10 Vital Financial Tips for New Faculty

This is a guest post by Inga Chira. Dr. Chira joined the faculty at California State University, Northridge in 2015 as an Assistant Professor of Finance and Financial Planning. She has a Ph.D. in Finance from Florida Atlantic University and is a Certified Financial Planner (CFP®). Inga's research is mostly concentrated around two fields: corporate finance and financial planning. Her current projects explore the use and perceptions individuals have about the financial planning profession and the drivers that motivate people to save.


As an assistant professor who likes to talk about financial happiness and as a financial planner who has a practice focused on academics, I am often surprised by how little effort goes into planning our financial lives. We are all smart people, we know a lot about everything from 18th-century opera to asset pricing, and somehow, we don’t prioritize the conscious financial aspect of our lives. So here is some money-related advice for the recent-ish graduates who have left their impoverished Ph.D. lives and moved on to the relatively free-flowing cash world of the professorship.



1.Think about what is important to you before money starts pouring in. The transition from Ph.D. student to assistant professor/instructor comes with a nice monetary benefit. What I have observed so far in many academics is that lifestyle, needs, and desires will adjust really fast to the new paychecks. While before we were making ends meet on the $18k stipend, now $75k does not seem enough. My advice is: take a deep breath, write down your life goals, figure out how much money you really need to be happy, and decide what you would like to spend your money on. The more intentional you are about your paycheck allocation, the less stressed you will be in the future. Repeat this exercise when you get promoted to associate and full professor. It’s actually something we should be doing before any increase in pay.

2. Take that 403(b), 457, or 401(k) seriously. This is an amazing benefit and many colleges are very generous when it comes to funding your retirement. Forget about the pension for a moment and focus on this portion of your retirement because this is the portion you can actually control. Even if you have a pension and your college does not match any 403(b) contributions, take some time and look into it. In an ideal world, every professor I know would max it out. I understand, however, that finding $18k in your budget is not the easiest thing, so just do your best. Put as much as you can aside into a non-pension retirement account. [Note: If you are not sold on why you should be putting this money away, please go to my website and sign up for the 5 emails that deal with the 403(b) allocation. It is such a big decision, it deserves your time].

3. Ask questions about your pension. In case your college still has a traditional pension plan (and many colleges do), put some effort into understanding it. Many of us take the pension either as a great benefit or something that is no longer going to be there when we retire (just like social security). The reality is somewhere in the between but unless you know the details of your pension, how it is calculated, and how well it is funded, it is really hard to understand what it means to you (and if you are in IL you probably already realized that it means a lot). There are so many resources out there; a little bit of time may mean the difference between deciding whether you will to stay at your current job or look for a new one. I just worked with someone who decided to quit her tenure track job and take an instructor position in a different state because of the much better pension.

4. Get to know the difference between the defined benefit type pension and the defined contribution type retirement. As far as academic benefits go- this is a really big one. Some schools do not give you a choice. For example, in the Cal State system, CALPERS is the only option available. However, many states and schools make you responsible for that choice and it is a one shot deal. If you feel like you can’t make this choice because you don’t know enough, get some help. This decision might potentially mean more to you than your actual salary. You do not want to leave this choice in the hands of the retirement gods.

5. Assess whether your current job is really the best for your living standard. This is a tough one. We are conditioned to fight for tenure and keep it once we get it. Leaving a job to move to a lower cost area is pretty radical. But money-wise, it can be such a big difference where you earn your paycheck. I live in Los Angeles; I just moved here because sometimes you need to follow your husband rather than your own financial advice and this one hurts me a lot. For every dollar I used to make in Florida, I need to make $1.9 in LA. That is $2 to $1, people. My salary certainly did not double when I moved to California. If you have a choice or if you got to a point in life where you can afford to be picky, thinking about how far your money goes in different states and cities is important. Here is a good comparison tool to play with: http://money.cnn.com/calculator/pf/cost-of-living/

6. Get a grasp on your student loans. A comparison analysis of your student loan options may save you money, lots of money. You do not have to pay what “the man” told you to pay. Very few Ph.D.s I know finished school without student loans (if you are one of those, good for you!) but for the rest of us, it may be time to start paying those student loans back. What you pay, in what order you pay it, and whether you pay it at all makes a difference. For example, I recently refinanced my federal student loans from 6.55% to a private lender at 1.95%. This was the best for me. I also just told my sister who is entering repayment that she needs to stretch her loans for the extended period because this makes more sense for her. We are both going to end up saving thousands of dollars but the way each of us got there, is very different. You need to figure out what is best for you and your student loans.

