Budget Throwdown: Advanced Graduate Student

When we looked at the expenditures of the Average American and the Average Grad Student, I asserted that it was possible to do much better.  To see where I find my savings, first let's break down the model UC Berkeley budget.

Adjusted to include taxes and cover a full 12-month year:

UC Berkeley, 2012-13MonthlyAnnual
Rent & Utilities49%$1,160.00$13,920.00
Total Living Expenses98%$2,317.00$27,804.00
Health Insurance---(covered)$2,306.00
Tuition & Fees---(covered)$12,876.00
Total Graduate Budget2%$3,640.67$43,688.00
Total Expense to Student100%$2,375.50$28,506.00

As previously mentioned, this budget leaves you with nothing saved, or worse, a small deficit.  That's not good.  But we can do a lot better than this!  So much better, in fact, that I save and invest half of my graduate student stipend.


Planning, and reminding myself that a) I'm a graduate student, not a millionaire, and that b) nearly everything is a luxury and luxuries are rarely the route to happiness.  The average American household makes only a bit more than I do, and many others before me have demonstrated what can be done when you fully utilize what you have.


Food makes up over a quarter of this budget; there's almost certainly room for cuts here.

A $684-per month-food budget gives you $22 per day to spend on food.

man, too bad it's not a $20 delivery chain pizza.
You likely wake up in your house in the morning, so there is really no excuse not to prepare your own breakfast.  A big bowl of breakfast cereal with milk all of the fixings—walnuts, almonds, pecans, raisins, cranberries, maybe some honey and flaxseed—is still less than two dollars.  Eggs, even the free range ones, are only $0.30 each, and with a handful of shredded cheese, some vegetables, a trip through the cast iron skillet and a splash of hot sauce, you have yourself another ~$2 possibility.  Brew yourself a $0.50 cup of decent coffee or tea if you're a caffeine-addled junkie.

Excellent, we've made it to lunch with $20 left to spend.  A frozen veggie burger and roll will set you back around $1.50, and a little bowl of salsa with nachos won't add more than another dollar.  Pack some carrots, broccoli, and cherry tomatoes to dip in some ranch dressing like a little side-salad: another $1.50.  With a tall glass of water ($0), we really broke the bank on our $4 lunch.

$16 left for dinner.  We'll go for a big old pasta dinner, with one pound of rotini ($1.20), half a jar of store-bought sauce ($1.50), and some fresh-grated parmesan cheese ($0.25).  Since we're grad students with REAL MONEY now, throw some garlic cloves ($0.25) and a handful of olives ($0.25) into the pasta sauce and pour yourself a Sierra Nevada Pale Ale ($1.00).  There is no way the average person is going to finish a pound of pasta by themselves in a single meal... but I can, and this meal will set me back another $4.50.

We spent $10.50 for a day's worth of food without making any conscious effort to keep costs down.  Drop the beer, prepare your own pasta sauce from tomato paste and fresh or frozen ingredients, have the omelet for breakfast and eat a quick lunch of a bowl of cereal or some leftovers from the previous day's dinner, and it's pretty trivial to halve this value.  Even at $10.50 per day, we're saving $315 per month ($3,780 per year).

I do make a conscious effort to keep this number low, by buying and cooking in bulk, avoiding ridiculously expensive foods, premixing dry ingredients for rapid baking, fully utilizing my $15 bread machine, and playing the leftovers card whenever possible.  As a result, my average daily food costs come to around $5.50.  With another $40 thrown in for the occasional bar and restaurant visit, that brings me to $200/month for food.  Spending $484 less than the UC Berkeley model budget already saves enough money—$5,800 per year, almost 19% of my income—to hit the annual contribution on a Roth IRA investment account.

"But wait," you say, "I want to get a coffee ($3), go out for lunch ($10), and grab some beers at happy hour ($8) after work!"  To which I respond: this is why you're poor.

"But I can't cook and I won't compromise on good food!"  I hope you like your job, because you're going to have to do it forever.  Deal with it.

Rent & Utilities

Coming in at one-half of total expenses, this category has grown much too big for its britches.  The Bay Area makes this a tough proposition, so get ready for some pain.

This category and includes rent and utilities like water, electricity, natural gas, internet access; I also lump in phone plans and internet services like web hosting and internet radio, because as far as I am concerned, these are just high-tech utilities.

The model budget allocates $1,160 per month to this category.  A possible breakdown might look something like this:

$950   Rent (includes water, garbage)
$75     Cell Phone + Data Plan
$30     Electricity + Natural Gas
$30     Cable TV
$25     Internet
$20     Netflix, Hulu, Pandora, ...
$25     Renter's Insurance

Don't pay for TV: it's a huge waste of time, it doesn't accomplish anything, and it has no positive effect on life satisfaction.  Carefully look through your other multimedia subscriptions too; a Netflix subscription might be cheaper than the alternative of constantly buying movies, but there may be room to trim a service here.

