How Much Money Should I Save in Grad School?

This content has been reviewed and edited by an Investment Advisor Representative working for Global Predictions, an SEC-registered Investment Advisor.

Grad school is full of opportunities, but let’s be real—it can be financially challenging. Between tuition, living costs, and trying to save, it’s easy to feel overwhelmed. The good news? With a bit of planning, you can manage your finances and even set some money aside. Let’s break it down together so you can navigate grad school with confidence, peace of mind, and improved well-being.

Key Takeaways

• Savings goals during grad school depend on your unique situation, but every little bit helps.
• Budgeting is key to juggling tuition, living expenses, and savings.
• Smart financial planning, like building an emergency fund or exploring part-time work, can make life easier.
• Financial stability can positively impact mental health, reducing stress during a busy academic journey.

Why Save During Grad School?

Saving money in grad school isn’t just about the future—it’s also about handling unexpected costs, reducing reliance on loans, and developing healthy financial habits. Plus, financial stability can directly contribute to better mental health by alleviating stress and anxiety.

Common Financial Challenges:

• Tuition and Fees: Scholarships or assistantships help, but tuition often takes a big chunk of your budget.
• Living Expenses: Rent, groceries, and utilities can quickly add up.
• Emergencies: Things like medical bills or car repairs can throw off your budget if you’re not prepared.

By saving regularly, you can reduce stress and focus on what matters most—your education and well-being.

Step 1: Calculate Your Monthly Expenses

Start by figuring out your essential expenses. These usually include:

• Housing: Rent or dorm costs.
• Utilities: Electricity, water, internet, and phone bills.
• Food: Groceries and the occasional takeout treat.
• Transportation: Public transit, gas, or car upkeep.
• Insurance: Health, car, and renter’s insurance.

Hypothetical Example Budget:

• Rent: $800
• Groceries: $300
• Utilities: $150
• Transportation: $100
• Miscellaneous: $150

Total Monthly Expenses: $1,500

‍Understanding your baseline helps you figure out how much you need to save for emergencies and future goals.

Step 2: Build an Emergency Fund

An emergency fund acts as a safety net. Aim to save at least one to three months’ worth of essential expenses. For example, if you spend $1,500 monthly, a three-month fund would be $4,500.

Tips for Building Your Fund:

• Set aside a little from every paycheck or stipend.
• Automate your savings to stay consistent.
• Consider small changes, like cooking at home or splitting rent, to free up extra cash for savings.

Step 3: Save for Long-Term Goals

Even with a tight budget, putting away a small amount for long-term goals can make a big difference. Consider:

• Student Loan Repayment: Save for early repayment to reduce interest costs.
• Retirement Savings: If your school offers a retirement plan, contribute if possible. Starting small—like $50 per month—can grow over time.
• Career Transition Fund: Savings for post-graduation can help with moving expenses, job interviews, or professional attire.

Step 4: Explore Income-Boosting Opportunities

If your budget feels too tight, consider these options to increase your income:

• Part-Time Jobs: On-campus jobs or remote gigs offer flexibility.
• Assistantships: Many graduate programs provide stipends and tuition waivers for research or teaching assistants.
• Freelancing: Use your skills to earn extra money on your own schedule.

Hypothetical Example: Emily’s Grad School Savings Plan

Scenario: Emily is studying biology and receives a $2,500 monthly stipend. Her expenses are $1,800 per month, leaving her $700 to save and spend.

• Emergency Fund: $200/month
• Loan Savings: $300/month
• Retirement Savings: $100/month
• Fun Money: $100/month

By the end of a year, Emily has $2,400 in her emergency fund and $3,600 for loans, while still enjoying a small budget for personal spending.

Additional Strategies to Save Money

Maximize Discounts

• Use student discounts for subscriptions, travel, and local services.
• Take advantage of free campus resources, like gyms or software access.

Meal Planning

• Cook meals at home to save on dining costs.
• Share meal prep duties with roommates or friends to cut down on grocery expenses.

Use Budgeting Tools

• Apps like Rocket Money or YNAB can help you track your spending and identify areas to save.

Address Loan Interest Early

• Pay interest on student loans during school to reduce the total cost over time.

FAQs

What if my stipend barely covers my expenses? 

Start small. Even $20 a month can add up. Focus first on building an emergency fund.

Should I save for retirement in grad school? 

If you can afford it, yes! Small contributions now benefit from compound growth.

What’s the best type of account for savings? 

Use high-yield savings accounts for emergencies and Roth IRAs for retirement if you qualify.

How do I balance saving with paying off loans? 

Prioritize building a small emergency fund first, then allocate extra funds toward high-interest loans.