What should be in your MBA budget?

If you’re busy studying for your GMAT, there’s something else you should be doing too. Now is perhaps the best time to start putting your b-school budget into order. You'll need it to apply for a loan and  to secure your international study visa. 

Your MBA budget needs to cover a lot more than you might originally suspect, so getting to grips with what you have and what you will need is one of the first steps on your MBA journey. Start by gathering budget estimates in these areas.

The basics

You know what goes in this category, don’t you? It is fairly straightforward, beginning with tuition for the duration of your studies. 

Business schools are wonderfully upfront with these costs – and a quick call to the financial aid office of any school should give you an idea of expected annual increases. 

• Additionally, you will need to ensure you’ve got plenty of money for books and related academic supplies. Most schools have a strong understanding of these costs and are happy to make their estimates public. 
  
• Eating and sleeping is also a must. Choosing on-campus accommodation and college meal plans will help to reduce costs if you’re battling a strict budget – but this doesn’t work for everyone, especially those with families. (But, remember, you may need an early acceptance to secure on-campus housing.)
  
• Don’t forget health insurance if you’re planning to study in another country. You may need to take out additional insurance before you apply for your visa, which should also be in your budget.
  

The extras

The number of on-campus and programme-sponsored off-campus activities during your time at business school will blow your mind. Ask any current MBA candidate; they’ve often got two or three activities tentatively booked for the same time... nearly every night of the week. 

And that’s before considering participation in the clubs that they’re members of during their time on campus.

On top of this, there are also excursions and additional class seminars to consider. Forgoing some is part and parcel of the MBA experience; missing all of them would be a shame.

When trying to determine a budget for these activities, get in touch with students at the most expensive school on your application list. Ring up the clubs, financial aid offices, and if possible, any grads from your home country. 

And, you shouldn't forget about weekend excursions, holiday ski trips, and team bonding done over dinner or drinks at the local. These add up faster than you might imagine.

The aftermath

You’re going to get a job that starts within a month of graduation for double your current salary, right? 

We certainly hope so, but you need to be a little more realistic than that. 

Budget for six months of unemployment while you deliberate the different offers and paths available to you. If you don’t need that money; great. You can sink it into loan repayment once your first pay check comes through. Not budgeting for this time is an oversight you don’t want to make – especially if you’ve already exhausted all your funding options.

Refinance your student loan to save money

You’ll also need to factor the cost of interest on any student loans you take for your education - and although you’ll only begin think seriously about that when you look for loans and compile your post-graduation monthly budgets, it does technically fall into your MBA budget.

Some programmes actually include estimates in their Cost of Attendance (CoA) figures, though these may only apply to domestic students (typically, US citizens attending US universities). As you budget for your post-graduation life, be sure to sink in some estimates of your own based on the loans you’re able to secure.

Although you need to budget based on current, accurate figures, you may also want to start considering your refinancing options.

Unlike Prodigy Finance, which uses a future earnings model to determine your interest rate, most lenders only work with historical data. The rate you qualify for after graduation will take into account your shiny new degree and high-paying job (this is what Prodigy Finance offers from the start). If you accepted one of these options to fund your studies, you should strongly consider refinancing your student loan to save on the total cost of your loan and give your budget the boost it needs. 

So what should be in your budget?

While universities release formal costs of attendance (CoA), most students should take these as minimum budgetary figures.

On the plus side, the official CoA is what immigration officials expect you to cover to secure your visa.

On the other hand, because the official costs are usually very low, they’re unrealistic for most MBA candidates. Sure, you aren’t forced to join your classmates on evenings out, but it’s one of the primary ways students develop those all important networks that will propel them through the rest of their lives.

It’s also critical to note that there are vast differences in expenses, even when comparing two universities in the same city – and, of course, it’s almost impossible develop just one budget that fits every programme you may apply (and be accepted to), as shown here. 

For reference, the visa and flight costs are variable; we’ve used these examples to uncover estimate costs:

• an Indian candidate attending Harvard, flying from Bangalore,
  
• a South African candidate attending LBS, flying from Johannesburg, and
  
• a Brazilian candidate attending INSEAD, flying from São Paulo.
  

The visa fees only include the application cost; travel to and from interviews, any postage, printing, parking, and more are completely excluded. And, of course, flights are basic estimates and don’t include extra baggage, date changes, or ground transport to or from your home airport.

As you can imagine, these costs add up quickly – and it might be worth your time to tentatively plan through a year (including the number of clubs you might like to join) before realistically compiling your budget. 

And then keeping yourself on budget is totally your responsibility during your studies. 

Make it easy on yourself by making it as realistic as possible. If you need to reduce your budget during the loan and financing phase, you can - as long as you've given yourself the wiggle room you need. Fortunately, an early start on your MBA preparations and round one applications will ensure you’ve paved the way for success. And, it gives you plenty of time to apply for those loans and scholarships to put your budget into action.