Renter's insurance may be a good investment if you have expensive possessions, but if you're living true to your graduate student heritage and most of your furniture and personal belongings were cheap buys on Craigslist or free from graduating friends (or off the street *cough*), don't bother.

"$75 for a cell phone? Nobody pays that much!"  Not true.  Calculate the true cost of your plan with all taxes and fees, and factor in the cost of your phone with regards to how often you upgrade.  Many of my friends and coworkers pay $60, $70, even $100 a month just so they can see Aunt Cindy's Facebook cat photos before anyone else.

Comcast pretty much owns the world, so you're screwed on internet unless you resort to drastic measures.  Saving electricity is pretty much common sense.  If you live in a cold climate that requires lots of heating, learn how to cook and bake, broil, sear, and fry your way to a warmer living space.

The elephant in the room is your rent.  For most people, this is by far their most significant single expense.  There are two keys to saving money here: shop around and live with people.

Having roommates allows you to divide the cost of many, many things.  Split the internet bill, split the electricity that runs the refrigerator and other common-use appliances, and split the capital expenses of acquiring items like vacuum cleaners, mixing bowls, and toasters.  If you can find good roommates, you may even be able to split the shopping, cooking, and upkeep duties at very significant time and money savings.  If you have bad roommates... well, that can suck.  Re-roll when the lease runs out and try again.

Maybe you only had a few days to find your place when you moved out here, and now you're paying way more than you want to be.  Use the next opportunity to correct this mistake!  Many landlords will happily allow you to transfer to a month-to-month lease while you shop around for something more reasonable.  Avoid accumulating too much stuff to reduce your space requirements and simplify the moving process.

The budget allocated $1,160 to this category; I pay $480 per month.

The $8,160 saved is a full 26% of my income.

How is that possible?  $0 cell phone, $0 home phone, no cable, and rent is split with an apartmentmate and a roommate.  I have cool roommates, and we split all food costs and coordinate on laundry supplies and the like; in exchange for Costco runs and access to my tools and cooking things, I borrow the neighbor's vacuum cleaner.  Life is good.

"But that's just not feasible for most people!"  Fact!  But I'm one person and so are you, and the 'average situation' doesn't have to be relevant.  I could obtain a similar result by jettisoning excess junk and moving to a smaller apartment, perhaps with a slightly longer bike commute.

"I want to live in a nice place!"  You're a graduate student—how many hours a day do you actually spend, awake, in the place you rent?  I would gladly accept a smaller living space in exchange for a shorter run of 60-hour weeks in a cubicle farm.  Wouldn't you?


If you are the sole owner of a car, congratulations: it is the proverbial millstone around your financial neck.  For the privilege of sitting comfortably while hurtling anywhere at incredible speeds, you'll pay: for parking, or gas, for maintenance and tolls and insurance and a million other things.  If your housing situation requires a car commute, you've made a mistake.

What you need is a bicycle, and a shorter commute—it is almost guaranteed to make you happier (and save you time and money besides).  Get a bicycle.

Mass transit, too, is your friend—realize that the total cost of traveling by car is on the order of $0.50-0.75 per mile and the highly-subsidized mass transit fees are an excellent deal.

Flying is extremely expensive.  You can play games with credit card airline rewards, but the surefire way to cut this cost is to fly less.  Paying to fly business or first class is insanity—you're a graduate student, and that can wait until you're an executive officer at a Fortune 500 (or, preferably, it can wait forever).

I split the costs associated with a car with my apartmentmates and commute to work by bike.  I do bike and car maintenance by myself whenever possible.  I coordinate with friends and neighbors when driving (to Costco, for instance) to maximize the utility of each dollar of gasoline.

When I do fly home, I do it for extended periods of time.

Berkeley budgeted $312 for transportation, and I get away with about half of that—$130 a month in 2012.  The savings is another $2,180, or 7% of my income.

"I don't know how to ride a bike!  My commute is too long!  I don't like to get sweaty!"  Get in better shape.  Move.  Figure it out.

Everything Else

In the previous categories, I've already saved half of my stipend income.

The model budget still gives us another $2,500 ($200/month) to play with for books and personal expenses.  Buy your textbooks used for a pittance and invest this money on fun stuff.  If 'fun things' is synonymous with 'things that build physical, social, and financial well-being', you know you're doing something right... but that's a topic for another day.  Read my review on 'Happy Money' for some inspiration.

That, in summary, is how I do it.  The practice in lifestyle engineering will no doubt help me to keep my expenses low in the future when I make significantly more money.  In the meantime, all of the money I save—on the order of $15,000 per year—is available to invest or to pay down debts.

This year, I had another little surprise: a one-time financial windfall.  Did I upgrade my wardrobe, buy a bunch of shiny new electronics, and go out for dinner every day for a month?

That story will have to wait for tomorrow.