Pre-semester Preparatory Primer, Part III: review your finances

We’ve gotten this far into our Pre-semester Preparatory Primer without talking about money, but it was bound to surface at some point. Financing grad school can sometimes be more stressful than anything the academic experience can generate. One key to managing financial stress is thoroughly understanding your own resources and obligations in order to avoid unwelcome surprises during the year. By this time, your basic financial plan should be in place (especially as first semester bills have now come due). For most students, this involves several different types of financial instruments and expense categories. Let’s consider a few of these:

• Educational loans: The majority of Fletcher students have some form of educational loan, and it’s crucial to understand the terms of any loan funds you’ve taken out. At a minimum, you should be sure you know what interest rate your loan carries, and how and when that interest is charged. For example, most US federal educational loans accrue interest from the time of disbursement, and will have several interest payments due each year. Students can either make these interest payments during the year or not, but failure to do so will cause the unpaid amount to “capitalize” (i.e. be added to the principal loan amount), resulting in a larger repayment amount in the long term. Different educational loans also have a variety of repayment terms and options that borrowers should understand. Finally, nearly all educational loans are approved and issued on a per-year basis, and will require students to re-apply to take out further loans for a subsequent academic year.
• Part-time work: Many Fletcher students work part-time at some point during grad school. Regardless of the type of position, a realistic expectation is to work around 8-12 hours per week at a rate of $12-$15 per hour. While individual experiences will vary, it’s important to make reasonable estimates of how much of a contribution to your budget to expect from part-time work. Think weekly grocery money rather than tuition.
• Living expenses: Speaking of your personal budget, by now you can probably make a fairly accurate estimate of your monthly expenses. Rent for the year should be a fixed cost, and you can reasonably estimate utilities, groceries, and personal monthly expenses (for off-campus residents, utilities will be higher during the winter months). Expect the unexpected: at some point in the course of a year, you may have an unanticipated health or medical need, an urgent family matter requiring a trip home, or a car repair. Do a bit of math! The more you understand and can anticipate your monthly expenses, the less likely you are to run into unforeseen difficulties.
• Summer break: No matter how you spend your summer, you need to be ready for expenses you may incur. If you’re on a 12-month lease, are you planning on staying in the Boston area for the summer, or perhaps subletting your apartment? Do you plan to work, or pursue an unpaid internship? Do you plan to change housing between your first and second years? While you probably don’t yet know the details of how you’ll spend next summer, you should be assuming a certain level of associated expenses when planning out your annual budget.
• Currency fluctuations: For most international students, your finances are not in US dollars, and it’s worth having at least a general familiarity with your home currency’s value against the dollar over the past year or two. You obviously can’t control currency fluctuations, but you can do your best to anticipate the effects on your financial plan if your currency has experienced significant volatility in recent years.

There are a variety of issues that can affect your financial life that are beyond your control. Nonetheless, being savvy about the variables to monitor throughout the year can help you anticipate potential problems, and be in the best possible position to overcome them.