This question comes out of complete ignorance of anything that relates to personal finance. I'm a graduate student in mathematics, and I'm on a grant from the university until the end of the year. Then I'll get a post-doc somewhere (maybe in the States, maybe not). In my bank account I have ~$5,000.

Is there anything I should be doing now that I'm not. Is there a retirement fund I should be inquiring about? With ~$5,000 should I be inquiring about mutual funds, or is it not significant with this amount of money?

  • There are a lot of valid answers here. Starting young is a good idea, so you are already ahead of a lot of people. When you save enough to start investing, look into Warren Buffet for some tips.
    – GUI Junkie
    Commented Oct 20, 2010 at 22:58

4 Answers 4


First of all, make sure you have an emergency fund. Ideally this should be at least 6 months of living expenses in an easily accessible place.

Do you have any credit card debt, school debt, or other debt? Work towards becoming debt free, especially of higher interest debt and debt on things that are only depreciating (cars, for example). If you have extra income, consider putting it towards debt.

If you currently have access to a 403b, you should begin investing immediately. If not, look into a Roth IRA. The community has provided suggestions for good places to get one. With a Roth IRA you take post-tax income money and invest it into this retirement account and when you reach retirement age you get it and all the interest as tax-free income. You can't withdraw the principal until retirement age. You should put up to the legal limit into a retirement account - if you can't do this at first work towards this goal.

After an emergency fund, becoming debt free, and fully funding your retirement, save for goals such as a house or other things you are working towards.

The exact order of doing these things might vary, but in general you need the emergency fund first.

  • 1
    TIAA-Cref is a good place to open a 403b/Roth IRA those in the "academic, medical, cultural and research fields", such as yourself. Your university might already have a contract with them, making it easy to open your own account.
    – Pete
    Commented Oct 11, 2010 at 19:05

I may be walking on thin ice but that's never stopped me from answering before. ;)

I have a PhD in physics. I knew that I wasn't a die-hard publisher so I didn't pursue academia.

A postdoc will likely pay about what a person with a BS in math could make in industry, but you're now a few years past that age. You'll be playing catch-up. The magic of compounding was working on a small amount of money while you were studying, if it was anything like my experience.

When I think "postdoc" I think "you're looking for tenure track" so if that's incorrect forgive me. Competition will be fierce for those positions, meaning you'll be looking at not one but several postdoc positions, all at low salaries. Postdocs are a way of absorbing the glut of PhDs.

Tenure track is a long road, and by the time you get there -- if you get there -- who knows if there will be such a thing as tenure?

Long way of putting this: I'd take a good, hard, careful look outside of academia for your employment if you're concerned about your financial outlook.

  • That's a pretty accurate portrayal of what's to come, yes. A post-doc in math (in America) pays at least $4000 a month (so overall more than twice my current earning). I wouldn't really say that I'm after being financially secure as much as I want to be responsible with my money and I don't know enough to know what I should be doing.
    – M. Duff
    Commented Oct 11, 2010 at 12:48
  • In any case I have no plans to leave academia.
    – M. Duff
    Commented Oct 11, 2010 at 12:48

On average, you should be saving at least 10-15% of your income in order to be financially secure when you retire. Different people will tell you different things, but really this can be split between short term savings (cash), long term savings (401ks, IRAs, stocks & bonds), and paying down debt.

That $5k is a good start on an emergency fund, but you probably want a little more. As justkt said, 6 months' worth is what you want to aim for. Put this in a Money Market account, where you'll earn a little more interest but won't be penalized from withdrawing it when its needed (you may have to live off it, after all).

Beyond that, I would split things up; if possible, have payroll deductions going to a broker (sharebuilder is a good one to start with if you can't spare much change), as well as an IRA at a bank.

Set up a separate checking account just for rent and utilities, put a month's worth of cash in there, and have another payroll deduction that covers your living expenses + maybe 5% put in there automatically. Then, set up automatic bill payments, so you don't even have to think about it. Check it once a month to make sure there aren't any surprises.

Pay off your credit cards every month. These are, by far, the most expensive forms of credit that most people have. You shouldn't be financing large purchases with them (you'll get better rates by taking a personal loan from a bank).

Set specific goals for savings, and set up automatic payroll deductions to work towards them. Especially for buying a house; most responsible lenders will ask for 20% down. In today's market, that means you need to write a check for $40k or $50k. While it's tempting to finance up to 100% of the property value, it's also risky considering how volatile markets can be. You don't want to end up owing more on the property than it's worth two years down the road.

If you find yourself at the end of the month with an extra $50 or so, consider your savings goals or your current debt instead of blowing it on a toy. Especially if you have long term debt (high balance credit cards, vehicle or property loans), applying that money directly to principal can save you months (or years) paying it back, and hundreds or thousands of dollars of interest (all depending on the details of the loan, of course).

Above all, have fun with it :) Think of your personal net worth as you do your Gamer score on the XBox, and look for ways to maximize it with a minimum of effort or investment on your part! Investing in yourself and your future can be incredibly rewarding emotionally :)

  • Mmm, normally money market accounts will earn you a little more interest, but these aren't Normal times right this moment. You won't find a money market account with any substantially better rates than a savings account, so you might as well do the savings accounts, because they're FDIC insured and money market accounts aren't. (You can get up to about 1.4% for Internet savings accounts at the moment, I think; check out various comparison sites).
    – user296
    Commented Oct 21, 2010 at 15:26
  • Money market accounts offered by brick-and-mortar banks are, for the most part, FDIC insured. In fact, I've never encountered an institution that offers an uninsured MM, even if they offer uninsured Repurchase Agreements or other products. Commented Oct 22, 2010 at 1:56

Buy this book. It is a short, simple crash course on personal finance, geared at someone in their 20s just starting out their career. You can easily finish it in a weekend. The book is a little dated at this point (pre housing bubble), but it is still valid. I personally feel it is the best intro to personal finance out there.

99% of the financial advice you read online will be a variation of what is already in this book. If you do what the book says, you should be in a solid position financially. You won't be an investment guru or anything, but you will at least have the fundamentals.

There are various "protips" for personal finance that go beyond the book, but I would advise against paying too much attention to them until you have the basics down.

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