7. Think hard about buying a house when you move to a new job. I know we all want tips of how to get rich fast but after 3 houses in 3 states for 3 different academic positions, I am pretty sure buying a house is not it. Your expectation of how long you will stay in this job is very important, but so are many other factors. If you found a deal that is a cash maker (for example, a house where your mortgage is $1,600 and the rent income is $2,450), buy it even if you are not convinced you will stay in this job for longer than a year. However, if you are moving to San Francisco, are not sure about your tenure, and do not have a husband who owns Google, it may not be so wise to buy that $800k condo. This is another one of those decisions that may be worth thousands of dollars in either direction.

8. Negotiate your package. This is obviously applicable to someone who has just secured an offer. Once you are in your 3rd year, not much negotiation is possible. Remember that everything is negotiable, not just the salary. Deans are nice people (in most cases); they want to get the best person for the job. They usually do not hoard money for themselves but there is only that much room they have when it comes to salaries. [Note: Still- even if you get $2k more per year, over 30 years at the reasonable investment rate, you are looking at an extra $200k. It’s worth to ask.] However, you can also negotiate moving expenses, summer support (my favorite because there is more flexibility there), any special responsibilities (will you be the director of something and as such, can you get some more money?). When all else fails money-wise, you can also negotiate loads, preps, schedules, and even your parking spot (seriously, I know someone who did that although I wouldn’t recommend it; the dean had to give his spot up and will never forget that). One of the biggest shocks I experienced when moving from industry to academia is how little professors negotiate. This is your life, your salary, and you will be working very hard for it. There is no shame in asking for more.

9. Take advantage of your benefits. The package of academic benefits is usually pretty awesome. Unlike many other professions where you really can’t only rely on the employer benefits for everything, here you could be just fine doing nothing else but maximizing those benefits. But you do need to spend the time on them. I spent about 50-70 hours working on my benefits and making sure there is nothing else I can extract from my current job. I don’t advocate you do nothing else for a week, but try spend some time on this task. 30 minutes allocated towards your 403(b) is really sad, especially when you may be leaving hundreds of thousands of dollars on the table. Just take the time and try to figure it out.

10. Finally, please call a financial planner and get some basics covered. I am currently working on a paper looking at the 403(b) accounts of professors at a large US school. What I see makes me depressed. Please don’t be the person who chose the JP Morgan large cap fund for 1.11% when the Vanguard fund that does the same is right next to it and costs 0.05%. You should obviously call me for all your help but in case that’s not your cup of tea, make sure whoever you call is a fee-only (or at least fee-based) advisor. Do not get a commission person; that person gets paid for what she sells you and not the advice she provides. If you are interested in finding a good person, let me know and I will provide you some places to start with. These days, so many people offer a good financial analysis for really cheap (you can get a basic review for about $500), that it is a sin not to do it.

If you have any financial questions, please contact me. You can find all my information here: http://attainablewealthfp.com/contact/

How to meet your financial, fitness, and writing goals: Five strategies that work

Have you ever lost weight, saved money for an important purchase, or met a writing deadline?

If you have ever met any fitness, financial, or writing goals, there is a good chance that you have developed skills that will allow you to meet other goals.

The strategies for meeting very different kinds of goals are surprisingly similar. In this post, I will focus on these three areas – as these are some of the most common goals that people have.

If you have never set or met any goals, then this post might also be helpful for you to decide if goal-setting is an appropriate strategy for you.

So, what do money, fitness, and writing have in common?

1. Set reasonable goals.

With saving money, it will be hard to meet your goals if you try and save half your income. Likewise, losing five pounds a week is setting yourself up for failure, as is trying to write 3,000 words a day. Instead, set reasonable, achievable goals. These goals will vary by individual, but it is important to set goals that are both reasonable and achievable. Here are some examples of reasonable goals.

Writing: Write for 30 minutes Monday to Friday. Write 300 words a day. Take notes on one article or book chapter a day.

Fitness: Walk or bike to work once a week. Go to the gym three times a week. Avoid meat on Fridays. Avoid sugar on Tuesdays. Lose one pound a week.

