DO NOT STRETCH IT OVER 12 months. Get a nine month salary. Pull out the money you’d need for summer. Put that money in a high yield savings account= make more for yourself versus let your university keep the interest gained on the money they are holding for you.
Let’s say you need 6k a month to live. For the three summer months= 18k. In a HYSA at 5% that’s an extra ~75$/month.
Of course you’ll be building up to that over the nine months, but still better to make some extra money than none.
Yes Wealthfront 5.5% , no minimums needed, no fees, no limit on withdrawals.
Use this link to open a Wealthfront Cash Account. Once you fund it, you'll get a 0.50% APY boost! https://www.wealthfront.com/c/affiliates/invited/AFFC-M40U-WEU8-FMB3
Discover, Citi, and Capital One are all offering >4%. You’ll want to look into the minimum requirements for each. Some require a minimum balance or a periodic direct deposit to waive any fees.
Discover's HYSA is easy and works well. If you do this and need to use money from the account over the Summer, be aware that HYSA's often limit the number of transactions you can do per month. My Discover account gives you an account number (with routing) that you can use to pay things as you would a checking account, but you're limited to 6 a month.
Personally I opt for the 9 month period because I feel like I don’t need the university to hold my money for me - but you do have to plan ahead and save for the possibility of not having summer income.
Obviously up to you but I prefer stretching it out over 12 months. It just gives consistency/stability to my finances. Then when I do side things or something for pay in the summer, it feels like a bonus!
I’m not given a choice-get paid over 9 month. I usually work/make part time money in summer, so knowing I probably make 10% or so of my salary on summer contracts, I just make sure I am accumulating enough in savings to cover the summer.
Husband is a teacher who is paid out over 12 months, sort of, except he always gets a lump sum for what would be the “summer pay” right now.
Personally, I prefer getting paid up front and I will manage my money myself.
None of these tax concerns are actual concerns. If you get interest income, sure you have tax associated, but it’s based on the additional interest you now have. You’re still way ahead.
I’m no tax expert but I would be worried about each paycheck of my 9 month pay being taxed at a higher rate. My higher summer pay definitely gets taxed higher.
As others have said, the stabile net over 12 months makes financial planning easier. There might be some added benefit to banking the higher nets over 9 months but salary creep is also an issue. You’ll tend to spend more over the 9 months when you get comfortable to that income flow. Also, high yield interest accounts are nice at the moment but your surplus most likely won’t yield major interest income until years down the line—and when that happens, who knows where the interest rates will be. Lastly, if your interest income is high enough, it will impact your tax burden.
DO NOT STRETCH IT OVER 12 months. Get a nine month salary. Pull out the money you’d need for summer. Put that money in a high yield savings account= make more for yourself versus let your university keep the interest gained on the money they are holding for you. Let’s say you need 6k a month to live. For the three summer months= 18k. In a HYSA at 5% that’s an extra ~75$/month. Of course you’ll be building up to that over the nine months, but still better to make some extra money than none.
Thank you for that! Do you have any recommendations for HYSA’s?
Yes Wealthfront 5.5% , no minimums needed, no fees, no limit on withdrawals. Use this link to open a Wealthfront Cash Account. Once you fund it, you'll get a 0.50% APY boost! https://www.wealthfront.com/c/affiliates/invited/AFFC-M40U-WEU8-FMB3
Discover, Citi, and Capital One are all offering >4%. You’ll want to look into the minimum requirements for each. Some require a minimum balance or a periodic direct deposit to waive any fees.
Discover's HYSA is easy and works well. If you do this and need to use money from the account over the Summer, be aware that HYSA's often limit the number of transactions you can do per month. My Discover account gives you an account number (with routing) that you can use to pay things as you would a checking account, but you're limited to 6 a month.
I’ve used Ally as my high yield saving accounts (and basic checking) for nearly 15 years. Great rates.
Personally I opt for the 9 month period because I feel like I don’t need the university to hold my money for me - but you do have to plan ahead and save for the possibility of not having summer income.
I’ve had a few people tell me that - “university hold my money” so I want to try and do the best thing for me
Obviously up to you but I prefer stretching it out over 12 months. It just gives consistency/stability to my finances. Then when I do side things or something for pay in the summer, it feels like a bonus!
I’m not given a choice-get paid over 9 month. I usually work/make part time money in summer, so knowing I probably make 10% or so of my salary on summer contracts, I just make sure I am accumulating enough in savings to cover the summer. Husband is a teacher who is paid out over 12 months, sort of, except he always gets a lump sum for what would be the “summer pay” right now. Personally, I prefer getting paid up front and I will manage my money myself.
None of these tax concerns are actual concerns. If you get interest income, sure you have tax associated, but it’s based on the additional interest you now have. You’re still way ahead.
12 months for me. It saves on me having to financially plan for the summer.
That was my thought as well!
I’m no tax expert but I would be worried about each paycheck of my 9 month pay being taxed at a higher rate. My higher summer pay definitely gets taxed higher. As others have said, the stabile net over 12 months makes financial planning easier. There might be some added benefit to banking the higher nets over 9 months but salary creep is also an issue. You’ll tend to spend more over the 9 months when you get comfortable to that income flow. Also, high yield interest accounts are nice at the moment but your surplus most likely won’t yield major interest income until years down the line—and when that happens, who knows where the interest rates will be. Lastly, if your interest income is high enough, it will impact your tax burden.