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College Budgeting 101: How to Spend Less in Grad School

Learning to budget well in college and grad school sets you up for financial success in the post-grad world. This guide will cover how to budget for graduate school from the costs associated with your degree to your daily expenses.

Author: Shannon Lee

Editor: Staff Editor

A young woman with curly hair, wearing glasses and a pink shirt, works intently on a laptop in a modern office setting with books and a coffee cup nearby.

Ouch! With the average student loan debt at $37,338 per borrower, reducing expenses while in grad school is absolutely crucial. Since many funding sources only pay for direct schooling costs, students are often left looking for other ways to pay for daily living costs in addition to leftover school expenses not covered by financial aid. However, this financial strain can be seen an opportunity to learn core skills that will set you up for financial success in the post-grad world.

This guide shares some key tips and real-world strategies to help current and future graduate students learn to manage their money. It includes information on improving financial literacy, learning to budget, and employing creative ways to save money and live on less. Not only is learning to budget and save important for graduate school, but also for life long financial success. Stick with us, and we will show you how to get started.

Knowing the key terms and concepts identified below will make the rest of this guide easier to understand. Just like you learned core terminology in undergrad before moving into the details of your field, learning basic budgeting terminology will help you build a strong knowledge base for understanding larger concepts. This information will also benefit you after grad school when you’re budgeting and making larger financial decisions like planning for retirement, making investments, or buying a home.

Income refers to the money you earn or receive each month. For most people, income includes earnings from a job or an investment (e.g., interest or dividends). In the context of paying and budgeting for education, however, income is a broader term that generally includes any source of money that can help pay for the cost of education, including living expenses. Therefore, student loans, grants, scholarships, and cash in a savings account can be included as sources of income.

These are your monthly costs related to daily life. Expenses are categorized in two main ways. First, fixed expenses are relatively stable and consistent, while variable expenses can quickly and easily change. Common fixed expenses for a graduate student are tuition, rent/mortgage, and car payments. Common variable expenses include gas, entertainment, certain utilities, and food.

The second main way to categorize expenses is as necessary or unnecessary. Necessary expenses are essential and must always be paid. Unnecessary expenses are those most people can do without. There is some variation in how someone defines a necessary expense, though. For example, some consider health insurance a necessary expense while others consider it optional. Food costs, however, are necessary expenses for everyone. How you define an expense affects how you prioritize them when creating a budget.

This is money for true emergencies. Ideally, your emergency fund has enough cash to pay for all your necessary and unnecessary expenses for three to six months. This isn’t realistic for most students, so a more modest emergency fund with enough cash to pay for necessary expenses for one or two months or to cover the costs of an unexpected small emergency like a flat tire or a moderate illness will likely suffice. This might look like $1,000-$2,000 while you are in school but only you can determine the number that is right for you.

It’s important to know what your savings goal is and gradually work your way up to that number. Then after you graduate and begin working, you will want to reevaluate that number and try to increase it to 3-6 months of expenses so you have a safety net if needed. Additionally, one of the biggest missteps people make with emergency funds is that they use them for non-emergencies, so putting these funds in a high-yield savings account that is not attached to your checking account is one way that people avoid dipping into this account for everyday extras.

This is the amount of money you owe someone else. Common examples include mortgages, personal loans, school loans, car loans, and credit card balances carried over each month. Not all debts are the same, though. Like expenses, they should be prioritized based on necessity, interest rate, and amount. Prioritizing debt is important when creating a budget to decide how much money each month should go towards paying off each debt. For instance, you’d spend more money to pay off a debt with a high interest rate than one with a lower interest rate so prioritizing paying off higher interest debts first can reduce total money owed in the long run.

Before you can make any major decision on how to manage your income and expenses, you need a clear picture of what those are and how they affect your overall financial situation. The best way to do this is to create a budget. The following section explains this process and gives examples to help you better understand the concept, so you can create your own budget for graduate school.

The main sources of income for graduate students are wages and financial aid. Most income does not arrive monthly; instead, it comes in every two weeks, every quarter, or each semester. So, you’ll need to do some adjusting to determine your monthly income rate.

Also consider when the income comes in. For instance, if you received a $12,000 scholarship that pays $6,000 each semester, and each semester is four months, you might decide to divide the $12,000 over eight months, which is $1,500 per month, not $1,000 per month. However, you’ll need to account for the fact that during the summer months when you’re not in school, you won’t have this income.

Alternatively, you can apportion the scholarship money each month, even for months you’re not in school. This is simpler to organize and plan around, but it won’t accurately reflect your actual cash flow throughout the year.

