5 Steps to Study Abroad Success
Managing Your Money
Budgeting Your ExpensesUse the list below to help prepare a detailed budget to track the money you are spending.
- Housing fees / rent
- Food / meals
- Health insurance
- Personal expenses
- Family expenses
Important things to remember as you plan your budget include:
- Will you be receiving income on a regular basis? If so, plan to pay your bills and meet your other expenses with your income schedule in mind.
- If you are receiving a scholarship or assistantship from your school, keep in mind that these awards are often taxed by the local governments. You may be surprised at how much smaller your award is after deductions for taxes have been made.
- Some schools charge various fees in addition to tuition. Some are one-time fees, such as an orientation fee; others may be charged each semester, such as "student activity" and health-service fees.
- Be prepared to meet initial, one-time expenses. Read the information below on renting an apartment.
- Track your expenses by category, such as food and books, to better understand where you are spending the most money. When done every month, this type of accounting can give you the incentive to economize.
- Owning and operating a car overseas is an additional expense, and carries many responsibilities. If you are hoping to have a car during your stay, be sure you have budgeted sufficient funds, not only for the purchase price, but also for maintenance and insurance.
- Financial aid awards are typically paid to students by check, but in order to cash and access the money you will have to open a bank account. Also, it is important for you to realize that even if you do receive financial assistance, you will not be paid for your first month''s work until the very end of that month.
Bank InformationBanks are the most common form of institution in most English speaking countries. A bank may have several branches in one city or region. Most banks are providing online services that allow their customers to do their banking from their home computers. Many larger banks are multinational; you may have an account with a bank at home that also operates globally.
What services do you need?Banks offer a variety of financial services, including checking and savings accounts, certificates of deposit (CDs), automatic teller machines (ATMs), electronic banking, credit and debit cards, investment services, and estate planning.
Select a BankWhen selecting a bank, it is important to determine which of these services you may need. For example, if regular banking hours are not convenient for you, electronic banking or convenient ATM locations will be especially important. Select a bank that can provide the services that fit your schedule, preferences, and habits.
Select a Type of AccountIf you have questions about what type of account is best for you, make an appointment with a bank official to discuss your concerns. You may discover a variety of financial services that could be very useful as you make plans for your financial future.
Manage Your AccountHandle your money carefully as what may seem like a large amount upon arrival can quickly be absorbed in daily living.
Maintain Your AccountUpon returning to your home country after completing your studies, you may wish to maintain your accounts and investments in a foreign bank. Many international alumni choose to maintain the accounts for a variety of reasons, including the tax benefits and the security and stability of financial institutions.
Typical Bank ServicesBecome familiar with the different bank services in foreign countries. Here are some of the terms that often used when banking overseas.
Checking AccountA checking account safeguards your money while allowing for easy payment of expenses. Some banks require their customers to maintain a minimum balance of funds in their checking accounts. Basically, all checking accounts may be accessed using an ATM card. The card is issued by the bank and may be used together with a personal identification number (PIN) to withdraw cash and make deposits at special banking machines. If you will be studying abroad for a longer period of time (more than 6 months) it is better to open a checking account at a bank in your host country.
Check BookIf you open a checking account, the bank will give you the option to have personal check books. Do not write a check for more money than is in your account. It is illegal and you will be fined by your bank as well as the establishment to which you issued the check. When cashing checks addressed to you, it is necessary to present self-identification to the bank. Your student identification card or driver's license is acceptable. Sometimes, it is difficult to cash checks from your bank if you are outside its service area.
ATMATM stands for Automatic Teller Machine. Using the ATM, you can withdraw, deposit, and transfer your money without going to the bank. Each time you use the ATM, record the amount and the reason why you withdrew the money. It is easy to overdraw on your account if you don't track ATM transactions.
Savings AccountA savings account is used to safeguard money for a prolonged period of time. Interest is paid on your deposit generally at a low rate. Although certificates of deposits (CDs) pay a higher amount of interest than savings accounts, you must leave the money untouched for a specified period, which is typically several months or years. The longer you leave the money on deposit, the higher rate of interest is paid.
Bank StatementBank customers receive periodic reports, or "statements" of deposits, withdrawals, and interest paid. For most types of accounts, the statement is sent directly from the bank to your mailing address each month or quarter. It is your responsibility to review the reports for accuracy.
Credit CardYour bank may offer you a credit card with a charging limit. Credit cards are very convenient, but you should use them with caution. Money you charge is money you must repay, often at high interest. Credit cards are best reserved for emergencies. If your stay abroad will be short in length, it is to your advantage to create an international credit card while in your home country. Not only can an international credit card be used to conveniently withdraw money from an ATM overseas, but it is also a valid form of self-identification.
Transfer MoneyIf you would like to have funds transferred electronically-or "wired" from your home country to your bank overseas, both banks must be able to send and receive the transfers. Verify with both banks that this is possible. If you choose to have funds wired between banks, be aware that service charges and currency exchange rates will change the amount that is credited to or debited from your account. One advantage of using electronic transfers is that the funds are usually available for use without the delays associated with paper checks.
Handling Money SafelyAlways use caution when handling money. It is best not to keep large amounts of cash on you or at home. Many students have had large sums of cash stolen or lost. Be careful that this does not happen to you! Also, look after your credit card number and expiration date making sure that they do not fall into the hands of others.
