TIP TOPICS for Students: Money (Really) Matters: Tips From the Frontline on Balancing Graduate School Finances
Jessica E. Dinh and Allison S. Gabriel
The University of Akron
(We thank our peers (n = 70) from the following graduate programs for filling our our survey for this column: Bowling Green State University, Colorado State University, Michigan State University, Penn State University, The University of Akron, University of Albany6, and University of Minnesota.)
Saving money can be tough for graduate students. Really tough. From textbooks to tuition, from rent to restocking one’s daily essentials—not to mention meeting life’s unexpected surprises—navigating graduate student finances can be a daunting challenge. But hopeful readers, have no fear! TIP-TOPics’ financial column is here. In this issue, we dare to ask the big money questions in the minds of I-O graduate students across the country. We review the most recent financial statistics (Carnevale, Strohl, & Melton, 2011; Khanna & Medsker, 2009) to answer questions such as “How much is my advanced I-O degree actually worth?” In addition, we identify useful money-saving tips for graduate and post-graduate students based on the first-hand experience of those hard at work in the trenches.1 Finally, in the last section of this column, we offer some good “how to” advice for successfully nailing one’s first academic or applied postgraduate job.
Now I’m in It for the Long Haul…Is It All Worth It?
So, you’ve decided to go to graduate school. For many, this means moving away from the comforts of home, as well as downsizing to a smaller apartment, learning how to peaceably share that small apartment with roommates, how to cook and fend for oneself, and how to pay the bills for utilities, the Internet, insurance, and so forth. Oh, and did we mention the rising cost of gasoline these days? At this point, considering that you still have years of school ahead, paired with the prospect of spending endless hours at the office, you might just be asking yourself: what is the economic value of an advanced degree in I-O, and importantly, is it all worth it?
The answer to these questions should be a yes, according to a recent study conducted by Georgetown University’s Center of Education and the Workforce (Carnevale et al., 2011). According to this report, individuals with a bachelor’s degree earn, on average, a whopping 84% more than those with just a high school diploma. Further, the 38% of students who pursue a graduate degree receive another 28% boost in average salary levels.
The numbers are even more impressive when we specifically consider the field of I-O. Georgetown University’s report shows that, compared to typical earnings in other psychological fields such as social or counseling, the economic value of an I-O degree is quite high (Carnevale et al., 2011). For instance, the average amount earned for all individuals with an advanced degree (bachelor’s, master’s, or PhD) in I-O psychology was $53,000 a year, with the 25th percentile earning about $37,000 a year, and the 75th percentile earning about $75,000 a year. SIOP’s 2009 survey breaks these numbers down further, indicating that the mean weighted starting salary of new I-O doctorate graduates was about $83,000, and for new I-O master’s graduates, mean weighted starting salaries were about $56,807 (Khanna & Medsker, 2009).
Salaries were a bit higher for new doctorate graduates in human resource/organizational behavior (HR/OB), with an average starting salary for those with a master’s degree of about $62,680 per year and, for new doctorates, about $87,934 per year. Of course, figures can also vary over time depending on one’s employment setting. In fact, doctorates employed in academic settings can earn anywhere up to about $94,805 a year, and those with a master’s can earn about $72,152. What about those employed in business or management departments? Try earning anywhere up to $162,269 with a doctorate, or about $125,060 a year with a master’s! As these statistics illustrate (see Khanna & Medsker, 2009), the economic value of an I-O degree is quite high, much to the relief of I-O grads everywhere.
To Save or to Spend…That Is Always the Question
With our sights set high on the financial returns promised by advanced graduate degrees in I-O, it’s now time to consider more proximal matters: how to manage personal resources and save money until we get there. Saving money can be tricky, especially when our primary financial resource is a graduate stipend. By definition, stipends are payments offered as a complimentary benefit to folks like graduate students or interns. Hence, they tend to be much lower than typical wages and are meant to cover “essential needs” such as food and shelter. Of course, deciding which needs should be covered and which desires should be forgone is not easy. In fact, the definition of “essential” is blurry and can vary wildly from student to student. Take Apple’s new iPad as a prime example. With its new 3.1 million pixel retina display, its 5 mega-pixel camera, HD video recording, ultrafast Wi-Fi internet technology, and with over 200,000 apps to choose from, this 9.7” slab of pure awesomeness has got to count as being essential. So what if it’s equivalent to about an entire month’s rent; it’s an investment, right? (That’s what we’re telling ourselves, anyway.)
