How Much Money Should I Have Saved Before Graduate School

*This post has been reviewed by an Illinois Registered CPA. However, when making important financial decisions, it's best to speak with your financial advisor.

Last Updated on July 26, 2022

A Guide: How Much To Save Before Graduate School

College education comes at a hefty price. You may be lucky enough to receive a scholarship, but you still need money for the rest of your expenses such as books, supplies, and subscriptions. What if you need to move to a different city or state? Then you’ll also have rent, transportation expenses, and all the responsibility that comes with living on your own.

The bottom line is you need to have money saved for graduate school. If you haven’t done it by now, don’t worry, we have created a guide to help you out. We’ll tell you more about how much you should save and give you a few useful budgeting techniques for saving money efficiently.

How Much Money Should I Have Saved Before Graduate School

Now that you have a bachelor’s degree, it’s time for the next step on your educational path. A graduate degree can open the doors to many enticing career opportunities, but it costs money. How much money should you have saved before graduate school? The answer is not straightforward because the expense depends on a variety of factors:

• The program you want to pursue
• The type of program (Master’s or Doctoral degree)
• The university you want to attend
• The length of the program
• The career opportunities it unlocks

College Tuition Compare lists the average tuition and fees for college graduate programs a:

• $10,056 (for in-state students)
• $25,632 (for out of state students)

These numbers apply to the academic year 2021-2022. The tuition cost for graduate programs per credit hour depends on the type of study. For Education and Humanities programs, the fees are lower compared to technical programs.

Just a quick look at this university’s fees points out the differences. Students have to pay $930 per credit hour for Education graduate programs. A credit hour in Humanities subjects such as English or History costs $500 per credit hour, while all the other programs cost $1,245 per credit hour.

The state where you choose to study will also make a difference. Graduate School Tuition data suggests that Massachusetts has the highest tuition fees. The average graduate fees in this state amount to $27,897. The state with the lowest tuition fees is North Dakota. Here, the average out-of-state rate is only $9,562.

Another option to consider is foreign graduate programs. it might surprise you, but some European programs cost less than US degrees. Some states, such as Norway, don’t charge for tuition. You only have to pay a union fee.

These numbers might help you make a decision, but in the end, there are many factors to consider. For starters, your student loan. Are you still paying for your bachelor’s degree? Then, you might not want to add another loan for your graduate program to your debt. The wise choice, in this case, is to start saving money. You can do this while you repay your student loan.

How to Avoid New Loans While Pursuing Another Degree

If you have debt besides your student loan, learn how to handle it. A well-known strategy to pay off debt is the snowball method. Learn what it recommends.

The snowball method

This method involves repaying debts in a specific order. You first have to make a list of all your debts. Write the corresponding amount for each and the remaining rates until you pay them off. This will offer you a picture of your debt situation. You will be able to approximate when you will become debt-free. Arrange the debts in ascending order, from small to large.

With the snowball method, you first focus on the smaller debts. Pay them off one by one until all your debts have been checked off the list. Each month, make the minimum payments for every debt, leaving the smallest one for last. When you’re done with the other payments, come back to this one.

How much money can you use to repay the smallest debt? Pay as much as you can, trying to greatly exceed the minimum payment. You will repay the smallest debt faster, then move on to the next one.

The half-payment method

In addition, you could rely on a budgeting strategy called the half-payment method. This is not a debt repayment solution, but a way to pay monthly bills. Utility bills, for example, are some of the best expenses to tackle with this method. That is because you know more or less how much you have to pay each month.

You could apply the half-payment approach to your student loan or any other monthly debt. This method works if you have a stable income. It was designed for those who get paid biweekly. . Here are the steps this strategy involves:

1. When you receive your first paycheck for the month, save 50% of the student loan payment.
2. When you get the second paycheck, put aside the remaining 50%.
3. Now that you have the full amount, make the payment.

Apply the same strategy to all your recurring payments. It is easier than paying all debts at the end of the month. By the time you get there, other expenses might have already drained your budget. The half-payment method can help you budget better and avoid penalties. It is also useful in helping you put money aside and fixing your credit fast.

What to Consider When Budgeting for Graduate School

The first rule of budgeting is commitment. You need to commit to your savings goal and contribute each month to your graduate savings account. Where you keep your money makes a difference. You can keep it as cash in a safe at home, but a better option is a savings account.

There are different benefits to enjoy, such as interest. You might not get much, but every dollar matters. Plus, your money is safer in a bank than at home. You won’t risk using your savings as an emergency account.

You can also set up an account with fixed withdrawal terms. This way, you will be even more motivated to leave the money there. Withdrawing it sooner than the due date would result in losing the interest. If you’re currently studying for your BA degree, you can enjoy different perks. Banks offer certain benefits to students who open a new account. You could get a better interest rate or a referral bonus.

Now that you know where to keep your money, let’s focus on step two. What will you need money for? First, you have to choose your graduate program. You will find the tuition costs online. If not, you can call the university to ask for this information.

Tuition costs are the major expense you’ll incur, but there are other factors that will influence the amount. One of them is the program’s length. Another one is the type of enrollment. Will you enroll as a full-time or part-time student? If you’re an in-state resident, you’ll have different fees compared to out-of-state students. Take all these into account when calculating tuition fees.