Money: Only buy fancy coffee once a week. Put 10 percent of earnings in a savings account. Use 10 percent of earnings to pay off debt. Cancel cable television. Eat out only once a week.

2. Keep track of your activities.

Knowledge really is power here.

If you really want to take control of your finances, one of the best things you can do is to track every penny you spend. If you are not ready to do that, however, you can at least make a budget and track spending in certain areas. Mint provides a free tool for you to do that. For example, if you set a budget of $100 a month for eating out, it will tell you when you’ve reached that limit, and you can eat in for the rest of the month.

The same goals for your fitness goals – keeping track can do wonders for you. There is a free app called My Fitness Pal which allows you to track everything you eat and even add your exercise so that you can keep track of calorie intake and expenditure. This application works, but requires a high level of commitment. However, even writing down the food you eat once a week or writing down the exercise you do daily can help you meet your fitness goals. I haven’t tried them yet, but many people recommend the FitBit - which tracks your activity.

For writing goals, there are also different levels. Some people find it useful to write down the number of new words they write each day. Others keep track of the hours they spend writing. If you want to go all the way with time management, it can be incredibly revelatory to track your time for a full week. In this article, Kerry Ann Rockquemore draws parallels between tracking your money and your time.

3. Get a buddy involved.

Getting friends involved can help you achieve these goals. There are many ways to do this, from joining support groups to simply asking a friend to check in on you daily or weekly. There are online forums you can join, or you can make your own. Many of us are uncomfortable sharing personal information with others, but , if you can find a trusted person who will keep you accountable, it can do wonders for meeting your goals.

4. Celebrate your achievements.

It is crucial to not only set goals, but also to reward yourself when you achieve them. Depending on your personality and your goals, you can either give yourself a small daily reward or promise yourself a larger reward at the end of the week, month, or year.

It can be hard to think of rewards, so I will offer a few productive examples.

• At the end of each week, if you meet your writing goals, catch up on one of your favorite TV shows.
• At the end of the day, if you meet your fitness goals, call one of your friends and catch up.
• At the end of the month, if you meet your financial goals, allow yourself a small splurge such as downloading a movie or getting a fancy coffee.

5. Make your goals a priority

It would be very difficult to make fitness, money, and writing goals your priority at the same time. For this reason, I would suggest thinking about one area of your life and deciding where you want your priorities to be. In what area are you most committed to change?

I have made different areas of my life priorities at different times. Prior to going to graduate school, my priority was to travel the world, learn new languages, and have a great time. To meet my goal of traveling the world, I worked as a waitress, and saved nearly all of my tips.

Once I began graduate school, as a new mother of twins in a very low-income household, I had to track every penny we spent to make sure we could pay rent at the end of each month. My financial goals were to avoid getting into debt, and I made that a priority.

When I was lucky enough to secure a tenure track job at a research university, I made writing my top priority, as I was sure I wanted to be in academia, and I wanted to build a solid case for tenure.

Now that I have tenure, I continue to write. It still is a priority, but writing has become such a habit that I no longer need all of the mechanisms I once had in place to make sure that I made progress on my writing projects. This has allowed me to focus on other areas of my life. With three children headed for college, I have to think about saving for their education – thus bringing me back to examining my finances. As I just turned 40, I have also realized that my body is not getting any younger, and it is important for me to pay attention to my fitness.

Over the past month, I have recommitted to my fitness goals. It was actually through this process that I saw the parallels and was inspired to write this post.

Finally, I know it has been a while since I have posted here. One of the reasons for this is that I have been focused more on writing opinion pieces. I also have just finished writing a textbook called Race and Racisms that has taken up quite a bit of my time. You can check out the website for that here.

I am grateful to all the readers of this blog and hope to post here more often.

Is Having a Stay-at-Home Spouse the Secret to Academic Success?

Have you ever heard that quote: “Behind every successful man, there stands a woman”? I have often thought about that quote in relation to my senior male academic colleagues. However, today, I want to talk about how it relates to me. How does having a supportive, stay-at-home husband provide me with privileges in academia?

The reason I ask this question is that there is an assumption that this is an undeniable privilege. Consider this comment on FSP’s blog: “I think people with a stay at home spouse should have an asterisk next to their name on their CVs and tenure documents, like baseball players who've taken steroids.”

