Category - Advice

Common grad student spending pitfalls and how to correct them

grad student finances

Grad school is a financially challenging time of life for virtually everyone, even if you’re being paid for your role as a student. Often, grad students find themselves overspending and even living beyond their means, but they have little knowledge of how to correct the situation. In this post, I will detail the most common spending pitfalls grad students encounter when managing their stipends.

Common spending pitfalls

While each of these potential pitfalls can lead to massive overspending, I have also included tips and strategies to help you avoid or reverse the negative consequences. The ultimate goal should be to reduce needless spending in order to leave more cash flow available for what is most important to you. This is different for each individual grad student. The advice here may not all apply to every grad student, since each situation is different, and each graduate student has their own set of needs and wants.

Living alone

Many grad students make the mistake of living in studio or one-bedroom apartments by themselves when they truly can’t afford the rent on their own. Instead, they should rent larger homes to share with one or more roommates (generally, sharing a bedroom is not necessary, but rather sharing the kitchen, living area, and possibly bathroom). If your rent to live on your own is more than 30% of your gross income per month, it’s generally regarded as too expensive. The best value in housing varies by city, but a single-family home that you share with multiple other people can often give you the most square footage for the least amount of money. If you find yourself in a lease that is too expensive, you can move in with a roommate at the end of the lease or sublet your place to move sooner (if permitted by your landlord).

Having a large car loan

A person living on a low stipend may think that the only way she can afford a car is through debt, not realizing that having a low income is all the more reason to avoid taking on debt or get out of it quickly. Plus, what may seem like an affordable monthly payment at the start of grad school may become far too high later in grad school when you are more familiar with your yearly expenses.

Owning a car is a very expensive undertaking, debt or not, so if it is possible in your city, you should consider living car-free. This may involve choosing a home in close proximity to your university and/or public transit and perhaps buying a bicycle or another lower-cost form of transportation. You can always rent a car when necessary, such as through Zipcar or another car sharing service. (Hint: Look to the solutions that first-year international students who don’t yet have US driver licenses have found.)

If you do choose to buy a car, pay for it up front if you can. This will help you limit the purchase price of the car to what you can truly afford.

I was financially unprepared to buy a car when I started grad school, yet one was more or less required for my city at that time. I chose to take out a car loan, not fully understanding at that time the financial implications of my choice. What I’m glad I did with respect to that car, and what I suggest that you do as well, was to:

  • buy an up-front inexpensive vehicle (in my case for $4,500)
  • buy a long-term inexpensive vehicle (i.e., reliable, high gas mileage, low insurance cost)
  • put down as much money as I reasonably could
  • shop around for loan terms to get the best interest rate possible
  • pay off the car ahead of schedule

Taking out a car loan may be a necessity in your financial life, but an expensive car is a luxury. “Act your wage” by driving an inexpensive vehicle during grad school, and upgrade when you can pay for a nicer car without debt. Selling an expensive car is a big undertaking, but one your wallet will thank you for each month for the rest of grad school.

Convenience food

Perhaps one of these scenarios sounds familiar to you:

  1. You wake up too late to pack your lunch before class, so you decide to go to the cafeteria instead.
  2. Your classmates agree to meet up in the evening to study together, but you didn’t bring dinner to campus. You pick up take-out from an on-campus vendor on your way to meet them.
  3. You had a long day in the lab and just don’t have the energy to cook dinner when you get home. You grab a frozen dinner or some pre-prepared refrigerated food and zap it in the microwave.

I found myself in each of these situations numerous times early on in grad school, and they lead to radical overspending on food. One of the reasons I wanted to break this cycle was because I wasn’t getting any enjoyment or even saving time from eating all this convenience food (and it’s also quite unhealthy!). Pre-prepared meals from the grocery store and cafeteria/restaurant food can easily cost several times more per meal than food you prepare yourself.