Afterward, move on to step three – calculating your living expenses. This is often the most difficult part. You might move to a new city. In this case, you can check out the rent rates.

It may be hard to determine exactly how much you would pay for everything else. You need to spend at least one month there to have a clear picture of your expenses. Because this is not possible yet, start by making a list. Write down all the necessities your budget will have to cover:

• Housing expenses
• Food
• Gas or public transport costs
• Books and supplies for your studies
• Personal expenses
• A buffer

It is great if you can also put money aside for a buffer emergency fund. You could tap into it whenever in need. For example, you might need it to fix your car. If you don’t use the buffer, it’s good to add it to your savings. Even after you start graduate school, you should continue saving money. Budgeting methods will help you out.

After your list of expenses is ready, assign a budget to each. Again, you will have to approximate. Doing research online will help. Check out the average rent and utility costs for your new location. You can do a bit of research to approximate book and supplies costs. Afterward, add up all the amounts. You will come to a monthly budget you’ll need for the next stage of your student life.

Then, start scrutinizing your finances. You might already have a job. Will you be able to relocate and work remotely? Will you look for a new one with the same company? If you don’t move to a new city, you’ll probably keep your job.

Figure out what income source you can count on during graduate school. If you also get a scholarship or help from your parents, add them to your monthly income. Afterward, deduct the anticipated expenses from your income. What is the result? Will you be able to cover tuition and expenses from what you earn? If yes, you’re on the right path. Still, proper budgeting is recommended. This way, you’ll live a financially sound life and save money each month.

How to Budget and Save Money for Graduate School

There are different budgeting methods you can rely on to save money for graduate school. At their core, they all involve expense tracking and budget allocation. These are two popular examples:

The 50-30-20 budget

With this budgeting strategy, you create three spending categories. Each one gets a fixed share of your budget. You allocate 50% to your needs, 30% to your wants, and 20% to your savings.

If you want to save money for grad school, this is a good strategy. It helps you put aside money each month. By saving the recommended 20% per month, you can have a budget of thousands of dollars in a few years. Let’s imagine you work part time and earn $300 per week. Here is what you can achieve with this strategy.

Monthly budget	$1,200
20% monthly savings	$240
amount saved in 1 year	$2,880
amount saved in 3 years	$8,640
amount saved in 5 years	$14,400

In a year, you can save $2,880. Over five years, this amount can turn into $14,400, and all this by saving 20% of your salary each month.

The digital envelopes system

With this strategy, you save money while covering all your monthly expenses. This is a flexible method. You create different digital envelopes or accounts for each expense category. For example, you can have five envelopes – rent and utilities, food, gas, personal expenses, and savings. Put into each envelope the amount you previously determined. Then, spend what is available in the envelope for each category.

Frequently Asked Questions (FAQs)

How can I save money in grad school?

Do you often ask yourself why you can’t save money? You can save money in grad school with budgeting. A part-time job would also help. You can apply for a scholarship. Those can help you cover tuition fees, so you’ll only have to worry about living expenses.

How much money should I have saved before graduate school?

This depends on your tuition fee and location. You might spend a considerable amount on tuition. Make sure you have some of that money. It would help if you could have the fee amount for your first year of study. This can be somewhere around $20,000 for out-of-state students. To save this amount, you might want to budget by following these steps:

• Calculate your monthly income.
• Set a savings goal based on your budget.
• Set the deadline and start saving.

Here is a simulation for a $2,500 monthly income and a $20,000 savings goal:

Available budget	$2,500
Savings goal	$20,000
Deadline	A little over three years (40 months)
Monthly savings amount	20% ($500)

If you save 20% of your income per month, you would have the full amount ($20,000) in 40 months. There might be months when you save more than 20%, allowing you to put aside the necessary amount in less than three years.

How can I reduce my expenses while in grad school?

If you have a hefty tuition fee, you want to save money on other expenses. Try to reduce your living expenses. For example, move into a place with cheaper rent. Use public transport instead of your car. Borrow books instead of buying them.

Sources:

Colleges 2022 graduate tuition comparison. College Tuition Compare. (n.d.). Retrieved July 12, 2022, from https://www.collegetuitioncompare.com/compare/tables/?degree=Graduate

Baum, A. (2018, August 26). 9 best bank refer-A-friend programs: Get $50 or more for Free. Frugal For Less. Retrieved July 12, 2022, from https://www.frugalforless.com/bank-refer-a-friend/

2022 average college tuition & expenses. College Tuition Compare. (n.d.). Retrieved July 13, 2022, from https://www.collegetuitioncompare.com/statistics/

Lee, H. (2018, November 11). Study in Norway; Free and low tuition universities, cost of living in Norway and Visa Application Requirements. Online Students Hub. Retrieved July 21, 2022, from https://onlinestudentshub.com/study-in-norway-free-and-low-tuition-universities-cost-of-living-in-norway-and-visa-application-requirements/

Norway, S. in. (n.d.). Study in Norway. Tuition fees / Study in Norway / StudyinNorway / Home – Study in Norway. Retrieved July 21, 2022, from https://www.studyinnorway.no/study-in-norway/tuition-fees