The school year is around the corner and many students are scratching their heads wondering how they are going to paying for their education overseas. Budgeting is an important component for any international student and we are happy to show you how to create a study abroad budget to make the most of your experience. Be smart, know your costs and plan ahead. While you may have funds set aside for the upcoming semester, if you think ahead you can make your money go even further.
Here are five tips on how to create a study abroad budget:
1. Think about the essentials.
There are some costs that you just can’t avoid. You will need to pay for housing, utilities, transportation, tuition, books, and food. Before signing any contracts, think about the costs associated with each. For example, if housing is not already included, then you can choose to live at an affordable place – but be sure to consider the location. If you found an inexpensive apartment, but the commute is long – be sure to consider your transportation costs. You may also consider living with roommates as this is a sure way to reduce your expenses, and make a friend at the same time. While all of these costs are considered “essential”, you can make choices that will reduce the costs. Eating out can be quite expensive, and many times you can make similar food right home for a lot less. Consider this a challenge. Cook with new ingredients and learn some local recipes. Many grocery stores and markets will save you money.
Create a monthly budget of these essential costs. Make sure to add a miscellaneous and emergency category as you never know what may come up.
Any student studying overseas is going to want to make the most of their trip. Think about your funds, deduct your essential, emergency fund, and miscellaneous costs, and now you’ve got your “splurge money.” You’ll have to consider some important tradeoffs depending on what your budget allows. Is the $4 cup of coffee more important that you weekend trip to a nearby city? If you get a $4 cup of coffee every day for a year – that comes out to $1,460 – think what you can do with that. We recommend you make a list of places you must visit and things you want to do. Put that money aside, but don’t forget to consider what you’ll do if you see a new pair of shoes – or if you are invited to a fancy dinner with friends! Consider how much money you have, and realistically how much you can spend keeping in mind that events do pop up.
3. Budget in Your Host Exchange Rate.
Even though exchange rates are constantly fluctuating with the whims of the market, it’s important to consider 1) the volatility of the exchange rate against your home currency and 2) how you want to account for your budget. We recommend budgeting in your host currency to avoid doing constant conversion calculations. If you choose to do this, be sure to keep an eye on the exchange rate and know what fees you may incur using your primary method of payment. Many credit and debit cards, for example, charge an additional fee to make transactions in a foreign currency.
4. Scholarships & Loans.
If you are going to be an international or study abroad student, maximize your scholarships and grants by contacting your school to see if any financial aid available. There are also many independent organizations that will provide international scholarships and grants. Once you’ve maximized your scholarships and grants, if you need additional funds, you may want to consider a study abroad loan to help cover your expenses. Keep in mind that you’ll be responsible for paying back the money plus interest, but this can help prevent students from running out of money and missing opportunities in a foreign country.
5. Stick to Your Budget.
So you’ve done all of the work in creating a budget. Perhaps it lives as an excel spreadsheet on your computer. Now, you’ve got to apply it in practice. Note down your expenses and make sure that you aren’t exceeding the budget you’ve allocated yourself. When you first arrive in your new destination, there will be many start-up expenses. Don’t forget to account for this. Also, you may find after a few months that you’ve over (or under) allocated funds. You may find that the cost of living is lower than you expected giving you more money to put aside. Or, you may find that you’ll have to begin saving more money as you’ve got more costs than expected. Once you’ve been in your host country a few weeks, you may need to make some adjustments to finalize your budget so that it is a feasible budget that will allow you to make the most of your study abroad experience.
>> Read on to learn how to budget for school
>> Apply online for international student loans