Helpful Tips for Managing Your Money During Study Abroad

Helpful Tips for Managing Your Money During Study Abroad

Money management is a crucial part of a student’s life while studying abroad. It can also be one of the most daunting tasks for students. Given below are some tips and tricks to help you with managing money during your journey.

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1. Prepare a Budget

Making a budget is possibly one of the most important factors to managing your money successfully while studying abroad. Not only will a budget help you determine how much money you have to set aside for your expenses, such as housing, utilities, and food; it will also help you determine how much you have available to set aside for the fun stuff like travel and entertainment.

Some tips to help you stick to your budget and avoid over spending:

  • Spend within your means.  Before you spend money, try and ask yourself some important questions, such as: Is this something I can afford? Is this an impulse buy?  Do I really need this?
  • When out with friends, take only the amount of money your willing to spend.  Avoid taking your credit or debit cards with you to avoid impulse purchases.
  • Use your student identity card to receive any student discounts available.  You would be surprised by how many student discounts are available from food to shopping, to electronic devices.  There are discounts everywhere so make sure you take advantage of them whenever you can.

2. Learn the Exchange Rate for your Destination

Foreign exchange rates change daily and the conversion rate you see online, may not necessarily be what you get when you buy the currency. Essentially, when you buy a foreign currency the rate depends on several factors, who you buy it from, when you buy it and where you buy it. Most likely when you buy a foreign currency you are paying the “retail rate” which is often higher, and service fees are included in the exchange. Overall, your best bet for a good rate is in the country of the currency.

Upon arriving in your destination, you can buy the local currency at the airport, banks, a foreign exchange service or withdraw the money from an ATM.  Again, it is important to do your research as rates can change several times a day.

3. Understand Your Bank Fees

If you plan to use your credit or debit card while studying abroad, you will want to understand the bank fees you may be charged for using your card in a foreign country.

Foreign transaction fee

A foreign transaction fee is the most obvious type of fee you could face when using your credit or debit card in a foreign country. This fee is a percentage of the total transaction amount for purchases or withdrawals and typically range from 1% to 3%.

International ATM fee

Banks and interbank networks tend to charge for the use of their automated teller machines. When withdrawing money internationally you may be charged a flat fee by your bank for each third-party ATM transaction. Generally, these fees range from around $2 to $5 per transaction.

To avoid some of these fees, check to see if your bank has any foreign branches, or if they are part of an international network. If you bank with Citibank, you are in luck because they have over 45,000 ATM’s located all over the world.

4. Open a Foreign Bank Account

If you will only be studying abroad for a semester, opening a foreign bank account may not make sense.  However, if you will be studying for a year or longer, as an international student you will most likely need to open a bank account.  You may need an account to pay your tuition and fees, as well as your rent, utilities and living expenses.  It will also help you manage your expenses and keep you from incurring any international banking charges from your home bank.  Another advantage to getting a foreign bank account, is that you won’t be charged for taking money out, or for paying with your card (check with your bank first). Credit or debit cards are also needed for making travel arrangements, should you decide to go on any trips during your journey.

However, foreign student bank accounts have different benefits and a few things to be wary of as well.  It is important that you do your research to find out which type of bank account is right for you.

It is important to note that different countries also require different identity documents in order to open a foreign student bank account. These documents may include letters from your university, as well as possible tax codes. Do your research before you leave to make sure you have all of these documents in your possession when going to open your account.

5. Transferring money

Sending money internationally can get very expensive. An affordable way to transfer money is through a new service called TransferWise. TransferWise is the best way to send money internationally and the fees are low compared to other money transfer options. By using TransferWise, you can save up to 90% of the fees involved in sending money across borders. 

So let’s say you want to send yourself $1000 from your US bank account to your UK bank account. Since TransferWise has bank accounts located all over the world, your $1000 is deposted into one of its US accounts, and is then sent you in British Pounds from one of its UK business bank accounts. This approach eliminates most of the legwork of the transaction, as well as the costly intermediaries, allowing TransferWise to offer a much better exchange rate.

6. Set Money Aside for Emergencies

We realize that saving money as a student may not be easy.  However, as a student you may encounter an unforeseen event that could translate into a financial emergency.  Therefore, setting aside a small amount of money every month into a savings account is highly encouraged.   While many US institutions offer students emergency fund loans, a foreign university may not offer the same benefit to its international students.  By setting a small amount of money aside every month, you know that you are covered when faced with a potential financial challenge.

7. Use Your Student Discounts

As an international student you can apply for the ISIC student discount card. The International Student Identify Card (ISIC) is an internationally recognized “proof of full-time student status” and is issued in 130 countries.  This card allows you to gain access to over 150,000 discounts and benefits around the world.  The card is recognized by universities, academic institutions, student organizations, national governments and ministries of education around the world.

The ISIC is available to full time students in school, college or university, who are 12 years old and above. There is no upper age limit. You can order your card online or by visiting your nearest ISIC issuing office.

You will need to provide the following documents to apply for the ISIC card:

  • A copy of your university or student identity card, clearly dated and indicating you are a full time student.
  • A signed and dated letter on official university or school stationery stating you are studying there full time. An original copy is preferred, although photocopies and faxes may be accepted.

8. Embrace Public Transportation

As you get acclimated to your destination and learn your way around, there may be times when you will want to take taxis to get around.  However, understanding how to minimize your travel costs while learning your new city will make all the difference to your budget.  One of the most cost effective ways to keep travel costs down is by using public transportation.  Depending on where you are from, you may find that it is very easy and more practical to use public transportation such as buses, trams or trains to move about.  The cost of using a taxi can cost anywhere from $5 and up, and in some cities substantially more.  While, a monthly public transportation pass will most likely cost you around $20 a month in most European countries.

9. Part-Time Employment

Since your studies should be your primary focus, most countries will only allow international students to work on a part-time basis during study abroad.  However, many foreign universities have established programs to help international students find part-time employment, either on campus (library, canteen, administrative office, etc.) or out in the community.  While these jobs may not pay much, they will be flexible and observant of your studies.  You may also be able to enroll in a paid internship or trainee-ship to help earn some extra cash.

10. Eat Like the Locals

One of the best ways to eat cheap and save money while studying abroad, is by immersing yourself in the local cuisine and eating like the locals.   Ask the locals for recommendations on where to go to eat out and where to shop for the best grocery deals.

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How Studying Overseas Is A Good Start to Global Citizenship

10 Reasons Why Students Should Pursue a Full Degree Overseas

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