Student Budget

Question

I've got a question for those already in school. Are any of you tracking your expenses and how does it compare to the student budget estimate from the schools? Now that I've been accepted I'm starting to plan and was trying to figure out how much money I'm really going to need. It seems like the student budget is really low. Doing a fairly conservative estimate I'm coming up with numbers about $10k more than the student budget and that doesn't even include any travel expenses if I take a trip.

Granted I'm including things like cable and internet and utilities that can be flexible. I also was basing my numbers off of living alone, do those student budgets assume you'll have roommates? That's the only way I can see the numbers possibly coming close. The way it's looking to me the first year alone will be almost $100k at CBS.

mappleby · Answer

I know this section isn't as popular as the application section but is there really nobody out there keeping a budget during their MBA?

MDF · Answer

The estimates are extremely conservative and don't include the summer months, which can easily add another $10K in expenses.

I believe that $100K/year is a more realistic figure. That aligns with what I'm expecting to spend.

mappleby · Answer

Good to know. And your cost of living will be lower in Chicago than Manhattan so I might even be under-estimating still.

wbelmont22 · Answer

How many MBA students find roommates? Any good advice on how to find a compatible roommate? Maybe this would be a great way to not only lower rent expenses but other expenses as well.

eniac · Answer

In San Francisco, it is relatively normal thing to do, since the rents are really expensive. Luckily, there are a lots of houses here, so you can have the feeling of living in a separate apartment.

Back to topic

Dunno about Chicago, but you need at least $2000/mo without any additional cost (traveling...). Plus - tuition fee, health insurance, furniture... It easily gets to 100k.

tortoiserun · Answer

It really comes down to where you go to school and how much discipline you have, but in general, I would say be prepared to spend as much as you're spending right now. I came from a high cost of living area (LA) and am at school in a much lower cost of living area (Ann Arbor), and my monthly spending is as much as it was when I was working, if not a bit higher. Those MBA activities and socializing really add up!

As for the summer months, I was able to easily cover my expenses with the money I made in my internship, so unless you are planning on a non-traditional internship that doesn't pay a standard MBA amount, I wouldn't worry about that.

I'd say my class is about 50/50 with regard to having roommates or living alone. In more expensive cities, more people have roommates, from what I understand.

mappleby · Answer

Thanks, I'm doing the opposite. I'm going from Colorado with a really low cost of living to Columbia with a really high cost of living. I'm married so won't have a roommate and have the added expenses of my wife's spending! :shock:

So my guestimate right now is looking like around $3,750/month in living expenses. Add to that the tuition, health insurance, fees, books, etc and I'm looking at $110k for my first year without any travel expenses. Being married I won't have any roommates to split costs obviously but my wife should be working full time at least.

lala10 · Answer

At least you'll have one income.

$3,750 in living = rent and utilities? Rent will easily run you over $2k, unless you guys are getting a studio really uptown. Additionally, just going out in NYC is expensive - food, drinks, etc. I never really set up a budget, but just estimated ~$200k/2 years before i started. I'm quickly finding out that it might be a bit higher than that. Separately, our suggested spend was something like $167k / 2 years so I wouldn't rely on the school guided budget too much unless you plan to subsist on ramen and live in a dorm...

mappleby · Answer

I'm trying to find a 1 bedroom, I'm fine with living uptown to save on rent. It seems like we can get a place for $2k so that $3,750 was including utilities, groceries, going out, etc. I might still be under-estimating which is frightening.

lahai1dj · Answer

This is a very helpful thread.

I am curious to know what some of you have done to prepare for B school as far as saving. I have a 401(k), which I don't wish to tap, a comfortable savings account, and enough frequent flyer miles to circle the globe. How much is enough to burn through over the course of the B school experience? $20k? $30K? $40k--in addition to rent.

lahai1dj · Answer

Also, what have you current (and soon to be) students done to acclimate yourselves to the ascetic life of a student? I've been in the real world too long to be content with, drum circles, video games and other cheap forms of entertainment :-D

mappleby · Answer

That's the hardest part for me to figure out as well. I'm a compulsive saver so I have a pretty good chunk of cash in a savings account and stocks but I'm struggling to figure out how much of that I should use and how much I should take out in student loans. That was my whole purpose for putting together a budget for the first year. I'm leaning towards more loans my first year while I figure out what the cashflow will be like and then adjust my second year. I also want to leave a decent chunk in savings if I can just in case I'm hunting for a job after graduation, student loans can't cover that gap.

vinash · Answer

i am very concious on this, the budget is main thing when you are on the way, specially when you are in as a ovesees, and out of your home so please be live with budget....

BigBrownFox · Answer

The interest for non-subsidized student loans in the USA range from 6.8%-9% APR for Federal government student loans and possible much higher for private student loans. I doubt that you can achieve a 6.8%-9%  after tax  return on any of your investments without taking lots of risk. Therefore I suggest using all of your savings, bar a small chunk of cash reserves for emergencies, and taking on as little debt as possible.

If everything goes according to plan you should have a job offer secured by the first half of your second year. If you don't have a job secured by then, then you always have the option of taking out a personal loan at 8-10% APR up to a few tens of thousands of USD, if you have good credit, to carry you over until you do find a job.

Obviously you want to take advantage of as much subsidized loans as possible, since for those type of loans the government pays your interest while you are in school.

mappleby · Answer

Unfortunately there are no subsidized stafford loans for graduate school anymore. They were phased out this year. The unsubsidized loan is currently at 6.8% with a limit of around $20k per year. My hope is that will be sufficient but the idea of selling all my non-retirement savings is a little nerve-wracking. I will still probably hold some just for a little safety net.

vinash · Answer

very fine quote, willl help to USA students to stay....

suecone8 · Answer

THIS.

I had this exact conversation with a Darden financial aid advisor on Friday. I said, what do you do if you have some savings but not enough to cover 2 years plus expenses? He said there's little chance you're getting 7% in the market right now (so, so true) so barring a fund for emergencies (your car needs new tires, etc) which he said might be about $5K, that you should plan to put your savings toward your first year. Plus, the less time you have a loan out, the less interest it has time to gain. Assuming the goal is to take on as little debt as possible, better to spend your money up front and take on smaller loans your first year (if necessary) and borrow more later.

VeritasPrepMike · Answer

Tracking your expenses is a good idea. I would say school estimates tend to come out lower. While business school can certainly be even more expensive when you include all the side trips and evenings out, remember you don't have to do all of those things. It can be tempting to keep up with the joneses, but it becomes very expensive. And you might think it's no big deal because you have student loans to cover it all, but that eventually catches up to you when you graduate with more than 100k in debt!

Student Budget

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