Budgeting with Repayments Hat
This is a real struggle for most international students: Managing the everyday costs of living along with EMIs (Equated Monthly Installments) of a loan.
Managing Core Expenses Along with Loan Payments
Healthcare, utilities, groceries, and rent—these fundamental expenses are a must have for students and need to be paid along with the loan obligations.
How to manage:
Draft a monthly schedule ensuring that there are two fixed and non-negotiable portions:
1. Essential living expenses and
2. Fixed loan repayment amount
Setting up automatic payment for the repayment to the loan provider like one would with rent helps.
Maintaining an emergency fund equal to 1 1/2 of EMIs helps to skip loan gaps during low or no income months helps too.
Like how Elena set up automated payments of $600 to her loan provider every month. She then budgeted her rent and groceries to be around $600, which meant that her budgeted amount wasn’t exceeding $600.
Staying on Course by Skipping Out on Luxuries
For students that have payment deadlines, paying for activities like shopping, going out to eat, or any other form of self-indulgence is a no go. This might feel like a form of restriction but is essential during the initial years.
How to manage:
Replace social activities with more cost effective alternatives like potlucks, local hikes, free cultural events, and other low cost hobbies.
Save for occasional treats – An absolute removal of leisurely activities may lead to burnout and prevent spending out of control during an extended enjoyable period.
Arjun limited spending on eating out to twice a month, but he hosted dinner parties which allowed him to socialize. This saved him approximately $150 to $200 per month.
Pressure to Take “Any Job” Quickly
Gradate students are often responsible for a loan, and as a result, they may feel that they are forced to take up roles that are not in line with their long-term career objectives.
How to manage:
Try to save 3 to 6 months of expenses that can be used as a financial runway. This will allow for more selective job searching during that period.
Look for part-time positions that fit with your schedule, or offer to take up short-term contracts in your desired field as you apply for positions that interest you.
Keep networking within your desired field and take up stopgap jobs to stay productive and keep up the momentum.
Long-Term Perspective
The early repayment years are the most challenging. Once you know that your income will keep going up over time, you can save or spend the extra money you make. The goal is to make it through the hardest time without going broke or running out of money.
If you get a raise or a job that pays more, you can start contributing additional payments on the principal to shorten the length of the loan and lower the total amount of interest you pay.