Below is a table with examples of monthly income with amounts to illustrate this concept.

Source of Income Monthly Income Amount

Wages

$2,000

Financial aid grant and scholarship money

$1,000

Money from savings

$200

Income tax refund check

$20

Monthly Total

$3,220

Below is a chart of potential expenses a graduate student may encounter. Remember that the following expense amounts are just estimates, and, depending on where you live, they’ll be higher or lower. Also, some of these expenses are not necessary or may not apply to all students. For instance, if you’re still on your parent’s health insurance plan and they’re paying for your premiums, you won’t need to worry about that expense.

Depending on your approach to budgeting, money set aside for savings or to build an emergency fund could be an expense. This is not illustrated in the chart.

Monthly Expense (variable/fixed) Expense Amount

Rent (fixed)

$1,300

Books for school (variable)

$60

Internet (fixed)

$50

Cell phone (fixed)

$100

Utilities (variable)

$150

Cable TV/Netflix/Hulu (fixed)

$20

Car insurance premiums (fixed)

$60

Health insurance premiums (fixed)

$50

Car loan payment (fixed)

$300

Tuition (fixed)

$1,500

Groceries (variable)

$300

Eating out (variable)

$100

Personal care (variable)

$30

Entertainment (variable)

$100

Coffee (variable)

$50

Gym membership (fixed)

$40

Gifts for holidays/special occasions (variable)

$20

Gas (variable)

$60

Monthly Expense (variable/fixed) Total

$4,290

If your expenses exceed your income, you’ll need to figure out how to balance your budget. One way to do this is by increasing your income by working more or applying for more financial aid. In the above table, the hypothetical graduate student is already receiving some financial aid. This student should consider also applying for other forms of financial aid like student loans, a fellowship, or a graduate assistantship.

Another way to balance your budget is to reduce expenses, such as by cutting back on entertainment or other unnecessary costs. Don’t cut back too much on unnecessary expenses, however, since you’ll need some disposable spending to avoid financial burnout. When it comes to budgeting, the challenge is as much psychological as it is economic.

Total monthly income

$3,220

Total monthly expenses

$4,290

Net monthly cash flow

($1,070)

Graduate school expenses are unique because they depend on many variables, including the type of school, living arrangements, type of program (i.e., online versus on-campus), and personal habits. A good example is a computer, which almost all graduate students need. Do you have a family member or friend who will give you an older laptop for free, or do you need to buy a modern desktop with the most advanced hardware? This choice can easily result in a $2,000 difference in annual expenses. Below is a list of common expenses that most graduate students must pay for with the only variation being how much these expenses change per individual.

Unless you’re lucky enough to have a full-ride scholarship or someone paying for your education, tuition and fees will be one of your largest expenses. The amount depends on the school, but expect these costs to equal at least a few thousand dollars each semester. Keep in mind that even though most schools are transparent about tuition costs, identifying additional costs (e.g., activity fee, facilities fee, health fee, student services fee, learning fee, etc.) ahead of time can be difficult.

The cost of educational materials is highly variable depending on both the school and the program. These fees are often about $1,000 per semester. Some need to be paid each semester, but others, like the cost of a computer, are one-time purchases.

Living expenses can be grouped into one of three categories. First are off-campus living expenses where you live in an apartment or house by yourself. These involve paying rent or a mortgage each month in addition to utilities like gas, sewer, water, trash, electricity, internet, and video entertainment (e.g., cable, satellite, or streaming service). Many of these expenses vary each month, especially utilities. Second are off-campus living expenses where you live with someone else and share some or all the expenses. Third, you can live on campus. This is usually a single, fixed payment you make each semester.

Almost every student has transportation expenses, but the amounts vary tremendously. A student living in a big city who lives next to their school might have no transportation expenses beyond the occasional bus, subway, or rideshare fee. In this situation, transportation costs might be just $50 a month. Someone who owns a car, however, would have expenses like car insurance, vehicle maintenance, annual state registration/tax, gas, on-campus parking fees, and possibly a monthly car payment. In this situation, transportation costs could easily top $500 per month.

If you like to go out with friends, say to try new bars and restaurants, expect to pay more for entertainment than someone who stays in and watches movies. Other entertainment costs include hobbies and discretionary costs that may relate to other necessary expenses, like transportation. For instance, someone who loves to try new hiking trails may put significant additional miles on their vehicle when driving to new hiking locations.

