Budgeting Basics: Financial Management Tips for International Students Abroad

As an international student in the US, you will meet students from a variety of backgrounds. After all — the US is a big melting pot of cultures from all over the world. You will meet students who live paycheck to paycheck, students with their tuition fully funded by their parents, students with full rides through scholarships or government programs, and more. This diversity in financial situations can be both enlightening and challenging, especially when you're trying to navigate your own finances in a new country. One thing is for certain, finances are an integral part of any college student's life and mastering financial management skills during your college years will set you up for long-term success, both academically and professionally. By following some of these insights, you are guaranteed to start off on a healthy journey with your finances!

Understanding the US Financial System

Before diving into personal finance tips, it's crucial to understand the basics of the US financial system. This includes:

1. Opening a US bank account: Choose a bank with student-friendly options and low fees.
2. Understanding credit scores: Learn how credit works in the US and why it's important.
3. Familiarizing yourself with US currency and tax systems.
4. Learn about student visa regulations regarding work and finances.

Having this foundational knowledge will help you make informed decisions about your finances throughout your stay in the US.

Understanding Your Personal Financial Profile

Students underestimate how the lack of financial planning can lead to the lack of confidence, empty social life, declining health due to stress, etc. Financial stress can significantly impact your academic performance and overall well-being, making it crucial to develop a solid financial plan early on. No one else in the world has a better understanding of your personal financial profile than yourself, so that is where we will start. "The most important rule is also simple - you have to live within your means. Don't spend what you don't have." Are you going out with your friends for drinks a few times a week? Are you used to the convenience of an over-priced coffee from your local cafe every morning? Do you tend to order takeout rather than buy groceries and cook meals? These small habits can stack up quickly while remaining un-noticed. Let's explore how you can keep yourself in check.

Creating a Comprehensive Financial Profile

The most important numbers to be aware of at the beginning of your journey is the flow of money in and out of your account on a monthly basis. Whether that is paychecks from work, alternate personal income, or your parents depositing money into your account on a monthly basis, understand what your spending capacity is. Breaking it into 12 monthly periods will help you notice trends in spending during the holidays, birthdays, vacations etc. which will then help you understand your current financial Profile.

To create a comprehensive financial profile:

1. List all sources of income (scholarships, part-time jobs, family support)
2. Document all recurring expenses (tuition, rent, utilities, insurance)
3. Track variable expenses (food, entertainment, transportation)
4. Identify seasonal expenses (textbooks, holiday travel)
5. Calculate your net income (total income minus total expenses)

This detailed breakdown will give you a clear picture of your financial health and help you identify areas where you can cut costs or increase savings.

Budget, Budget, Budget.

A night out in the city, a quick lunch and drinks with your friends, a nice new addition to the wardrobe, a gym membership etc. are completely okay and much needed! But, when budgeted in alignment with your spending capacity. Whether it is creating an extensive budget tracking sheet on Excel or writing down your daily expenses on your notes app, start off by documenting your spending habits to better understand your day-to-day expenses. Creating an expense budget sheet is the foundation for efficient financial management.

Here are some apps that can help you do this:

• Mint: Syncs with bank accounts, tracks expenses, sets budgets, provides financial summaries, alerts for due payments.
• Wally: Budgeting, expense tracking, currency support, receipt scanning, financial insights.
• Spendee: Budgeting, shared wallets, custom categories, financial overviews, secure bank syncing.

Being an international student comes with its own set of financial obligations such tuition fees, textbooks, housing, and transport. Accommodating these expenses within your budget will help in balancing your academic and personal life more efficiently. Prioritize fundamental needs such as Rent, Utilities, Groceries, Transport, Health Insurance, Phone Plan, etc. and allocate funds for miscellaneous activities and spending. Make sure you are prioritizing spending on yourself to prevent mental burnout and feeling stuck in your finances! I would also highly recommend putting money towards savings - you never know when you will need it.

Advanced Budgeting Techniques

1. Zero-Based Budgeting: Allocate every dollar of your income to a specific category, ensuring no money is left unaccounted for.
2. 50/30/20 Rule: Allocate 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment.
3. Envelope System: Use physical or digital envelopes to allocate money for different expense categories.

Remember, the key to successful budgeting is consistency and regular review. Adjust your budget as needed to reflect changes in your financial situation or goals.

Managing International Student-Specific Expenses

Managing your finances as an international student can be tricky, but don't worry – here are some tips to help you out! First, keep an eye on those currency exchange rates when transferring money from home and explore different options such as wire transfers from banks or international payment applications such as Flywire. Finding banks or services with good rates and low fees can save you a lot. Then, there's the travel costs, whether you are planning trips back home or adventures around the U.S. during breaks, look for student travel discounts and try to book early for the best deals. Don't forget about cultural adaptation costs, too, you will need to budget for things like buying clothes for different seasons or joining local events. And lastly, be ready for visa and immigration fees, keeping your legal status up to date like renewing your visa or applying for OPT, can add up. Stay on top of these, and you'll be all set for a smoother financial journey in the U.S.

Always Have Backup — Save for an Emergency

Life is unpredictable, which means you definitely need some backup in case of a financial emergency. An unexpected trip to the ER, a cavity filling, a four week hospital stay…trust me, I have seen it all. Having savings or an emergency fund will serve as a financial safety net in case you encounter any of these situations. In order to stay away from extensive credit card usage or borrowing, try and ensure that you have 3–6 months worth of living expenses set aside. This fund will help give you mental relief by eliminating uncertainty.

Building and Maintaining an Emergency Fund

1. Start Small: Begin by saving a small amount each month, even if it's just $20-$50.
2. Automate Savings: Set up automatic transfers to your emergency fund each payday.
3. Keep it Separate: Store your emergency fund in a high-yield savings account, separate from your checking account to reduce the temptation to spend it.
4. Regularly Review and Adjust: As your financial situation changes, reassess your emergency fund needs and adjust your savings goals accordingly.

Student Discounts!

As an international student, you have access to exclusive discounts on items ranging from certifications, software, technology, to dining and entertainment. Many retailers and service providers offer special rates exclusively for students, recognizing the financial constraints they often face. To maximize these savings, carry your student ID and take advantage of digital platforms that aggregate discounts from multiple brands for students such as StudentBeans. This is one way to make the most out of your student life without compromising on your needs and wants. Additionally, look out for exclusive partnerships and discounts offered through your university for its students.

Look into all the benefits that are offered by plans that you purchase. For example, if your health insurance plan offers 2 free dental cleanups a year, a full blood checkup, a free pair of contacts, etc. might as well not let it go to waste. A 6 months free Amazon Prime subscription and a free Hulu subscription with a Spotify premium student plan are some other examples of offers active during the time of this publication.

On a Deeper Note — Some Personal Advice

Your financial status should not limit or influence your personal and professional goals, or the way you present yourself. Finances are very personal to each individual, I recommend that you stay smart with your spending and you will get to where you need to be sooner or later. Remember, financial wellness is an ongoing journey. Be patient with yourself and focus on progress, not perfection.

Wrapping up

Hey, I’m Amanda! A fellow international student and a growth intern at roam. I hope you found some of my insights from working with hundreds of international students over the past 2 years and learning from their personal experiences to be useful.

Roam is an ecosystem that simplifies international student migration by putting together all the resources students need to start their lives in a new country, in one place. This includes publishing informative articles (like this one), creating personalized tools on our website, and building digital and in-person communities for international students. Check us out, and feel free to reach out!