<p>Hey guys,
So, I was reviewing my award offer from Northwestern University and one of the student-written handbooks says: "Most first year graduate students dont realize that their salary will decrease after their first year due to the pay out of your signing bonus, if you received one. This is a standard procedure at most graduate schools, but not expecting this change can be really detrimental in terms of financial planning."</p>
<p>Is this really true for all graduate schools? (I've been accepted to the Chemistry Dept.)
If so, how much does your salary decrease? Why?... Where does the money go? Do you get it back eventually?</p>
<p>Also, the handbook also says "Taxes are not automatically withheld from your paycheck, at least during your first year. At the very beginning of orientation you will fill out forms for the business office. Be sure to fill out the W-4 form indicating that you want additional withholdings taken out of your check." I'm just inexperienced. Why would you want taxes withheld from your paycheck? What does that mean, anyway?</p>
<p>Finally, I've been told that I should take my salary, divide it by twelve months, and then plan on only spending 1/2 of my monthly earnings on rent/utilities and no more than that. I thought that sounded like fair advice, but what do you guys recommend as far as budgeting? How much should be allocated to rent, groceries, etc?</p>
<p>Oh, and I’ve also heard form other places that your salary increases each year… so yeah, now I’m really confused about what happens to your stipend!</p>
Because if you don’t have taxes withheld from your paycheck, you have to pay estimated taxes to the federal and state governments – if you just pay all the tax you owe for the previous year on April 15, you will have to pay a penalty for not having paid enough as you went along.</p>
<p>Estimated taxes are due at least quarterly, and remembering to file them is a pain. </p>
<p>
I’ve heard that no more than 1/3 should go to rent/mortgage, but that’s going to be more or less difficult depending on where you’re living and what your stipend is.</p>
<p>A lot of these things depend on where you go for school.</p>
<p>I don’t know anyone that was offered an upfront amount of money to start school with, most of us had to save up some money so we could afford moving, apartment deposits, and other initial fees until we got our first paycheck at the end of our first month of school.</p>
<p>In my group our stipend is held at a constant throughout our graduate career. I know some where you get a boost after passing candidacy/quals, and others where you get a raise every year. Sometimes you will get a cost of living raise or something of the sort if there’s a major change to how things work at your school (for example, when I was at my undergrad, they removed a heavy subsidy for graduate student health insurance, but raised stipends by the amount of the subsidy).</p>
<p>Also, don’t divide your salary by 12 and take 1/2 of that. First multiply your salary by 0.8 and do your figuring off of that number. That’ll be roughly what you take home after taxes. I manage to only spend ~1/3 of my take-home salary on rent, but I’m sharing a medium-sized one bedroom apartment with my girlfriend. It’s easy to spend considerably more, but I also know some people that have cut it lower by living far away or cramming a lot of people into a small place.</p>
<p>The year before I joined the graduate program at UT Southwestern, the stipend was $24,000 in 2007. Starting in 2008, the stipend increased to $26,000, and for 2010, it will increase once again to $28,000. All grad students receive the same amount no matter what year they entered. I can live pretty comfortably off the current stipend. I never heard anything about a stipend decrease though.</p>