Summary
- Studying abroad is very common for Indians
- The budget has various components
- Scholarships can be rescinded – needs to be controlled
- Currency fluctuation can complicate the estimation
- Emergency fund requirement can never be forecasted
- Learning to maintain budget helps students long term
Indians studying abroad is not a new phenomenon – since the British Raaj, Indians have been studying abroad, particularly in England. Our great national leaders like Gandhiji and Jawaharlal Nehru studied abroad. According to a recent statement by USIEF, there are more than 180,000 Indian students in the US alone. However, one thing that is often not focused is having a budget and why it should be maintained.
When a student goes abroad to study, they have to consider different levers of cost which become part of the budget. This can be broadly classified into the following:
- Return tickets to the university
- Tuition fees
- Accommodation expenses
- Expenses for getting study materials
- Food expenses
- Daily Commute
- Healthcare
It is very important that students who are studying abroad have to plan and manage their budget with at most care compared to students who are studying in India. The various possible reasons why it should be done are:
- Scholarship cancellation
Often students go abroad with scholarship and this is contingent upon many factors – like maintaining a minimum grade or doing some research assistantships. It is even possible that the grants may be cancelled due to lack of funding. If a student faces such a situation, they might be forced to find extra funding in a short time, which could be difficult. This will even get worse if the student does not manage his funds properly
- Currency Fluctuation
Most people tend to ignore that fact that foreign exchange rates can fluctuate. As a matter of fact, between January 2014 and 2019, The Indian Rupee depreciated 11.15% against the dollar. This can affect in both the cases where the loan is taken in India or abroad.
- If the loan is taken from an Indian bank in Indian rupees – the students often find them underfunded to complete their studies
- if the loan is taken abroad and EMI is paid after returning in India – the EMis can increase month on month due to Foreign exchange fluctuation.
- Unforeseen expenses
It is impossible to account for all unforeseen expenses that are required in a foreign country. Many extra costs come in countries have to face. This could be a shock to people who are neither exposed to it nor budgeted for the same. Lifestyle expenses can vary a lot. The simple act of stepping out of home and having a meal would be something people do not consider while getting a loan
- Emergency flights
It is quite possible that students have to travel back home for emergencies and this will cost a lot due to distance as well as booking a flight at the last moment.
- Insufficient Surplus
As most budgets do not capture all the expenses associated with studying abroad it is very important for students to keep a good surplus. However, most students do not maintain a surplus and end up looking for finances towards the end of their studies. This can lead to frustration and often end up with taking finances from loan sharks who offer interest rates up to 3% month on month.
At times even a properly calculated surplus could get extinguished by unforeseen circumstances.
6.Set them financially for the rest of their life
Last but not least, learning to budget while you are studying abroad is a great thing. It adds a layer of financial control to your financial independence. Hence students should look at it positively as a challenge rather than as a task they have to do. Most people who study abroad and manage their finances end up being financially responsible for the rest of their lives.
So as we see, budget management is very important for students who are studying abroad due to the reason we saw above. Students might overshoot their budget because of reasons that are beyond their control. However trying to keep the budget within the limit is something student should try doing as it helps them not during the time they are studying, but later in their life too.