One of the best investments of time you can make toward improving your finances and your physical health is to learn to cook – or, as I prefer to say, to prepare your own food, as cooking is often not required. Instead of falling into a reactionary cycle of being caught without food ready, take the time when you have it available to prepare several meals at once. Expect that you will eat lunch on campus every day and breakfast or dinner some days; bring several meals with you to school on Monday and leave them in your office fridge for the week to eat as needed, and bring in more when you run low. Keep homemade dinners in your refrigerator to eat when you get home, instead of requiring yourself to cook after work each night. Batch cooking and meal planning can be huge time- and money-savers in your food budget.

Failing to track spending

Tracking your spending is often one of the most eye-opening experiences one can have with respect to personal finance (another is understanding the power of compound interest). When you start tracking your spending, you are almost certain to discover that you are using your money in ways you did not expect or remember. The simple act of tracking itself is enough to change spending behaviors, even independent of budgeting. Even if you aren’t ready to start budgeting right now, tracking your spending will also give you data to work with when you do decide to start, making the process much easier than if you went in blind.

With all the great upsides of tracking your spending, it is surprisingly easy to get started and can take you as little as a few minutes each month to maintain. All you have to do to automatically track your spending is to link your checking, savings, and credit card accounts to a piece of tracking software of your choice, such as Mint, You Need a Budget, Mvelopes, or GoodBudget. You will likely need to spend a few minutes in the first few months ‘teaching’ the program how to categorize your expenses, but it can remember your corrections. If you prefer manual tracking to automatic tracking, you can easily implement a similar system with paper and pen, Excel, Pocket Expense, or Every Dollar.

Not preparing for irregular expenses

Grad students can often be blindsided by irregular expenses, which can result in stress and possibly debt. In comparison with the average person, they may experience a perfect storm of:

  • higher irregular school-related expenses
  • less familiarity with budgeting and planning, and/or
  • lower discretionary cash flow.

Irregular expenses come up once or a few times per year and are more or less predictable. Examples include school fees, travel, car-related expenses, medical expenses, entertainment, conference expenses, insurance premiums, housing and utility deposits, and shopping. Sometimes an individual irregular expense will overwhelm the available cash flow in a given month, or several smaller ones will hit in the same month. The student may be left scrambling to pay for the expense by limiting cash flow in other areas or putting the expense on a credit card and may ultimately miss some opportunities.

The best way to weather irregular expenses is to have savings on hand to use for the expense, which requires building up that savings in advance. An easy system to help with these expenses is to use a separate savings account with an automatic transfer each month from checking to savings to build up the balance. When you incur an irregular expense that you anticipated, simply transfer the appropriate amount of money out of that account to pay for the expense.

Using this type of system really helped take the stress out of my month-to-month money management, and I even built up a nice cushion to help my transition out of grad school by over-estimating my savings needs for irregular expenses.

Not caring

The biggest financial mistake a grad student receiving a stipend can make is truly just to ignore her finances or not care about money at all. This is a very tempting approach as it’s easy to feel discouraged by your low income or think that your finances in grad school don’t matter in light of your expected higher income in a few years. However, just by putting a little energy into your finances, you can develop positive habits, align your money with your values, build a safety net, vastly increase your net worth in the future, and lower your stress. Your future self will thank you for taking action now!


Avoiding these common spending pitfalls will enable you to achieve financial success during grad school, especially if you pair them with positive measures such as budgeting and saving. There’s no shame in being stuck in one of these pitfalls right now; grad school is a learning and growing process in many ways, and you have plenty of time to make the necessary course corrections so that you can build wealth during grad school and after.

[Photo by Flickr user MIT GSC, used under CC licensing]

Getting into grad school with low grades

university building

You’re not the first person to have made mistakes during your undergraduate college years. You were young! Maybe the freedom you enjoyed by moving out of your parents’ home for the first time was too much for your younger self to handle responsibly. Those were some great parties though. Now that you’re older and more responsible, you understand things more clearly. Hindsight is 20/20.

During your undergraduate studies, for whatever reason, your GPA suffered. Now, as a responsible adult with your eyes set on a graduate degree, how are you going get accepted to grad school despite your low GPA? Breaking into your undergraduate school’s records office to destroy the paper trail, or hacking into their computers is probably not the way you want to go. So what are your options? Read More

Guide to building your own website

If you have already read my post about Why you need your own website, then you already know the advantages of having your own website as a graduate student. So, let’s get started in building your online presence.

