Managing your finances in a foreign country might be difficult, perhaps you did not do this yourself at your home country if you still lived with your parents during college. In the States you will not be earning a lot of money compared to the rest of the population as a graduate student although it will probably still be more than you would make back at home. You will therefore be vulnerable here and need to be extremely careful about your finances. I will not cover here obvious things like you should not spend all your money on parties or you should keep your spending in check but rather specific situations that you will experience in this country. Here are some things I think you should know.
- Your university will probably guide you to obtain a Social Security Number (or Taxpayer Identification Number). Do not lose your social security card, do not carry it with you but keep it in a safe place instead, and more importantly share your social security number only when strictly needed. Your social security number is linked to your Credit Score. Once you obtain a social security number you are already searchable in a unified system that tracks all your significant financial moves and assigns you a Credit Score. If your Credit Score is good then banks will look for you to lend you money so you can buy a car or a house, apartments will want to have you as a tenant, service companies might not ask you to put down security deposits. If your Credit Score is bad then you will not be able to get loans, you will not even be able to get credit cards, and landlords might not want to have you as a tenant, and service companies might ask you to put down larger security deposits. Also, share your Social Security Number sparingly and only when strictly needed, e.g. when applying to rent an apartment, when requested by the US government, when seeking employment, when applying to a credit card or bank account, or when setting up a trusted service that requires recurrent payments (e.g. well known electricity/water/internet providers serving your local area).
- How do you keep a good Credit Score? If you are an international graduate student your credit score will be inevitably low at the beginning. You do not make a lot of money, your annual income is probably around or in most cases below $20k. You also do not have a credit history, you just arrived and have never had a credit card in this country. In fact, you probably do not even qualify for most credit cards offered by financial institutions. This is a problem because your Credit Score depends on you having a credit history, this means having a credit card. You probably will get a debit card when you open your bank account but not a credit card. When you go to the bank next time, consult with the people there what would make you qualify for a credit card, sometimes smaller banks or credit unions will be more forgiving when handing out credit cards. Your first credit card will probably have a limit of $700 or maybe even less, this is normal. While debit cards take money from your bank account, credit cards lend you money from this balance. You usually do not even have to pay interests or any maintenance for having credit cards as long as you pay your balance at the end of the month on time. Once you get your credit card, use it but make sure you always pay the credit card on time. Paying the credit card usually means going online and transferring money from your bank account to your credit card account. It is annoying to do this manually but absolutely make sure you do it. Also, do not even think of spending more than your limit from your credit card. In fact, to keep a good Credit Score keep your balance in the credit card small. Always remember this, your Credit Score will grow slowly but if you miss a payment to your credit card it will drop sharply!
- Do not get a ton of credit cards. This is a corollary from the previous point. If you need to keep track of five online accounts in different websites to pay for all your credit card balances at the end of every month, you are setting yourself up for disaster. This is probably something you do not need to worry at the beginning when your Credit Score is low and you barely qualify for a credit card but as it goes up you can probably feel king by starting to have any credit card you want approved. But, why would you even be tempted to have many credit cards anyways, you say? Every time you go to a shopping mall, be it Macy's, JC Penny, Sears, Banana Republic, etc., you will be offered at the register to sign up for their "discounts", and they will typically ask for your social security number to verify if you qualify. What they are really offering you is a new credit card. During your first year or two you probably don't want to even go through this embarrassing situation because they will kindly tell you that you do not qualify. And while some of these cards do offer significant discounts in their stores, take into account the do-not-get-a-ton-of-credit-cards advice and keep things manageable. I personally recommend you having a main credit card from the bank where you have a bank account for your first three years, and at most two store credit cards from places where you actually shop frequently after your first three years or more.