Whether to become the owner of an iPad may be the least of one’s worries. Other, more down-to-earth concerns linger on grad student’s minds, including such things as covering airfare and finding lodging to next year’s SIOP conference in Texas (or perhaps the year after in Hawaii), finding leisure activities and other forms of entertainment, pursuing hobbies, shopping, buying home accessories, splurging on the latest computer software, and the like. Clearly, it takes resolve (and a whole lot of self-control) to manage one’s financial resources. These choices remind us of Walter Mischel’s classic studies on self-restraint. You know, the ones that have preschoolers stare down a soft, colorful, sugar-coated decadent marshmallow (i.e., that coveted “it” item) while being told that if they resist the urge to nosh it down when the experimenter had his or her back turned, they’ll receive a much larger reward (i.e., the preschooler’s equivalent of earning that graduate degree?). Oh, the uncanny parallels to grad life.
Thankfully, most I-O programs do a phenomenal job of helping their graduate students stay afloat, with programs offering full or partial tuition remissions, internships, and teaching assistantships to help cover the costs associated with graduate life. At the University of Akron, for instance, both terminal master’s and doctoral students receive internships and teaching assistantships that include annual stipends. Other forms of financial aid such as fellowships and research assistantships are also available in most programs. In a recent poll conducted for this column, we found graduate stipends met the monthly spending needs of about 56% of the I-O graduate students surveyed across the United States, allowing grads to pay for completely “frivolous” things like health care and medical insurance, entertainment (no, this does not include cracking open the most recent psychological journal—unless, of course, you’re our advisors!), groceries, and the occasional meal out. Of course, the sufficiency of stipends varies based on the cost of living associated with one’s area, with steeper prices for those living in areas like New York or Washington, D. C. Hence, in addition to stipends, 44% of those polled also indicated that they had applied for student loans or were relying on other resources (i.e., parents, spouses) to meet their financial needs. The SIOP salary survey mentioned earlier may have the additional benefit of helping students set limits for how much they borrow while in school. In fact, a recent rule of thumb for the amount of student loan debt acquired should be no more than what you will earn in your first full year of employment once you have completed your degree (Consumer Reports, 2012).
So what can graduate students do to get the most from the money received during their graduate school years? A quick Google search finds literally hundreds of websites devoted entirely to the topic of saving money while in school. Survival guide sites such as ehow.com and brokegradstudent.com offer tips and strategies about what to buy, what not to buy, and when to buy, as well as lessons to enhance self-control. The list is close to endless, and tips can be found in just about any category. For example, it does not take long to find thriving blogs on how to make your own beer to save money (not for the faint hearted). Given that anyone can post tips online, we wanted to know, what are the most useful and practical money saving tips possibly out there? We identified the top four suggestions from our survey of fellow I-O graduate students across the country and discuss them in some detail in the following section. However, there are dozens of other great tips and ideas that can help trim your monthly bills, so some additional tips are listed in Table 1.
Money $aving Tips for Graduate Students From Graduate Students
- Don’t eat out, and learn how to cook your own meals
- Keep track of your checking account to avoid overdraft and minimum fees
- Keep your receipts to monitor your spending habits
- Explore your area for free or low-cost leisure activities (e.g., picnic at the park)
- Find roommates
- If possible, buy store brand items at the grocery store
- Reduce your electricity bills by turning off unused appliances (e.g., computer, lights)
- Check if student discounts are available for purchases, restaurants, museums, and movie theaters (e.g., many academic institutions offer discounted internet services, museums have free admission days on certain days of the month)
- Pay your bills on-time to avoid late fees
- Look for freebies in your local or school newspaper
Money Saving TIPS for TIP-TOPics Readers
Be smart about where you purchase your textbooks. New textbooks are expensive, so for years we have made semiannual treks to sites like Ebay.com or Amazon.com to find copies of used textbooks. However, for those who still love the touch and feel of new textbooks, we recommend one handy underground site, Bigwords.com. This site offers a large selection of new international edition books that are nearly identical to publisher’s editions but can typically be purchased for about half the price. Social networking websites (i.e., Facebook, of course) may be another source to search for textbook deals from other students interested in selling directly.