Sticking to a budget is challenging and often requires cutting expenses. This might mean doing without certain luxuries or some forms of entertainment, or it might mean finding creative ways to find lower-cost substitutes for what you were previously paying for. For example, watch movies at home instead of going to the theater. Another strategy to help you stay within your budget is to increase your income. Sticking to a budget is often about working smarter instead of harder. The following list provides suggestions to help you be a smart budgeter while in graduate school.

Apply for as many scholarships as possible. Even when it seems like you have no chance, remember that there are many scholarships only a handful of people apply to. Increase your chances of getting an award by applying for scholarships with unique eligibility requirements, such as going to school in a particular state or studying in a certain academic field. Learn more about scholarships for graduate school through our OMD Scholarships Hub.

This arrangement can easily save you hundreds of dollars each month. If you’re living at home, your parents might not charge you rent; if they do, it will likely be below the market rate for your area. If you have a roommate, you can cut your utilities and rent by 50%.

Instead of going out or getting takeout, try cooking meals at home. Make the most of your time in the kitchen by planning meals a week or two in advance to take advantage of sales and by cooking in large batches to make meals for later. Meal planning apps like Mealime are great tools to help with this.

Most bookstores have a plethora of used textbooks for sale at a notable discount. To save even more, see if a friend has taken the class you’re enrolled in and will let you borrow their book for free. Another option is to rent the book from a bookstore, but be aware of what condition the book needs to be in when you return it. If you must buy new, look online where you’ll probably be able to find exactly what you need for less than at your campus bookstore.

Garage sales and thrift shops are great for finding anything you might need, especially furniture, clothing, and household goods, for literal pennies on the dollar compared to buying new. Many people consider it a badge of honor to say they picked up a great deal at a local thrift store.

Many people give away items they couldn’t or don’t want to take the time to sell, and they often leave them on the curb or at the end of the driveway. Many students also have stuff for free at the end of a semester when they’re moving out of their student apartments or dorms. Free doesn’t always mean low quality, either, so get creative with how you acquire what you need.

If you have friends with similar clothing styles and sizes as you, set up a clothing swap. Make it into a fun event where you and your friends get together for an evening of hanging out and trading articles of clothing.

Finding a new and inexpensive hobby is a fantastic way to save money on entertainment. Try something free and challenging like geocaching or rock climbing. Relive an older TV show on YouTube. Find a national or state park to explore. Most communities offer a good number of free events regularly.

If you live close to campus, consider biking or walking to class to save money on gas throughout the semester. As a bonus, you’ll also avoid the dreaded parking spot hunt just minutes before class is about to start.

There are plenty of ways to work out for free, both at home and in the community, especially if you already have workout equipment or can find them for affordable prices. Many YouTube channels and Instagram feeds offer great information on how to work out effectively and safely. Your school might also have a gym available to students for free.

Take your student ID wherever you go and ask about student discounts. Many stores and restaurants want to encourage local students to stop by, so they’ll offer decent discounts or student specials.

Take advantage of your on-campus and local library. You can usually check out the new releases and DVDs for free, and there might even be a book you need for a class that you can borrow. Many libraries also offer classes and fun events, so they are often great sources for low- or no-cost entertainment.

A tremendous benefit of our digital world is the many free resources available, including those related to budgeting and finances. The list of digital resources below includes those providing strategies, tools, and services that can replace or enhance what you’re already doing.

  • AnnualCreditReport.com

    Everyone is entitled to a free credit report each year from all three major credit reporting bureaus (i.e., TransUnion, Experian, and Equifax). This is an ideal way to monitor your credit.

  • Buddi

    Buddi is for Mac OS users who want a free program for budgeting and personal finance management. It’s specifically intended for those without a background in accounting or personal finance.

  • Compound Interest Calculator

    Whether you want to save money, invest, or pay off a debt that’s accruing interest, this tool helps you determine the effect compound interest has on your debt or return on investment.

  • EveryDollar

    Offered by Dave Ramsey, this well-known personal budget app works by using the zero-based budget method where every dollar you have coming in is accounted for and designated for spending or saving.

  • Fudget

    For those who spend more time on their smartphones or tablets as opposed to a laptop, there’s Fudget. This app, available on iOS and Android, is designed to help create a budget by keeping track of expenses and income.

  • Fund Analyzer

    One way to help pay for school is to invest any extra money into a mutual fund. Fund Analyzer from FINRA helps you compare thousands of mutual funds, especially in regard to management fees.

  • Goodbudget

    This tool is based on the envelope budgeting method where you allot a certain amount of money for specific expenses each month. It lets you sync and share your budget with others.

  • Google Sheets

    Google’s free spreadsheet software is available to anyone with an internet connection and compatible device. Helpful for creating a budget spreadsheet from scratch if you don’t want to use an app.

