(photo by: itthing.com)
Money is the main issue that worries students when it comes to studying abroad. Do you have enough? How do you make it last for 5 months or more when you don’t have a job? Can you travel and see everything while on a tight budget? I had the pleasure of teaming up with Dani Alderman at creditcardinsiders.com to bring you the money answers you seek for your up-coming study abroad experience.
What is a budget and why is it important?
A budget is a plan for how much money you’re going to spend during a certain time period- usually per month. Creating and maintaining a budget is the backbone of the study abroad experience; it will tell you what you can and cannot do. It will make sure that you don’t go broke from studying abroad (which I almost did) as well as help you to not miss out on opportunities. Not only will a budget help you during your time abroad, but it will help you in your life after college, too.
The basics of making a budget
Your study abroad budget doesn’t start the moment your plane lands; it starts at home. Before you leave, you need to know what your money situation is. This will help you to know how much you can spend each month (example: you have $3,000 in your account and you’ll be abroad for 1 semester or 5 months. Divide the amount of money you have by the number of months to get your total monthly spending budget or 3,000 / 5 = 600. This means that you can spend up to $600 a month before your account is at $0.00).
The most important aspect about making a budget is that you record every purchase. Tracking your budget on a spreadsheet or app is great but not necessary for study abroad. A simple recording in your phone’s notepad feature or in a notebook will do. The most important part is to look at it and don’t forget to record every purchase immediately. It’s also a good idea to record how much you plan to spend each week for different categories – for example: eating out 75€, museums 30€, etc…. This will help to keep you right on track with your spending. If you find yourself spending more on that morning latte each week and less on going to museums, you’ll know where to tweak your spending to reach your goals.
(here’s an example of budget recording on your phone. photo by Andrea)
(budget apps are great but not always necessary; if you like to use one- make sure to change to local currency. Photo by: lifehacker.com)
When making a budget for travel, it’s important to account for unforeseen circumstances. Maybe your bus to the airport is late and you have to pay for a cab. You might get sick and have to pay for medication. No matter the circumstances, it’s best to be prepared with extra money in your account. This way you can avoid overdraft fees, or worse, being stranded penniless in a foreign city.
Tip on currency
Knowing the exchange rate in the country which you are traveling is key! In many European countries, you will lose U.S. dollars when you convert your currency. For example, if 1 U.S. Dollar equals .73 Euros, you lose about 37 cents per U.S. dollar. This is because with the current exchange rate, 1 Euro equals 1.36986 USD.
Andrea’s note- Don’t forget to convert your monthly spending budget into the local currency. For example, if you’re studying abroad in Europe, that $600 monthly budget is really 440€. You’ll want to keep the 440€ in mind as you track your monthly purchases.
American credit cards that can be used overseas and travel credit cards with simple rewards that will help students to gain rewards
When choosing the right credit card for your travels abroad, it is important to consider the travel, security, rewards and theft solutions that will be most beneficial for you. If you are traveling to Europe, it might be useful to apply for a credit card with EMV technology. Most cards in the United States are chip-and-signature cards. These cards are more secure than the magnetic stripe cards we use every day. You should also consider credit cards with $0 fraud liability, 0% foreign transaction fees, and travel insurance and assistances. Most U.S. credit cards have foreign transaction fees from 2-3%! These fees can add up quickly so it’s best to choose a card with no foreign fees!
Here are the top three best travel credit cards for students:
Here are the top three best travel credit cards for all travelers:
If you plan to use one of your existing credit cards, make sure you let your card issuer know every country you will be visiting so they don’t freeze your account. Don’t forget photo identification at all times! Europeans take fraud and identity theft very seriously!
A third option is to get a prepaid chip-enabled card. You get the security of chip technology, but prepaid card are not usually linked to your personal information, it’s a win-win! Prepaid chip-enabled cards benefit college students studying abroad because they can’t spend more than the loaded amount on the card.
Studying abroad doesn’t have to break the bank. Being familiar with your finances, keeping a budget and having the right credit card can help you to maximize your time abroad. Want to find out more? Check out CreditCard Insider. Did you find this post useful? Let me know by giving it a “bon” in the blue box if you liked or a stale baguette if it wasn’t helpful.