Backpack To Briefcase

The L.G.B.T.Q.+ Bar - Backpack to Briefcase

A personal curriculum for LGBTQ+ Law Students

Living on a Budget

Living on a Budget

Introduction

Full-time private law schools charge an average of $51,000 for tuition and fees. Add in the cost of room and board, transportation, and school supplies, and you’re faced with an annual cost of attendance of over $70,000. For most law students, this daunting price tag leaves loans as the only way to finance their legal education. Every dollar you borrow accrues interest that you’ll have to pay back one day. Proper budgeting significantly reduces the amount you’ll need to borrow and, therefore, the amount of interest you’ll need to pay.

Creating a budget and sticking to it can significantly reduce the cost of law school. Think of budgeting as a way to force a conversation with yourself about whether your spending matches your priorities. Using a budget will help you form good spending habits now to keep you from overspending when you’re working full-time. Budgeting is not difficult, but it does require you to pay close attention to how and where you spend your money. If you’re heading to law school or are already enrolled, you need to consider the costs of taking out loans to cover your living expenses during your time in school.

A Note on Frugality

The best kind of frugality is unique to each individual: it is not a one-size-fits-all solution. Yes, there are popular approaches and strategies, but you still get to pick and choose which practices you will adopt. If spending money in a certain category enables you to live your values – and cutting back in that area would impede that – keep spending there. Move your search on to another category for potential cuts. Of course, the reality of living on a stipend may force you to revisit your valued category, but it should be last on the list for cutbacks. Practicing frugality doesn’t mean that you need to feel deprived or be living paycheck-to-paycheck. You can use this strategy to give yourself a leg up on savings and wealth creation, and build excellent  lifetime habits during law school.

Creating a Budget 

  • Determine Where Your Money Will Come From: First things first, where are you going to get your money? This can come from a variety of sources: savings, your parents, loans, and employment. Either way, figure out how you are going to finance your law degree. If you are getting loans, know whether you’re getting federal loans or private loans. If you have a cosigner, private loans will have lower interest rates but may hinder your ability to apply for Public Service Loan Forgiveness. If you’re on your own, federal loans are likely the way to go.
  • Determine The Total Amount of Money You Will Need for the Year: In this case, year can either mean the full calendar year, or the 9-month school year, depending on how you want to plan. If you are going to be working during the summer, you might not need to stretch your financial aid over the three summer months. If you plan on not working, or working an unpaid position in the summer, you might want to anticipate needing more money. Either way, try to solidify your plans as early as possible. Your law school likely gives an anticipated dollar amount that students need for expenses outside of tuition for the year, usually labeled under “cost of living” somewhere on the finances page of their website, or in the information they have sent to you. This usually includes stuff like fees, books, rent, transportation, food, and miscellaneous needs, and is tailored to the school and geographic area. Keep in mind, this is usually a 9-month estimate for the school year only. This estimate also determines the maximum amount you can take out in federal loans. However, if you are good at budgeting you can make this amount last the whole year. You should consider this “cost of living” amount with your own personal lifestyle. Use the school numbers as a guideline, and tailor them to you.
  • Keep Track of Expenses: Once you have set your budget, be sure to track every dollar you spend, to be sure you’re sticking to the plan. If you see that the original budget isn’t working, you’ll be able to adapt early before your expenses spin out of control. You can track your spending and expenses using a budgeting software program/app, through a simple system like Excel, or even on paper – just make sure that you count everything.
  • Watch out for Credit Cards and online purchasing!: Credit cards are a convenient way to manage spending, but can also be a budgeting pitfall. Interest rates are often high and the monthly debt accrues very quickly. If you plan to use a card during law school, be sure that all your expenses fit within your monthly budget, and pay the card off in full each month. Likewise, online purchasing is convenient and fast, but can encourage excessive and impulse spending that brings later regrets and additional credit card debt.

Reducing Your Expenses 

  • Target Your Largest Expenses First:  When you’re searching for places to cut back in your spending, start at the top. Using your budget, any past spending data you have, or your memory, rank your expense categories from largest to smallest. Your largest categories likely include housing costs, transportation, groceries, entertainment expenses, travel, childcare, among others. Once you have your ranked list, process each spending category from largest to smallest, brainstorming ways you could reduce your spending in that area. Sometimes the prospect of reducing your spending on a very large expense is quite daunting. You may have contracts, such as an apartment lease, in place that limit your ability to change the expense for up to a year. Often, reducing a large expense will take quite a bit of work but you have to focus on how much your quality of life can be improved in other areas by taking those steps.
  • Reduce Your Fixed Expenses:  There are two types of expenses: fixed and variable. A fixed cost is an expense that does not change with an increase or decrease in the number of goods or services produced or sold. Think rent, insurance, salaries. Our mortgage payment, for example, does not change from one month to another (fixed), but the exact amount of money spent on clothing or ice cream varies wildly from one month to another (variable).

See below some ways you can lower your fixed expenses:

1. Buy/Rent a smaller home.

2. Avoid car payments.

3. Double-check recurring expenses.

4. Research insurance costs.

5. Pay off your credit card debt.

6. Stop upgrading your phone.

7. Cut utility bills at home.

8. Research childcare options in your area.

9. Get rid of your storage unit, if you are using one.

  • Reduce Your Variable Expenses: The key to reducing a variable expense is to make your cost-cutting strategy a habit. After establishing the strategy, you should automatically follow it unconsciously and without having to use willpower. Until you reach that point, you should use whatever prompting strategies work for you to remind you to follow the strategy. Don’t use your limited time and energy forcing a strategy that refuses to become a habit or takes up too much time or energy.