- Be careful with your medical insurance and expenses. Medical expenses in the States are enormous and border on the unreasonable. People often like to tell their story when they went to the hospital to get one band aid and they got billed thousands of dollars. Do not get too afraid about that but still be careful. If you are a graduate student you probably are paying an infirmary fee, or campus health fee at your school. This usually means that if you go to the on-campus health facility/infirmary (not the school hospital) you will not get charged and it is covered by your school fees or charged directly to your insurance. This is a great thing to have so if you feel sick never hesitate to go there and make sure you know where it is located from day one. If you have an emergency also do not hesitate to go to an emergency room wherever that might be, this is usually covered by most medical insurance plans, and besides you probably do not have any other option if it is truly an emergency. Complicated situations usually arise when you need to treat some other disease that does not qualify as an emergency but it is also not a simple cold. Even for those cases, always go to the school health facilities first. If you happen to be traveling in another city, or are visiting some other place for the summer, always contact the health insurance company in your health insurance card before going anywhere to get medical attention (unless it is an emergency). They will advise you what places are "in network" for your health insurance plan wherever you might be. Never go to an "out of network" facility unless absolutely necessary (i.e. you are not in an emergency but still in severe pain). If you follow these guidelines you are more likely to avoid trouble. Remember that any medical facility will attend you and accept your health insurance card but only very few will be "in network", and the hospitals or clinics will not tell you whether your insurance will be able to cover your bill in full. Beware also that some plans will tell you that they cover 60-80% of the allowable amount for out-of-network facilities, this means 60-80% of a made-up amount over which you have absolutely no control.
- Be mindful about filling your taxes. The deadline is usually April 15th, and you typically require to fill federal and state taxes. The federal form that you will be filling as a graduate student as of this year is the 1040NR-EZ form. Read the 1040NR-EZ instructions carefully, I could include a link here but you better google it yourself because it gets updated every year. The instructions are simple and probably very few things apply to you. If you only worked for your school you will only receive one form W-2 reporting your past year earnings and how much tax was already paid by your school to the government. The instructions will also tell you if you have to attach any other form, typically the form 8843. The state taxes depend on each state and you have to figure out what form needs to be filled and follow the form instructions. Filling your taxes is not as hard as it seems but you will definitely need to sit down one afternoon, gather your documents and put some hours to this task. Schools typically offer tax seminars or tax clinic sessions to provide you with some help. There are also companies exclusively dedicated to tax preparation like HR Block, and TurboTax, to name a few. Remember that very few online tax preparation systems support the form 1040NR-EZ (NR stands for Non-Resident), so be careful and do not fill as resident. If you ever filled things incorrectly, you can still amend a return through a process which involves preparing your tax again with amendment form 1040X but that means a lot of extra work and if you find out that you actually owed taxes to the government (got a refund that was too big) you might have to pay interest and penalties in your amended return. If you make small mistakes in your tax return sometimes the government will amend those automatically and send you a letter explaining you the corrections, if you consistently claimed unusual deductions in your tax forms you might get audited and if the government finds that you owed them money they will come back to collect that money from you with interests and penalty fees. Again be careful, fill your taxes in good faith using your best efforts and judgment and you should be fine.
- Finally, do not get scammed. You might feel misleadingly safe in this country, especially if you come from places where scams are more frequent but scams happen everywhere in the world and sometimes they are masqueraded as legitimate businesses. If you register to any online service that claims to be free for a month / week / seven days but requires you to enter your credit card, be careful. These services will usually sign you up with the hope that you will forget to cancel the service so that they start automatically charging your credit card after their "free" period. If you fell in this trap you usually can call them and cancel the subscription and if it is not too late they might even refund you some of the charges. Always check your bank account and credit card statements for unusual charges. Sadly even big well known companies these days are falling into this practice. I think it goes without saying you should also avoid taking seriously any spam email or phone call promising you money or starting a business or saying you won a lottery or anything of the sorts.
If you follow these guidelines, do not become an over spender, and practice some basic frugality you will probably will be doing fine with your student salary. Managing your finances post-graduation requires a more fine-grained set of recommendations.