Check Point 1Determine how much cash you will spend in a given day and carry that amount, plus a little extra that can be used in an emergency. Carry the cash in more than one place, in case your pocket is picked. Men should carry their wallet in a front pocket; women should keep their wallet or purse with them at all times. When in public places, such as a restaurant or library, do not place your purse on the back of a chair where it may be easily accessible to pickpockets. Do not leave your wallet in your coat when you hang it on a chair or coat rack. Do not keep your wallet in a backpack. When making a purchase, double-check the total to make sure it was calculated accurately. Count your change when it is given to you to make sure you received the correct amount.
Check Point 2Use good judgment when banking at an ATM. Close the door behind you when you enter or exit an indoor ATM area. Avoid using machines late at night, especially if anyone suspicious is near. When you use an ATM to withdraw cash, do not count your money in front of the machine where others can easily see how much you have. Put the money away and count it in a private place.
Check Point 3There are slight variations in how ATMs work. Some require you to insert your card for the entire transaction; others scan the card and return it to you immediately. Follow the instructions on the screen carefully. Do not walk away from the machine until it has completed your transaction and the screen indicates that the machine is ready for a new customer. Keep all ATM receipts for your records. Do not give your PIN number to anyone, even a close friend or roommate.
Check Point 4When writing checks, leave no areas blank. Do not write and endorse a check for cash until you are inside the bank.
Check Point 5If your checkbook, ATM card, or credit card is lost or stolen, notify the bank as quickly as possible. Many banks have policies that limit your liability for unauthorized purchases or withdrawals if you notify them promptly. Most banks have a toll-free, 24-hour phone number you can use for emergencies.
Tips for Handling Your MoneyIt is your responsibility to keep up with your accounts. Review your accounts on a regular basis to make sure that neither you nor the bank has made a mistake. You have the right to obtain copies of records detailing activity on your accounts, although a fee may be charged for this service.
There may be a limit on how much money you can withdraw from an ATM at one time or on one day; check with your bank. A service fee is often charged when you use a bank's ATM where you do not have an account.
Pay bills on time. Companies often assess a fee for late payment.
More Bank ServicesIn addition to the standard, many banks provide additional services, such as those listed below. Banks may charge fees for some of these services.
Access to Canceled ChecksService where your past checks, whose amounts have been deducted from your account, are organized and again presented to you.
Cashier's CheckSpecial check issued directly by the bank cashier using funds from your account. It can be used when your personal checks are not accepted (e.g. buying a car or house).
Check CashingWithdrawal of funds from your account by writing a check in exchange for cash.
Checking ReserveEnsures there will be funds in your account at all times to prevent overdrafts.
Credit ReferenceStatement provided by the bank to give a third party information about your credit history.
DraftMoney is deducted from your account instead of your paying it in cash.
Foreign Currency ExchangeChanging local currency for foreign currency or vice-versa. Most banks have a limit on the amount that can be exchanged at one time. Exchange rates may differ from bank to bank.
LoansBorrowing money from the bank, which must be repaid within a specified amount of time with interest added.
Money OrdersForm of check purchased with cash; often used when sending money by mail.
Night DepositLocated outside the bank, a night deposit provides a way for customers to deposit cash and checks after the bank has closed.
Notary PublicPerson who verifies the authenticity of documents.
Safety Deposit BoxesSecured boxes located in a bank vault where bank customers can store valuables (important documents, jewelry, etc.)
Traveler's ChecksSpecial checks purchased at the bank, used in place of cash or personal checks when traveling. Traveler's checks require your signature in order to be cashed.
Watch SignatureEnsures that forged checks are not being deducted from your account.
Some Common Banking Terms
Auto DebitFunds are withdrawn automatically from your account by another institution (for example, a credit union to which you owe a monthly amount for a car loan).
BalanceAmount of money you have in your bank account. When used as a verb, refers to the process of comparing your checkbook register to the monthly statement you receive from your bank.
CheckbookBooklet that contains checks, deposit tickets, and a check register or ledger. Obtained or ordered from the bank when an account is opened. The check register is used to keep a personal record of funds in the account.
CreditDeposit of funds to a bank account.
Credit UnionInstitution that provides banking services to its members.
DebitWithdrawal of funds from a bank.
Debit CardPlastic card used in place of cash, checks, or credit cards to pay for goods and services which draws directly from your account.
Direct DepositElectronic deposit of funds into your account by another institution (such as your employer).
FDIC InsuranceIn the U.S. protection for your accounts (up to $100,000) offered by the U.S. government. Developed to restore confidence in the banking system after the stock market crash of 1929.
Insufficient Funds / Overdraft /"Bouncing a Check"Writing a check for more money than is in your account.
Personal Identification Number (PIN)Security code used with your ATM card.
Service ChargeFee the bank withdraws from your account for various services.
Stop PaymentOrder from you to your bank to prevent a check you have written from being deducted from your account.
TellerBank employee who handles the exchange of money.
Truncated ChecksProcessed checks that are not returned to you with your bank statement. Instead they are kept on file at the bank.
Shop AroundRefrain from making major purchases until you have become familiar with the rate of exchange between your country's currency and the foreign currency. Even once you have mastered the exchange rate, defer all but essential purchases until you have had a chance to "shop around" for the best prices. In all but the most isolated locations, you will find a large selection of goods and tremendous variations in price.
- Check prices at several locations before you buy.
- Unless good service is very important to you, shop at discount stores rather than department stores.
- Wait for items to go "on sale"-watch for sale advertisements in the newspaper, in store windows, and on television.
- Talk with friends about where to shop.
- Be aware that the "sales tax" on an item is not included in the displayed price.
- Find out where you can get a student discount, such as at museums, theaters, and art galleries.
- Find less expensive ways to obtain textbooks: buy from stores that sell used books or from students who have already taken the courses in which you are enrolled.