Know your grocery store. Another money saving tip you might consider is to know the layout of your favorite grocery store. Not only will you save valuable time getting in and out, but preplanning your route through the store may help prevent impulse buys resulting from wandering aimlessly through the aisles. A variety of consumer marketing studies (e.g., Ross & Geil, 2011) suggest shopping along the perimeters of a grocery store not only helps to curb spending, but it also protects one’s health. This is because fresher and healthier items (meats, fruits, and veggies) are typically stocked on the outside aisles. Finally, it’s always best to check local stores for special rewards programs. Many stores now offer digital e-coupons on their websites that allow registered members to shop online and add coupons to their member account. Not only is this convenient, but it also saves ink and paper as your selected coupons and discounts will be applied automatically at checkout during your next store visit. As another example, several grocery stores in Akron offer gas discounts for simply using a member rewards card. Because everyone needs food, and most need gasoline in order to function, this is quite the winning deal!
Become savvy about Amazon’s subscription and student prime accounts. Another great money-saving tip is to take advantage of the Amazon.com free 6-month student prime membership and subscription options. Starting a student prime membership is straightforward and easy (you just need an e-mail address with an .edu extension to get started). The benefits of a student prime membership include expedited shipping on all of your orders (guaranteed to arrive in 2 business days), with orders dropped off conveniently at your front door. In addition, for many of the household items and dry foods (e.g., teas, water filters) sold on Amazon, students can save up to 10% at checkout by simply adding a subscription. If you are in it just for a one-time buy, you are always allowed to cancel or change your subscriptions free of charge.
Assemble a carpool team. Finally, many graduate students may be surprised at how costly it is to own and drive a car. According to the American Automobile Association in 2011, it cost on average 58.6 cents per mile in 2010 to drive a small sedan. For a 20-mile round trip commute, this amounts to $11.72 a day, $351.60 a month, and about $4,219.20 a year. The potential added costs of parking permits, possible traffic tickets, and vehicle repairs mean driving can put a huge dent in the typical graduate student’s wallet. Hence, seeking alternative forms of transportation, such as carpooling, can help students lower the cost of going to and from the office. Sites like eRideShare.com allow students to find and set up carpools with other students living in and around the area. Not only are alternative forms of transportation like cycling or riding the public transit significantly cheaper, they also lessen the impact on the environment and can double as a workout.
Congratulations, You’ve Survived Graduate School…Where to Now?
After years of study, the thought of never having to “hit the books” again, graduating, and entering the “real world” can become incredibly enticing. Luckily for us at Akron (and many other I-O programs), knowledgeable faculty members are available to offer some words of wisdom when we’re ready to leap into such things. To get the 4-1-1 on the postgraduate job process, we asked our faculty members for their best advice on what to do and what not to do upon entering the job market. Dr. Rosalie Hall suggested that students should focus their investigative skills on researching the typical salary levels for desired jobs depending upon the job type and the geographic region one would be living in, as well as the comparative cost of living, and pointed out useful websites (i.e., SIOP!) where such information is available. When asked about how to negotiate, Rosalie further shared this information: “The most important point is to know that you can/should be prepared to negotiate and that the outcomes will be better if you have prepared yourself by finding out as much as possible about what typical salaries are, typical benefit packages are, etc.” Further, our own department chair, Dr. Paul Levy, had the following piece of advice to give: “Be yourself—you don’t want a school [or a business] to hire who they think you are because then there is the expectation that you will be that person. You want them to hire the person that you really are! It’s the whole realistic job preview thing on both ends of the interaction.”
Although graduate school is a time when money might be tight, whether it is taking advantage of discounts, or waiting on that iPad until our first “real world” job, everything comes down to setting ourselves up for success in the end. At Akron, we know we are in good hands, and we are certain the same applies to students in other programs.
Our next column of TIP-TOPics will focus on applied experiences in graduate school. As always, comments and feedback are welcome at our e-mail account, firstname.lastname@example.org. Until then, happy saving!
American Automobile Association. (2011). Your driving costs. Retrieved from http://exchange.aaa.com/wp-content/uploads/2012/04/DrivingCosts2011.pdf
Carnevale, A., Strohl, J., & Melton, M. (2011). What’s it worth? The economic value of college majors. Washington, DC: Georgetown University, Center on Education and the Workforce.
Consumer Reports. (2012). Your supermarket: Are you paying too much? 29–31.
Khanna, C., & Medsker, G. J. (2009). 2009 income and employment survey results for the Society for Industrial and Organizational Psychology. Retrieved from http://www.siop.org/ 2009SIOPIncomeSurvey.pdf
Ross, T. A., & Geil, P. (2011). Healthy eating on a lean budget: Diabetes meals for less. Diabetes Spectrum, 23, 120–130.