Let’s Talk About Money
IT STARTS EARLY
The second week of my MBA1 year, I was invited to Lake Tahoe. Someone I vaguely knew texted me and a group of classmates about a weekend retreat. We’d be renting an Airbnb, sharing meals, and renting a boat. Did I want to join?
Details were sparse. I didn’t know who was going — or how much it would cost. Both details were important to me– and I was uncomfortable with the lack of information. Still, I feared I couldn’t ask more without coming off as insecure or guarded. Because it was early in the MBA experience and Lake Tahoe seemed the destination that weekend, I felt immense pressure not to ask questions and to simply accept. So that’s what I did.
I spent $412.26 that weekend– for perspective, almost half of Americans cannot handle a $500 emergency expense.
Seeing the Venmo request come through, I panicked. Though financially stable, I felt nervous about the lack of control and transparency. I remember asking myself, “Is this what it means to be in business school? How will I stay on top of my budget?”
YOUR GSB BUDGET
Something remarkable happens to your budget when you enroll in business school. It can:
- Evaporate
- Grow
- Be ignored
- Stress you out
Which one(s) resonate(s) with you?
The change in your budget is in part a result of the social norms developed at the GSB. It is common to take weekend trips and indulge in dinners back-to-back. The events are fun, part of the allure, and absolutely not paid for by the school. Still, they all can play a role in “building your network” — a core tenet of the business school experience.
Building your network — or making friends, as I like to view it — is meaningful and rewarding. It becomes a problem, however, when it compromises your and others’ budget– and doesn’t feel like a choice.
I know that I am not alone in this view. In preparation for this article, I interviewed multiple MBA1s and MBA2s who emphasized the lack of transparency in money conversations in business school. An MBA2 told me, “The amount we spend on even the little things, without acknowledging it, is wild to me.”
We come here to participate in the GSB community. Are we really providing each other with a choice on how to participate and spend our money? For a group of such high functioning communicators, we don’t communicate well about money.
So…why aren’t we talking about it?
WHEN YOU ASSUME…
I think there are a few assumptions fueling the disconnect. The first one:
There is an assumption that business school students can spend money because they either have money or will make money afterward.
This is a problem. While it may be statistically true, this assumption dismisses the upbringing, values, and priorities of each individual at the GSB. Our lives intersect for two years, but we come from vastly different places and will go on to do very different things.
We should not assume that everyone has $412.26 in their bank account to spend on a weekend or that, even if they did, they are OK with that. We should not assume that everyone will earn six figures after the GSB and therefore students are willing to spend that money today.
But the GSB environment normalizes expensive trips. Spring break is a perfect case study.
MBA1s are visiting Colombia and priced the hotel and a set of parties at $1220 — $1820. This excludes flights, food and most other social activities. MBA2s are heading to Israel for about $3,000. Graduate Study Trips, educational experiences co-sponsored by Stanford, cost $2,000 — $3,000. To put this into perspective, what we spend in a week, the average American spends all summer.
If anything, all these expenses add pressure to earn six figures after graduation.
The second assumption is that GSB students are confident enough to speak up if they are uncomfortable with the cost of an activity.
I wish this were true. I think of myself as ‘‘confident’’ but even I did not speak up when invited to Lake Tahoe.
Especially in the first year, many may feel awkward asking money questions. You are initiating friendships and building your community. If invited to dinner, a show, or a weekend trip, it can be nerve-racking to bring up the budget.
IT’S UP TO US
Here are four ways to facilitate money conversations and help reduce stress.
For the Student Association…
- Poll MBA students to determine a baseline willingness to spend.
The Student Association can survey all MBA students and ask about a handful of trips to gauge how much people spent for each trip and how much they are (or were) willing to spend.
For example, ask a handful of MBA2s for rough estimates on entertainment and travel expenses, by event and quarter, and publish the anonymous results. Share readily with current and incoming students. Even better, dedicate time to discuss results and tips on how to initiate money conversations as a part of orientation.
A baseline willingness to spend will help organizers understand how to plan and budget an event ahead of time.
2. Set aside an ‘extracurricular budget’ so that students can secure funding for these events / trips.
Just as Stanford subsidizes GSTs for students on financial aid, the Student Association should set aside funds for students to events / trips that they otherwise could not cannot afford. The application process can be simple yet intentional. This will reduce the exclusivity presented by financial burdens trips and events can induce.
For organizers…
3. Create a budget and share spending expectations.
Event organizers, design your event budget with the willingness-to-pay information in mind. Along with key information such as date, time, location, etc., include the estimated budget upfront so attendees don’t have to ask for it. This change can go a long way.
For dinners, tell people whether the dinner will be split evenly and the price range — “$50 — $75 a person,” for example. For trips, share with your attendees the estimated cost of lodging, transportation, and groceries.
When it comes to sharing costs, communicate whether costs will be split equally. While splitting costs evenly is a little easier, consider charging attendees for what they consume– you don’t have to be scientific about it. Something as simple as tiered budgets for alcohol and non-alcohol participants makes a difference. Kudos to the FOAM committee for doing this! Tiered pricing introduces financial flexibility and allows people on tighter budgets to remain involved.
4. Solicit feedback from attendees.
Once you have shared your budget with attendees, ask for reactions or comments. That way you can understand if your event is well within, or pushing, your attendees’ budgets.
Here’s where you might find out that your trip will be better attended if you have options: attendees can come early on Friday or arrive Saturday morning; people can stay in stay in hotel A or B; dinner is a choice between grabbing burgers or having a sit-down dinner.
Ultimately, soliciting feedback benefits you, the organizer. Your event has a higher likelihood of attendance. You are seen as organized, thoughtful, and approachable.
WHY THIS MATTERS, BROADLY
Regardless of your financial situation, if you design events that share costs upfront and allow attendees to give feedback, you are embodying true leadership. It demonstrates open mindedness and inclusivity. This earns you credibility and respect and will serve you long after the GSB.