First of all, there is no doubt that having a supportive husband has been integral to my success. I entered graduate school in 1999. My husband and I married in 2001, and had twin daughters soon afterwards. My husband is an artist and a musician, and he simply was not going to be able to earn enough in his chosen profession to pay for day care for our daughters. He did work while I was on leave from graduate school. But, when I went back to school, he stopped working. He has rarely had a full-time job since.

It did not make economic sense for my husband to work full time when we had twin infants, and less so when our third daughter was born. Putting all three children in day care would have cost between $2500 and $3000 a month and the jobs for which he qualified would have netted him about $1000 a month. As a graduate student, I was barely netting $1000 myself.

It was not until 2008 that we had all three children in free public school. At that point, my husband could have gotten full-time work. However, he did not for three main reasons: 1) In Lawrence, Kansas where we live, entry-level jobs pay very little; 2) Music and art are his passion, not working for the man; and 3) We love to travel and any job he would get would not permit us to take 4-week vacations in December and three-month vacations in May. Thus, my husband has become mostly a stay-at-home dad, although he occasionally sells jewelry, plays music, takes odd jobs, or works on our house.

In case you are wondering, we have been able to take vacations even though we have just one salary because we live fairly frugally in a low-cost area of the country. We have made vacations a priority over durable consumer goods and expensive nights out at home.

For us, his staying at home has mostly been a lifestyle decision. I have a flexible job as an academic and he has even more flexibility as a self-employed artist. I have thought a lot about the privileges it brings me (as a woman and mother) to have a husband who works as much or as little as he likes. Here are some of the things my husband does on a regular basis:

1. Grocery shopping
2. Picking up the kids from school and transporting them to activities
3. Taking the kids to doctor and dentist appointments
4. Staying home with the kids when they are ill
5. Cleaning and cooking
6. Yard work

Things I do on a regular basis include:

1. Laundry
2. Helping kids with homework
3. Getting kids dressed and groomed in the morning
4. Reading to kids at night
5. Paying bills and keeping track of finances
6. Vacation planning

Looking at these lists, it is clear that my life is easier than a single parent who earns the same salary as I do. A single parent would have to do all of those things (and more) or pay someone to do them. On my salary, it would be a stretch to pay people to do all of these things for us. Thus, I can only imagine that being a single parent in academia can be very challenging, especially if the other parent is out of the picture emotionally and financially.

But, what about an academic who is married to a well-paid professional or even a decently-paid academic?

I do think that if my husband were able to earn a decent salary doing what he loves, he would do it. But, we simply have not been able to figure out how he could do that. And, if he were able to make a decent salary doing what he loves, then I think that we would simply pay people to help us out with the things he normally does around the house. Right?

For grocery shopping, there are grocery services. We could pay someone to transport the children to their after school activities, to clean the house, and to do the yard work. The greatest difficulty would be when one of the children falls ill. For that, one of us would have to stay home. However, the other things it seems that we could pay someone to do.

So, how much privilege is there in having a stay-at-home spouse versus a spouse with a well-paying job? Am I missing something in the equation here? Do I have privileges that a two-income household does not have?

As I mentioned above, it is clear that an academic with a stay-at-home spouse (or a working partner) has advantages over a single parent. It also is evident that there are privileges associated with having a well-paid partner as opposed to a low-wage partner. In that case, I am very lucky that my partner is happy working from home, not making very much money with his jewelry and music, and dedicating most of his time to our home and children. If he didn’t find that fulfilling and instead preferred to work for $9 an hour as an intern somewhere, then things would be more complicated. Or, if we lived somewhere where we couldn’t get by on my salary alone, life would be more difficult.

What do you think? Can parents outsource household tasks or are there real limits to that? Do academics with stay-at-home spouses have advantages over two-income couples?

New Faculty and “The Latte Factor”

Money is a touchy subject among academics. However, we actually live in the real world and have to make real-life budgetary decisions. And, our research and writing may well depend on us being judicious about those decisions.

The transition from graduate student to faculty member usually comes with a number of perks. A substantial raise is one of them. For example, I went from earning $1,000 per month to $4,000. One of the first things I did was to purchase a home. I was tired of living in apartment buildings with irritable and irritating neighbors, and yearned for the freedom of a single-family home. I thought about getting new furniture. But, two things held me back. For one, I had three children under the age of five that could were very likely to damage the new furniture. Secondly, I didn’t have the cash and didn’t want to go further into debt.

