Studying overseas is an enriching experience as it gives students a perfect chance to expand their academic horizons and be independent, resilient, and understand cross-cultural sensitivities. It opens doors to a global network of connections and enhances career prospects by showcasing adaptability and a global mindset.
As per the Education Ministry, the surge in Indian students going abroad for higher education reached a six-year high in 2022 at over 7.7 lakhs. With new opportunities, students should also be prepared to embrace and manage multiple responsibilities effectively.
These responsibilities include navigating new currency systems, understanding the local cost of living, and adapting to different spending patterns. It provides a valuable opportunity to develop financial management skills, budget effectively, and make informed decisions when it comes to expenses, ultimately fostering financial prudence.
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Here are some interesting budgeting strategies that can empower students to navigate the financial trajectory of their study abroad journey confidently.
Creating a realistic budget: Creating and sticking to a budget is crucial when studying abroad. Academic aspirants should start by understanding the various sources of income, such as part-time jobs or financial assistance from family and lenders. Then, they should list the expenditures, including tuition fees, accommodation, food, travel, transportation, books, and personal expenses.
It is important to allocate a reasonable amount of money to each category and track the spending accordingly. Also, there will be instances where students will need to engage with friends and peers beyond campuses and take short trips to explore the study abroad destination. Hence, planning for these and setting some amount aside in advance is essential.
A bank account in the study-abroad destination: Having a bank account overseas is important for managing finances, receiving funds from home, paying for expenses, and more. A local bank account can prevent students from paying extra charges while withdrawing money using an overseas card. It will also be beneficial to receive payments from employers while working part-time. This provides convenience, security, and access to banking services in the host country.
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Creating a strategic savings plan: "Do not save what is left after spending but spend what is left after saving." - Warren Buffett. Keeping this in mind, students must keep some money aside as savings, which can be beneficial in multiple ways. Innovative savings and income plans should not be only the parent's responsibility anymore, and students must step up too. So, students must spend and save judiciously to ensure timely education loan repayment.
Students should plan for managing medical and ad-hoc health-related expenses: Aspirants should prioritise their health and safety when studying overseas. A new place means new weather conditions, new food habits, staying up late to complete assignments and more. Medical insurance is a must to be financially secured from fat medical bills. Proper health and medical insurance policies ensure coverage for medical emergencies, accidents, and unexpected events.
Aspirants should avail of student discounts and benefits: Students should be aware of and take advantage of their host country's student-specific discounts and benefits. Many establishments, including restaurants, movie theatres, and transportation services, offer discounted rates for students. It is advisable to obtain international student discount cards to unlock a wide range of discounts and deals on various products and services. These offers can help them save money on everyday expenses and aid in maintaining the set budget.
Earning while learning: Many students studying abroad prefer to take up part-time jobs while they study so that they can use the extra buck to either support their lifestyle abroad or pay off a certain portion of their education loan interest (if any). They can seek such opportunities on their college campus, in the form of internships or local prospects that align with their interests and schedule. Students should ensure that their work hours do not come in between their academic commitments, as studies should remain their top priority.
Strategy for repayment of loans: If a student has opted for education financing, then they should have a proper repayment plan in place. Although student loans come with a moratorium period, it is not an interest-free period and will accrue interest from day one. So, students must make small contributions during the grace period. This instils financially prudent habits too.
Studying abroad is a transformative experience that helps students grow academically, personally, and financially. By implementing these key financial budgeting strategies, students can support their new independent lifestyle while studying overseas and make the most of their time abroad without compromising their financial well-being.
In addition, when students manage their finances, it is easier to repay their education loans seamlessly. Responsibly repaying student loans is essential to build a good credit score. Thus, being financially prudent will enable students to acquire a holistic international experience and walk on the path towards upward mobility.
Amit Yadav, Chief Strategy Officer and Chief Business Officer- Digital Business, Avanse Financial Services