Money matters: Part 1
Making the most of your stipend
Financial stress is often assumed to be an unavoidable part of the graduate student experience. But does it have to be that way? With a bit of planning and discipline, I have been able to save up enough money to pay off my undergraduate student loans, fund a retirement account, buy a new phone, and adopt a cat while maintaining a relatively average lifestyle for a grad student. I did not work in industry or have significant savings before starting grad school at MIT three years ago. I do not have kids or a car, and I share a one-bedroom apartment in a nice neighborhood and split utilities with my partner. I shop, eat, out, and travel on a regular basis, and I save around $10,000 per year. The biggest key to my financial well-being is budgeting.
For the 2023 – 2024 academic year, MIT’s graduate student stipends start at $3,649 per month, or $43,787 per year. We are taxed at an average rate around 14% between the federal and state governments, leaving us with at least $3,138 every month. This goes up to around $3,436 if you are a doctoral student. If you are not already tracking your spending or budgeting, the most important thing that you can do with your money is to pay attention to where it is going. You can do this by noting all of your purchases for a month in an Excel sheet or using one of many budgeting apps (Every Dollar and Rocket Money are two free options). At the end of the month, reflect on what you spent your money on and whether you feel that it was well-spent. Armed with these insights, create a budget. You can find lots of different rules-of-thumb and guidelines for budgets online, but at the end of the day, budgets are very personal and will look different for everyone.
One rule-of-thumb suggests allocating 50% of your income to needs (unavoidable bills, like rent, utilities, and groceries), 30% to wants, and 20% to savings. Particularly for us, as graduate students in a high cost-of-living area, it often makes sense to allocate more of our money toward our needs (unavoidable bills, like rent, utilities, and groceries) than the common rules of thumb would suggest. I personally spend about 57% of my post-tax income on needs and 17% on wants, leaving 26% for savings. To illustrate how it’s possible to save over $800 every month on a doctoral RA stipend, my budget is shown below (note that I have a roommate with whom I split rent and utilities):
| Item | Cost ($) |
| Rent | 1400 |
| Renter’s insurance | 5 |
| Internet | 25 |
| Electric | 25 |
| Gas | 15 |
| Phone | 25 |
| Groceries | 250 |
| Restaurants/bars | 200 |
| Entertainment | 40 |
| Shopping/gifts | 150 |
| Travel (average) | 150 |
| Transportation | 40 |
| Beauty | 50 |
| Medical | 100 |
| Misc/unexpected | 50 |
| Cat | 30 |
| Total | 2555 |
| Post-tax income (doctoral) | 3436 |
| Monthly savings | 881 |
Once you have an understanding of your spending and an outline of your budget, you can look for ways to reduce your spending if you are not currently meeting your financial goals.
I maintain a tight restaurant budget by trying to cook as many of my meals as possible at home (restaurants in the Boston area are expensive!). I do most of my grocery shopping at Daily Table, a discount non-profit grocery store in Central Square, and an Aldi in the suburbs, which are both very affordable. Other students save by sharing Costco memberships. I prepare food in bulk on the weekends and bring lunch in every day. I prepare cold brew coffee at home or make it in my office’s kitchen.
I shop around to find the best deals on services like my home WiFi, renter’s insurance, and cell service. Finding an apartment with some utilities included in rent (mine includes heat and hot water) can make a big difference in your monthly bills.
MIT also offers lots of resources and opportunities for saving on things like food, transportation, entertainment, and health and wellness. It is not typically hard to find an event with free meals on campus on any given day. MITAC offers discounted tickets to a variety of local museums, sporting events, tours, and even the symphony. There is plenty of entertainment to be had through sports, clubs, and events for free on campus, too. Be sure to take advantage of all of the grad student benefits available, such as 70% discounted T passes. Students on MIT’s health insurance plan (included in your appointment) can get free therapy and wellness coaching and acupuncture for $10 per session.
In summary, there are many ways to tighten your budget if you are resourceful and take a bit of time to seek out savings! Check out part 2 of this series to learn more about how to make the best use of the money you save (and spend) by using credit and different savings and investment vehicles.
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