This guide is going to take you through the process of setting up your website from start to finish. I’ve included screenshots and detailed instructions to ensure this is the ultimate guide to building your own website. Read More

Top ten tips to triumph at grad school

Why is it that some people seem to excel at grad school and others struggle? Some grad students seem to have it together. They enjoy coursework, ace their prelims/qualifying exams, write great dissertation proposals, have few (or no) mishaps with data collection or analysis, writing-up is a breeze, and they successfully defend within four years. For others, however, the journey is marked by constant twists, turns, and bumps along the way. While no two journeys through grad school are the same, there are some key strategies that you can employ to help you be successful. Read More

How to ask for a reference letter


There will be a few instances, maybe many, during your time as a graduate student when you will need a letter of reference from your supervisor or another professor. For example, some scholarship applications, award nominations, grant applications, and even some job applications will require you to include a reference letter from a faculty member. Or, to nominate yourself for a position on a committee within your department or somewhere else on campus, you will often need to submit a reference letter with your application. If you are applying to a PhD program, or if you are already a PhD student and you are applying for postdoc positions or some other academic appointment, you will definitely need reference letters.

So how do you go about asking for a letter of reference? Who should you ask and how should you ask them?

Read More

Writing a successful grant proposal

grad student

Fellowships, grants, and scholarships are the essential lifeblood of academia. In addition to helping achieve your immediate goal of securing funding for your thesis or dissertation, they enhance your – and your project’s – scholarly credibility in the eyes of the wider academic community.

However, major awards offered by prestigious institutions like Fulbright, the Social Science Research Council (SSRC), and the American Council of Learned Societies (ACLS) are extremely competitive. These groups receive thousands of applications each year and only a handful of those ever make it past the preliminary selection round, let alone result in an award offer. Even smaller organizations such as the Central European History Society or the Smith Richardson Foundation, for example, attract dozens of applicants for a relatively limited number of grants or fellowships.

Unfortunately, there is no “winning formula” for grant writing or fellowship applications; the entire process is more of an art than a science. Still, there are a number of steps you can take to ensure that you’re putting the strongest proposal possible forward and increase the likelihood that your project will be selected for an award. Read More

Why you need your own website

Get A Personal Website

You may not have thought about it before, but having your own website as a graduate student might be your most important tool for showcasing… well, you. We all know that every grad student needs a CV. CV’s are important to describe who you are, your qualifications, your research and teaching experience, and your publication history, for example (for more about CV’s, please see my Guide for creating a CV/Resume). They are immensely important documents for graduate students, but they have some major limitations.

Essentially, no one can find your CV or read it unless you email it to them directly.  For a graduate student trying to get their name out there, a CV on its own limits your audience to almost no one. Additionally, your CV is a static document. As soon as you gain new experiences and accomplishments (which grad students do continually), the CV that you sent to people earlier no longer represents your complete picture.

What’s the solution? Read More

Attending conference sessions

In most academic disciplines, graduate students have quite a few opportunities and choices of conferences to attend. As a graduate students, attending conferences is important to network within your discipline’s scholarly community. Every field has its huge national and international flagship conferences as well as smaller regional or sub-discipline conferences. My advice is to attend various conferences of different sizes and scope, as each has its own benefits to offer you as an emerging scholar or practitioner in your field. Regardless of the type or size of conference you attend, there are some basic strategies to keep in mind to make the most of your experience. In this post I am going to outline some of the key strategies for attending conference sessions. You should also be sure to check out the posts about delivering a conference presentation, networking at conferences, and your conference travel experience. Read More

Taking online classes as a graduate student


Online education isn’t going away. It’s everywhere, and entire universities now exist solely in an online environment. Public and private brick-and-mortar universities are devoting time, money, and resources to expanding and promoting their distance learning courses. The ultimate goal: Making post-secondary education more accessible than ever. For undergraduates, this option has existed for a while. However, some schools offer online classes for graduate students, as well, knowing that this is a group more likely to need the flexibility from their continued studies as they try to navigate both an academic and professional world. But are online worth the time and energy required to complete them? Read More