Why you shouldn’t rush to pay off your student loan
Heading off on your big OE is an amazing experience, but travelling overseas alone for the first time involves plenty of unknowns, and a big chunk of money. The last thing you want to worry about is money - the best way to avoid that is to put together a plan for how you’re going to fund it all. This doesn’t have to be complex or time consuming, but a little time spent planning now is something your future self will appreciate. Here are a few tips for how to do just that.
1. Figure out what it’s going to cost
You need to have solid grasp on how much money you need by the time you set off so you can start saving. Start by jotting down every expense you can think of, from airfares to visas to food - get it all down in one big list.
- Public transport
- Cost of entering certain sights
Next, spend some time trawling the web to get an idea of how much these will cost in the countries you’ll be visiting. Airfares and accommodation are biggies, especially if you’ll be staying in expensive cities such as London.
Remember, when you arrive, most countries will want to see evidence of how much money you have to support yourself before they’ll let you in. For the UK this is usually around $4000 minimum. Even though this isn’t a cost in itself, it’s an absolute minimum amount that you need to have in your bank account when you arrive. In reality, you’re going to want more than that if you don’t want to struggle during your stay.
2. Make a savings plan
Once you have a good idea of how much money you need, it’s time to knuckle down and make it happen.
Use the tools on offer from your bank
The prospect of saving several thousand dollars can be daunting. At first it may even seem like you’re not making any progress. To help ease you through this psychological barrier, break it down into smaller chunks by setting a monthly savings goal. Investigate the tools on offer from your bank to help with this. YouMoney is a bank account that works well for goal-based saving because it uses visual cues on internet banking that make it easy to see exactly where you’re at. Sometimes a quick glance at that progress bar in your mobile banking app will be all it takes to stop you from spending when you should be saving.
Tips and tricks to save money fast
Figure out how much you can afford to save each payday and get a savings account opened. Most banks have a range of accounts with different savings habits in mind, so find one that suits your style. A great way to get started is to set up an automatic payment from your cheque account to your savings account that goes out almost as soon as your pay goes in. This and a host of other helpful savings tips can be found in our guide to saving.
3. Supercharge your saving
If you’re already living payday to payday, or you want to supplement your income, you might need to take more of a hardcore approach to saving. This could mean taking a part time job, hitting TradeMe and selling off a few belongings and really cutting back on unnecessary spending. Sure, taking your lunch to work each day and forgoing the morning coffee is a sacrifice, but it all adds up. Here’s our guide to making some extra income on the side.
Once you’ve got your savings underway, it’s time to get smart about what that money is doing. We’ve already touched on savings accounts such as Rapid Save (an account that rewards you with higher interest if you don’t make than one withdrawal per month), but there are other options.
Term deposits can give you better return than a savings account if you’re willing to lock chunks of your savings up for a set period of time. This method would suit people with a decent amount of time before they fly out, so check out our in depth guide to term deposits to see if this sounds like an option for you.
Lastly, if you’re really keen to squeeze every cent out of your finances, start plugging the financial leaks. You might be paying unnecessary fees and paying more interest than you need to, so check out our step-by-step guide on how to sort it.