Money trouble for a research scholar: Managing finance for easy-going scholarly life

 

Vikash is a final year PhD student in a prestigious institute in India. He used to be meritorious student in his school and in higher studies. He qualified all India entrance exam for research fellowship with outstanding performance and got admission for PhD under supervision of a renowned Scientist in his field. Beyond all of this Vikash is intelligent enough to grab his research design and did very well in his past years with two nice research publications.

But Vikash is not happy at all due to the financial trouble. He did not receive fellowship since last three months and currently he is all most out of cash. He already took loan from others and that is also going to be finished within a few days. His bank balance is touching the minimum limit while he is entering his thirties. That is why he remains always tensed, depressed and irritated, sometimes he spends sleepless nights and it is now also negatively affecting his research and he cannot concentrate in his work. With time he is losing hope to get a good career in the field of science, as he finds most of his school friends are already established in life by entering banking, corporate, medical and technology sectors; and even being less meritorious compared to him they are in highly paid jobs, buying cars, homes, having vacations etc. and those are mostly showed off in the social media. Vikash getting depressed eventually, he is eager to find a way out to get a financial comfort.

The picture described above is a very common scenario that can be noticed in most of the research institution throughout the India and sometimes in other countries. PhD students and research scholars fully depend upon their fellowships for the bread and butter. Specially in India, most of the fellowships are often discontinued temporarily and not received regularly which creates a severe financial problem for the research scholars.

Now a day the average ages of the PhD students and postdoctoral research scholars throughout the world are in between 25 to 40. This age group is very crucial to build up a financial foundation for future life. In early twenties people use to start earn and from the late twenties they start to build savings. In India, unfortunately, personal finance always remains a neglected topic which are not discussed or taught in schools or colleges. Therefore, the methodology of building a good financial foundation remains fuzzy to most of the people and as a result a well paid person earn and spend throughout the life but cannot achieve true financial security. The situation get tougher when there is not a stable income. In such cases people cannot plan properly for their savings, they use to take loans and make situation more complex.

For a research scholar, it is very rare to make a plan for the financial future. Academic work pressure takes away a lot of mental energy from them leaving a too stressed and exhausted mind to make a plan for financial freedom. But it is not very tough to achieve a financially easygoing life for a research scholar who is getting stipend or fellowship. Here, some practical ways are discussed which may be helpful to the research scholars to achieve a financial stability and by following these they can build a base for future wealthy life.

1) Make your life frugal by choice not by force

Spending habit will decide whether you will be financially stable or not. Frugal people use to get wealthy easily as they save more compared to extravagant people. Believe it or not, all the billionaires you know are frugal in their lifestyle including Elon Musk, Mark Zuckerberg, Warren Buffet, Bill Gates etc. They do not spend money on themselves for showing off, they only spend money when actually needed to spend. For example, Mark Zuckerberg use to attend office in T-shirts and trousers, not in expensive suits, Warren Buffet use to have only 2-4 dollars lunch on daily basis and drive an old Cadillac etc. They are economic in life by choice not by force. They spend less even after earning a lot. There are several examples like these which have been published in the magazines or social media. Hence, if you make a habit of a frugal life-style by choice then it will help you to live a life with less stress and create a great saving habit.

2) Manage the irregularity of fellowships by considering yourself as a start-up owner

Mostly the business or startup owners do not expect a regular fixed monthly income. Initially they receive a part of the profit from their business when the business makes profit. That can be twice a year or thrice a year and they make their financial planning accordingly. In most of the cases research scholars get their fellowships with breaks, sometimes these breaks could be long per se for six months to a year. Here the challenge comes. If you are a fellowship dependent research scholar you need to plan your six months budget for regular expenditures and that should be made when you receive your salary at a time. For example, if you have received a lump sum amount of your fellowship after four months, you need to make budget for coming six months by knowing that no money will come to your account for coming four months. Save the money accordingly.

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3) Try to start a side hustle

It is not recommended for anyone to depend on a single source of income. Here, it is also applicable for the research scholars. Though, a research scholar in the field of science has a very tight schedule to find out extra time for extra work as a side hustle of income, one can give a try. You may plan your working schedule or working hours so that you may get at least six hours in a week to work for an extra income. These six hours can be taken out from your weekend or it can be taken from your daily routine. You may work as a freelancer by using your hobbies, like you may work for preparing book cover professionally by using your photography, designing, painting, skills. You may work as a part-time content writer by improving your writing skills. There are a few good online freelancing sites where you may register yourself for freelance work orders. You may also register yourself for online teaching or you may contact coaching centers where ‘hour basis’ teaching schedule is available. If you have expertise on any skills regarding your research subject you may look for working as a part-time consultant. At starting you may not be able get much commissioned work but with consistency and time you will be able to establish yourself as a part-time professional. But do not let your main focus to deviate from your research work which is most important for your stable career.

4) Avoid to use credit cards

If you are habituated with using credit cards then there will be a huge chance to spend extra money. As psychologically credit card gives you a comfort to purchase the stuffs in credit. If you cannot control your purchasing urge then it will be problematic for you to make the monthly credit payment and if you missed the date of payment you will need to pay a high interest. Therefore, it is always better to pay with cash, UPI or debit card for purchasing which is a real time deduction from what you exactly have in your bank account. It will refrain you from unnecessary spending and will help you to save extra money.

5) Avoid loans

Try not to take any kind of loan. Loans are some time necessary, but if you can manage without it, then avoid it. Loans always create extra burden and take away extra expenses from you in the form of interest. Specially personal loans are very expensive due to high interest rates. Never take loans for any gadgets or luxury items or do not purchase those with EMI, as those will take 5-20% of extra price from you.

6) Get a good health insurance

Health is the actual wealth. Now a day the accuracy and efficiency of the medical treatment is touching the excellences but with that the expenses of the treatments are also increasing rigorously. That is why a good medical coverage is very important for you. If you are young and less than 30 in age, you may get a good insurance with a premium ranges in between 1500-2000 per month. It will make you tension free about your medical expenses as there are lots of examples of people without any kind of medical insurance who spent most of their life-savings in medical treatment. So, go for it without any hesitation.

6) Start not only saving but also investment

If you already saved some amount by maintaining frugality and proper savings plan, you should now focus to grow your money. This is actually required for all to grow the savings with proper investment. When you receive a lump sum amount as your latest fellowship of 2-4 months, you should immediately separate at least 15-20% of that and invest in some good investment scheme. You may start with a fixed deposit for 2-3 years, and may also plan for a Public Provident Fund (PPF) or may go for a Systematic Investment Plan (SIP). But always make a detail research before putting your money for investment, specially for SIPs. If you continue these plans throughout your PhD period, which is average a ‘5-6 year-duration’, you must build a good corpus of money at the end of your PhD. For postdocs with taxable salary, these savings plan will also provide tax benefits. For tax benefits, ELSS mutual funds, FDs and PPFs are nice options. These will provide you a minimum of 6-10% returns on average for 5 years, if you start from the very first year of PhD or you may start as early as possible.

Therefore, maintaining a proper disciplined spending, saving and investment habit one can easily achieve a hassle free healthy financial comfort zone even with a discontinued or irregular income.