In fact, I soon realized that $4,000 a month wasn’t actually that much money. When my I sat down and came up with a budget based on my income and expenses, I realized I did not have enough money to buy whatever I wanted at the grocery store, to go shopping for new clothes, to drink lattes every day, or to go out to restaurants on a regular basis.

With a mortgage, bills, taxes, a student loan, child care, and credit card bills to pay off, I was not living in the lap of luxury. It took a while to come to terms with the fact that, although I was no longer a graduate student, I still had to watch my spending carefully. Once I began to budget my money, however, I was pleased to see that I did have money for some of the things important to me, such as taking a family vacation over winter break.

At the beginning of my second year, I wasn’t any further in debt, but I did not have any savings, despite a substantial increase in my income. I decided that I had to be even more careful with my money. I did get a raise, but my paycheck changed little, as my health insurance costs had gone up, and I was now paying into retirement. I re-did my budget, and included a line each month where I set aside money for the three summer months when I don’t get a paycheck, and money for vacation. Each year, as my paychecks and living costs change, I re-do my budget so that I can prioritize what I need and want in my life.

Budgeting Can Help Your Research Agenda
Why am I telling this story? Because budgeting is something I rarely see discussed in forums on advice for new faculty. Yet, budgeting is one of the most important things new faculty can do. For one, it takes away some of the stress of not having enough money. Secondly, having money set aside can actually help your research agenda. Let me explain two ways this is possible.

Money for Research
At my university, they often award faculty summer grants of about $8,000. If you take this money as summer salary, they take out taxes and other things, and you end up getting only about $5,000 of it. If, on the other hand, you spend all of the money on research-related expenses, you can get the whole $8,000. Many academics need to travel for their research. Plus, if you live in a small university town, traveling elsewhere for library research or fieldwork can be a welcome break. The trick, however, is that the $8,000 is money they will reimburse you for expenses. So, you need to have the money on hand in order to spend it and get reimbursed later. In addition, if you have family members who you’d like to take with you, you will have to pay for their airfare up front. Again, you will need cash on hand for that. And, you can’t use the grant to pay your mortgage or bills. Having saved up your money over the course of the school year will make it easier to take the larger sum and get research done, as opposed to taking the smaller sum and not have funds to travel for research.

Summer Teaching?
At my university, they also offer the option of teaching a summer course, for a percentage of your annual salary. With the exception of some people who do this as part of a study abroad program, all faculty I have talked to say they do this for the extra money.

I have to say this gives me pause, especially when Assistant Professors at R1 universities teach summer courses. Most new faculty members, presumably, are like me, and experienced a great increase in salary when they made the transition from graduate student to professor. And, even though the new position comes with new financial responsibilities – new clothes, a nicer place, student loans, etc. – I can’t help but feel inclined to suggest to new faculty that they more carefully consider their priorities.

At the end of the school year, we are all tired from the various service and teaching responsibilities that we have. Most of us have not gotten all of the research done that we would like to. And, if you are at a research-oriented institution, if you don’t publish, you will not be awarded tenure. Of course, you can get some writing done while teaching a summer course. But, most of us are too burned out to write in addition to preparing an intensive class. I think it is safe to say that teaching a summer class in most cases leads to a less productive summer in terms of research.

If you are not worried about your research productivity, then this does not make a difference. If, like most assistant professors, you are, then I would encourage you to avoid summer teaching unless it is absolutely necessary. If, for example, teaching a summer class is the only way you can help your mother pay for open-heart surgery, then, by all means, go for it. Most of us, however, do not have such life-threatening reasons to teach over the summer.

Many of us can avoid the need to teach over the summer through careful budgeting. Let’s suppose summer teaching nets you $5,000. That is equal to $417 per month for the year. Sounds like a lot to cut from your budget. For some, it could mean cutting out one latte a day, one night out drinking a week, and two nights out eating each month. For others, it could mean renting or purchasing a less expensive place or forgoing the purchase of a new car or new furniture. The only way for you to know, however, is to create a budget, and, moreover, to track your spending.

If you are starting a new faculty position this year, I encourage you to think carefully about your budget before making any major financial decisions. If you are an Assistant Professor and already find yourself in a position where you are teaching every summer, I urge you to assess the extent to which this is allowing you to meet your tenure requirements. If it is getting in the way of them, it might be time to re-assess your budgetary decisions.