Studying abroad presents an unrivalled opportunity for accessing world-class education, obtaining global perspectives, and nurturing personal growth. However, along with this decision comes a string of financial responsibilities. Although it is universally acknowledged that education overseas is financially challenging, it doesn’t necessarily need to break the bank either. Budgeting is one of the most powerful tools that can help you manage your finances and make the most of your time abroad. This blog will explore the fundamentals of creating an effective budget plan, simultaneously allowing you insights into the expenses that accompany an overseas educational journey.
Understand the Local Currency and Exchange Rates
Before you dive into budgeting, it is of utmost importance that you set aside time to familiarize yourself with the local currency and exchange rates. The value of your home currency may differ significantly from that of your destination, and exchange rates are rarely ever stable.
In regards to this aspect, you may consider using currency converter apps to stay updated with the current rates. If you wish to further augment your knowledge, you may also seek out an expert to help you navigate these differences. This will help you avoid overspending by giving you a clear sense of how much you’re spending in your home currency.
Very important tip: Please don’t convert the local currency to Indian rupees as that will always look more expensive. Expenses should be compared relative to the cost of living in that country!
Determine Your Income
Next comes another elemental step–determining your income. As an international student, your income will likely be determined by a combination of a few fundamental sources:
Parental Support
Part-Time Jobs
Personal Savings
Ensure that you calculate your monthly income accurately and note down any expected changes. This will give you a clear overview of your budget limits, and allow you to proceed with a specific financial bracket in mind.
Track Your Expenses
Now that you’ve determined your income and gained a comprehensive understanding of your financial standing, you can proceed to estimating and tracking your expenses abroad. Take out time to deeply think about possible expenses, and then divide these into categories to get a clear picture of where your money will be going. A few common expenses for international students include:
Accommodation
Rent often serves as the largest expense–whether you opt for student housing, a private apartment, or shared accommodation. Once you’ve decided upon your preferred type of accommodation, make sure to also account for utilities such as water, electricity, and internet.
Food
Food constitutes another important aspect of your budget. While some cities offer a more casual eat-out culture, with cheap markets and eateries lining the streets, others may be more expensive, prompting frequent home-cooked meals. However, even in the case of the latter, it is important to account for occasional meals at cafes and restaurants.
Transportation:
Public transportations, taxis, and ride-sharing services can add up to a substantial component of your budget. Consider tapping into student discounts on commuting options, and if possible, opt for walking and cycling for minor distances to further reduce expenditure.
Healthcare and Insurance:
Acquiring health insurance is often mandatory as an international student, so ensure that you account for it appropriately in your budget. Additionally, there may also be unexpected doctor visits and medications that need to be considered.
Books and Supplies:
The cost of textbooks, course materials, and supplies can add up. Explore options for second-hand books or digital versions to help reduce expenses.
Entertainment and Leisure:
Exploring the new city, travelling, and participating in social events make for an integral part of your study-abroad experience. However, these can be financially demanding, so make sure that you keep track of these expenses and account for them efficiently in your budget plan.
Set Realistic Spending Limits
Once you’ve identified major spending categories, you can move on to setting spending limits. This is where you need to be disciplined. If you’re someone who is easily tempted to overspend, make sure that you make these limits stricter and tighter. Here are a few tips for crafting an effective spending limit:
The 50/30/20 Rule:
According to this popular budgeting method, in order to design a well-balanced budget, allocate 50% of your income to essentials such as accommodation and food, 30% to elective spendings such as travel and entertainment, and 20% to savings or debt repayment.
Prioritise Needs over Wants:
While it can be extremely tempting to indulge in luxuries, it is of utmost importance to identify and segregate your needs from your wants, and make the former a priority. Focus primarily on your education and necessities, and then go for leisure activities.
Use Apps & Tools:
Budgeting apps like Mint, YNAB (You Need A Budget), or Expensify can help you track and categorize your spending in real-time.
Build an Emergency Fund
Any budget must include an emergency fund, and studying abroad is no exception. Medical bills, lost luggage, or an urgent flight home can serve as unexpected, expensive surprises. A financial cushion of a few hundred dollars can go a long way in helping you navigate these challenges. Ensure to regularly set aside a small percentage of your monthly income or savings into an emergency fund.
In conclusion, while studying abroad might appear financially daunting, it can be successfully overcome with the right approach. Through thorough research, reliable counsel, and careful planning, creating a budget can be extremely empowering. Planning ahead and monitoring your spending ensures that you enjoy all the experiences that studying abroad offers, without the stress of financial uncertainty.
If you wish to study abroad, but find yourself discouraged by its financial challenges, contact TFM! A leading overseas educational consultancy, our team of experts is committed to helping you achieve your study abroad aspirations, offering comprehensive financial guidance and support throughout the process! Book a free, personalised session with us NOW!
Frequently Asked Questions
Q. How can I save up on daily expenses while studying abroad?
Ans. Saving up on daily expenses can be significantly rewarding in helping you manage finances abroad. You may consider small changes such as opting for frequent home-cooked meals instead of eating out, arranging for second-hand educational resources such as books and course material, and travelling short distances by foot instead of taxis and public transport.
Q. How much should I set aside for an emergency fund?
Ans. For an emergency fund, $300–$500 is generally a sufficient amount. You may build it over time to ensure more security.
Q. Can I work part-time during my time abroad?
Ans. Most countries offer part-time work opportunities for international students, however, these vary on the type of visa you possess. Make sure to check the regulations in your host country before seeking employment abroad.
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