Navigating exchange rates while studying abroad in Canada
Budgeting while studying abroad in Canada is an essential step in managing your money effectively so that you can build financial independence. But for international students, budgeting comes with an additional factor to consider – fluctuating international exchange rates. These changing rates can affect everything from tuition fees to daily expenses like groceries and coffee.
So let’s talk about exchange rates – what they are, why they matter, and some tips for budgeting while keeping them in mind.
What are exchange rates and why do they matter?
Exchange rates represent the value of one country’s currency when converted to another. In your case, exchange rates determine how much your home country’s currency will be worth once it’s converted to Canadian dollars (CAD). These rates fluctuate due to factors like global economic trends, political events and market demand.
So, why do they matter for international students? The fluctuation of exchange rates can have a big impact on your student finances. A slight change in your home currency’s value could mean your tuition costs more (or less) than expected. It’s important to be aware of changes to the exchange rate so you can budget as effectively as possible.
How to manage exchange rates while studying abroad in Canada
Monitor the exchange rate frequently
This might seem obvious, but it’s worth stating clearly: Monitor the exchange rate between your country and Canada frequently. It’s a good idea to make it part of your regular budgeting process. Check with your bank to see if you can set up exchange rate alerts or use online tools like XE.com to track rate changes.
By staying up to date on the current rates, you’ll start to get an idea of typical fluctuations, and you’ll be able to make more informed decisions with your money – like transferring it when the exchange rates are more favorable.
Add a buffer to your budget
One way to stay on top of any potential unexpected rate changes is to add a buffer amount to your budget. This means you’ll be covered in case the rates worsen. Start by adding a 5%-10% buffer to your estimated expenses – over time, as you get a better idea of how much rates tend to fluctuate, you can adjust this percentage if needed.
Minimize conversion fees with an in-country bank
One of the best ways to avoid consistently dealing with the exchange rate is to keep most of your money in a Canadian bank account. With an in-country bank account, you can minimize the amount of money you need to convert into CAD and limit conversions when rates are unfavorable. You’ll also be able to avoid foreign transaction fees with an in-country bank account.
Not sure where to start? Check out the Student Banking package offered by our partners at TD Bank.*
Building financial confidence*
While exchange rates can seem daunting and unpredictable, these tips will help you manage rate fluctuations with confidence while studying abroad in Canada. That confidence will help you achieve financial independence for years to come! Just remember: monitor the rates, buffer your budget, and use an in-country bank.
*MPOWER has referral agreements with TD Bank and may earn referral fees from this relationship.
