quickly the savings will pile up.

Remember: Graduate school is expensive, but it’s not forever. You are making a short-term financial sacrifice so that you can earn more income over the course of your lifetime. Stay positive, get creative and keep these tips in mind to save money.

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CUNA 2023 diamond award trophy icon

CUNA 2023 Diamond Award Winner

Financial Education

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