  • honeydue

    Honeydue is designed for couples and facilitates the sharing of financial information and goals.

  • Intuit Mint

    This is a leading personal finance app that makes it easier to understand your expenses, find ways to save money, and receive free credit monitoring.

  • Managing Your Money All-In-One for Dummies

    This book is a comprehensive source for all things relating to personal finance. Because it’s part of the “for Dummies” brand of books, you can probably find one at a thrift shop or used book store or available for checkout at your local library.

  • OpenOffice Calc

    This free spreadsheet software offers an alternative to Microsoft Office’s Excel for creating a basic budget.

  • Personal Capital

    This tool brings together all your accounts and gives you a free consultation with a financial advisor. Personal Capital’s primary mission is to help build wealth.

  • PocketGuard

    This personal finance app not only helps you keep track of your bills and incoming cash flow but also helps you manage your various financial accounts like credit cards and bank accounts.

  • SoFi Relay

    SoFi, well-known for loans and other debt products, provides this free app to help users watch how their money is spent and monitor their credit history.

  • Truebill

    Available on iOS and Android, this app helps identify costs and keep track of income. Its other unique features include tracking subscription services, breaking down expenses, and setting up automatic savings plans.

  • FredAmrein

    Fred Amrein is the founder/CEO of PayForED.com. He is a nationally recognized expert in the entire college funding and student loan repayment process. Fred’s unique approach helps students and parents envision the financial outcome of a college education. He brings together the financial aid process, college saving plans, educational tax strategies, student financing, and loan repayment options.

    Q. When working out a budget for grad school, what is the most common thing (or things) that students forget to include that could trip them up later?

    The biggest mistake is underestimating expenses such as repairs on their old car or what it costs to live in a specific area. The car breaks down or expenses are higher than expected. This puts additional pressure on the student.

    Additionally, another mistake students often make is taking the full amount of financial aid. Under the financial aid process, the student can borrow up to the full cost of attendance. This is the amount they can be approved for, but this does not mean they need to take it all. They need to consider only borrowing the amount they are comfortable repaying, and come up with a plan for covering they rest on their own.

    Q. What are some surprise expenses many grad students don’t consider until they are actually enrolled (and then have that “uh-oh” moment)?

    Medical coverage that can be included in the cost of attendance. Depending on the type of graduate program – supplies, computer, and project costs. Additionally, a stash fund in case of an emergency, such as needing to travel home on short notice or repairing a vehicle.

    Q. What are some things you would recommend to keep the cost of grad school as low as possible?

    Talk to students at the current program that you are planning to attend with the same economic situation. Use a cash budget process and eliminate all electronic payments at least for the initial 6 months. This will help you define your budget better and show you how you spend your money. It will require you to create a monthly budget of overall living expenses and give the student a weekly allowance. This way you can see what you spend. You can touch and see it every day.

    Investigate employment options and evaluate repayment options and loan forgiveness strategies. Financial aid offices and loan servicers may be limited to provide complete advice since they are unable to give personal financial and tax advice. With more borrowers using Income-Driven Repayment Plans (IDR), the student needs to have a better understanding of their financial outcome. Make sure to get more information on loan forgiveness rules before the debt is incurred. The rules are complicated and too many times the perception of the rules is not reality.

    Q. What are some of the best resources you would recommend for students who want to keep their grad school as affordable as they can?

    More schools offer financial literacy programs and services. That would be a good place to start for budgeting and basic financial planning. I also think you are focusing a lot on the cost factor which is directly related to the debt incurred, but if you have a plan for repayment and the career outcome can afford the debt then that should also be part of the plan. In that same breath, you need to be realistic in the career and salary outcome, especially just after graduation. Use the career center and department heads to find and confirm career options. This could include part-time work while in school, internships, and changes in demand.

    Q. Anything else you’d like to add about budgeting for grad school?

    Plan for the outcome both from a career and income level. Consider the PayForED In-College solution. It allows you to project your debt at graduation, estimate your repayment options and create a personal budget. Have a focus on the outcome at the initial stage, 5 years and 10 years. That needs to be updated annually and be realistic. It needs to have the flexibility for both controllable and uncontrollable events. This decision is one of the few large financial decisions that you make on your own. When you buy a car or a house, there is a third party that approves that loan. When funding your graduate school, the process is designed for access and not affordability. Make your decisions as the loan approver. What would you say if this was someone else coming to you to borrow the money? Would you invest in yourself if this was your money and not someone else’s? That is the reality check that needs to be ongoing.