I have some regrets about my spending in grad school. Even with a tuition waiver and stipend, I took out tens of thousands of dollars in student loans. Six months after graduating my repayments started, and my loan payments were as much as my rent! I’ve always been frugal, but looking back there were many things I could have done differently to save money in grad school.
Congratulations! You’ve been accepted into a graduate program. Don’t worry, that “imposter syndrome” is normal. Everyone else in your program is also thinking that they got in by mistake and that others will soon realize they don’t have a clue what they’re doing. This feeling will hopefully go away in 20 years or so when you reach mid-career.
As if starting grad school isn’t stressful enough, you will likely have to move away for your program. You’ll need money for moving costs in addition to buying textbooks and other school-related materials.
Make wise financial decisions during grad school. You could be paying for them for years! I know people who are retired and still paying for their Master’s degree.
Here are some of the things I did right and things I regret
No private loans. I only took out Federal student loans.
Lived in a small inexpensive apartment. I wanted to live on the beach near friends, but living further away in a less expensive neighborhood really was the right choice.
Didn’t live alone. I was married, but I think that still counts as having a roommate.
Avoided credit card debt. We kept a monthly budget and did not spend more than we could afford each month.
Didn’t take vacations. We would go on day trips, stay with family, or would bring my husband with me if I attended a conference, but we did not go on “vacations.”
Shopping trips. We lived in a city where everyone was beautiful and dressed in the highest fashion. Although we are not fancy, even we got caught up in the lifestyle. Once a month, we would go out to lunch (including margaritas) and shopping for clothes and shoes.
I justified it by telling myself I needed a professional wardrobe, and that we were “saving” money by shopping at the Outlet mall. That’s all well and good, but we would spend over $200 a month shopping.
Cigarettes, Alcohol, and Caffeine. These often took the place of meals. But I could have save $100 or more a month (and possibly added years to my life) if I quit these unhealthy habits sooner.
Purchasing new vehicles. My husband and I both bought brand new cars when I was in grad school. They were more than my yearly stipend each!
Yes, our older vehicles were costing us a lot in repairs. But the repair costs were still less than the cost of new vehicles!
Cashing out 401k. When had to move for internship and we both went months without pay (and I was pregnant!) so life got real, quick. To help ends meet, my husband cashed out his retirement. We paid penalty fees and taxes on the money.
If we didn’t have car payments, maybe we could have saved enough to have made it through those months.
Live within your Stipend, not your Loans
If you receive a stipend, you will likely not be permitted to have a job outside your Research Assistant (RA) or Teaching Assistant (TA) position. Do everything you can to live within that stipend. Take on roommates, avoid a car payment at all costs, eat inexpensive and healthful meals at home (e.g., nuts, grains, fruits, veggies).
I knew I would have to start repaying the loans when I was on post-doc. But I had no idea how much my post-doc salary would be (or how much the licensure process would cost). I also had no clue that the payments would be as much as my rent.
If you are having difficulty getting by on your grad school stipend, what are the reasons?
Housing: Do you live in an area with a ridiculous housing market and rents have skyrocketed? If so, seriously consider getting a roommate (or two or three). Aim for rent to be <30% of your annual income.
Transportation: Do you own more car than you can afford? If so, consider selling it (even if you have to pay to get out from under it). Aim for car value to be <50% of your annual income.
Food: Are your food expenses taking a big part of your budget? If so, this is a really easy category to cut back on. Some families manage on $100 per person per month for food, but you don’t have to be that extreme to still save money.
Extras: Do you have debt but continue to engage in “luxuries” (e.g., salon services, gym memberships, gourmet coffee). If so, remind yourself that you have negative net worth and look for free or inexpensive alternatives.
Remember, “I can charge it” isn’t the same as “I can afford it.”
If you Don’t Receive a Stipend
If you do not receive a stipend, that’s even more reason to live as inexpensively as you can.
Would you take out a 20-year loan to join a gym? Get a manicure? Buy gourmet coffee? That’s essentially what you’re doing when you buy such luxuries while living off student loan money. Over the course of your loan, you end up paying a lot more than $3.50 for that coffee!
Keep your costs as low as possible.
There are endless tips for cutting costs. Before setting up internet at home, see how long you can go using office, library and phone’s hot spot for internet. Before signing up for streaming channels, try free services or using an HD antenna. Invite your new classmates over to your house for a pot-luck or drinks rather than going to a restaurant or bar.
Read more about my tips for saving money on
Find some way to earn money
Even if you are not permitted to work, there are still ways to earn money.
What possessions can you sell?
- Remember that you will have to pack up and move these things for grad school, internship, post-doc, and your job.
- Save yourself the stress and earn some money by selling them now!
What services can you offer?
- Will your class schedule allow you to walk dogs between classes?
- Can you house sit or pet sit on weekends?
- Can you tutor (especially during the summer when children are out of school and tutors are in high demand)?
- Can you teach piano or guitar or yoga classes?
- Can you record yourself explaining concepts in your area of expertise and post them on-line?
- Can you sell your crafts or baked goods?
- Can you negotiate with your roommates for lower rent if you do the cleaning or cooking?
Take Home Message
Many people survive on $20,000 a year. Why couldn’t I?
Because when I knew I could take out a loan, I didn’t feel I had to live on $20,000!
But student loans are not free money. You will be repaying back much more than you take out, and at a time when you are not making much money.
Start learning now how to live within your means. Do whatever you can to minimize the amount of debt you incur. Your future self will thank you!
If you are pursuing a psychology degree, see the APA’s website for Scholarships, Grants, and Awards
For more from this series on saving money on higher education costs, see
What tips do you have for saving money in graduate school?