See below some ways you can lower your variable expenses:

1. Get the most enjoyment for your money.

2. Pause before you purchase.

3. Do your best to plan in advance, especially for seasonal expenses.

4. Put your spending in perspective.

5. Track your expenses.

6. Use the “average” of your expenses when tracking.

7. Inflate estimated costs.

Slow and Steady Wins the Race

To reduce your variable expenses successfully, you’ll need to pay attention to what you spend each day. Over time, that exercise can be tedious. It’s tiresome to have to watch, count and restrict yourself every day. However, over time your carefulness will come more easily and you’ll be more aware of the habits that increase your variable spending — and how to change them.

Additional Tips and Guidance  

  • Share Housing: If your law school offers on-campus housing, you can select to either live in one unit by yourself or with your partner or share a larger unit with other law students. Of course, sharing the unit with another student or two will reduce your monthly costs. Although some law schools offer on-campus housing, many more do not. If this is the case for you, you will need to find off-campus housing that will enable you to get a good night sleep, feel safe, and offer you a good place to study and relax. Great places to find roommates are at your Accepted Students Day or online if your law school has coordinated either an email or social media Accepted Students group. You can group up with a few other law students and rent an apartment or house together off-campus. Do note though, that law students living off campus can usually expect to pay even more on living expenses. Stanford tells its off-campus graduate students to budget an additional 10 to 40 percent in monthly costs if they are living off-campus. If you choose to live with non-law students off of the Internet, just be wary of posts that are scams or seem unsafe: use your best judgment and do not live anywhere that makes you uncomfortable or threatens your safety.
    • Utilities: Consider looking at apartments that include utilities in the monthly rent, which means you would not need to budget for variable costs monthly. It will be easier to budget a flat amount each month than to estimate multiple fluctuating bills. Should your rent not include utilities, you can also try to limit your utility usage so that you pay less. For example, see if your utility has “peak times,” that is, utility companies charge more for your usage depending on certain times and days of the week. Also be mindful about turning off lights and other appliances when you leave the room or if they are not in use as well as adjusting the thermostat accordingly whether you will be home or not – of course being mindful about your pets!
  • Buy Used Books and Supplies: While new law school books can cost you anywhere from $1,000 to $3,000 each year, you usually don’t need to pay anywhere close to that. For 1L courses, look to 2Ls, 3Ls, and former law students – they haven’t sold their books back to the school, they are probably trying to sell them to new students like you. Check online groups, text your friends, and ask other law students if they are willing to sell you their old books. You may alternatively be able to get the books from online stores and vendors for a reduced price. Of course, do not shy away from local off-campus used bookstores as well!  Renting your law school books for the semester or sharing the books with some classmates can also save you money. You will occasionally have a law professor who keeps their textbooks in your law library for you to borrow free of charge – just remember you will have to plan accordingly as other law students will also be trying to borrow those books!
  • Cut Your Entertainment Costs: It is recommended that students limit entertainment expenses (including social nights out) to about ten percent of your monthly budget on entertainment expenses. Be strategic about how you spend your money in your spare time, so that you don’t wind up going through your budget early in the month. Tip: Stock up on free shows, movies and music at your local library or through your university. There is no reason to pay for entertainment and media when you can get it for free with a library card or by going to free events. Many cities and towns with educational institutions are flush with free concerts, street fairs, speaking events, and public art. Be in tune with the local community so you are up-to-date on the free “happenings” throughout the year.
  • Negotiate Everything: A method that a lot of people don’t actually employ is to negotiate. As a law student and future attorney this will be good practice!  You can not only negotiate your law school scholarship – if you were offered one during admissions – but you can also negotiate your financial aid package each semester you are in law school. You can leverage your good grades to get book stipends, partial scholarships, and other funding options. Further, you can negotiate your rent with your landlord. Since you will get your loan money disbursed to you in a large chunk, you can offer to pay 6-12 months of your rent upfront for a discount. This will also help you budget for the remainder of the semester knowing your rent, a fixed expense, is covered. After 1L year, plenty of law students will seek summer employment and part-time employment during their 2L and 3L academic years. The ranges of salaries for employment during law school will depend on a number of factors. Big law firms typically enact lock-step systems for their compensation structure in which their associate attorneys all earn the same as their peers of their law school graduation class. However, you can still negotiate your compensation for transportation benefits and other types of fringe benefits.
  • Use Your Law School’s Free or Reduced Services:  If you like to exercise and use fitness facilities, you can usually use your campus fitness facility for free or a significantly reduced rate.  Be sure to also take advantage of your school’s free and reduced shuttle service if it is offered!

Closing

Obtaining a law degree is a long haul. If you adopt the attitude toward frugality outlined above, think how many different strategies you can try out over the years. Even if you only made habits of 20% of them, that could impact your spending enormously. One of the great benefits of living on a stipend is figuring out what is important for you to spend on and what isn’t. If you maintain the comfortable but low lifestyle you fine-tune in law school after you start earning more from your real jobs – probably with a few judicious upgrades! – you can start making huge strides in increasing your net worth in the long run.

Additional Resources