Gap year can teach valuable financial lessons
By Helen Fowler
Each year, hundreds of young people take a gap year to observe orangutans in Borneo, practise yoga in Kerala or build orphanages in Zambia. In a study by the Institute for Fiscal Studies through the Centre for Analysis of Youth Transitions, about 16% of the 4,000 participants took a gap year. For many of those students, a gap year is the first time they will handle their own money, and it can teach some valuable lessons:
1. Budgets are vital. A
gap year typically costs between £3,000 and £4,000, according to the National
Union of Students. If you are going with an organised programme, find
out what is included (food, accommodation, transportation) and work out
how much money you can afford to take with you. Set a budget, and stick to
it. Planning in advance can save you from impulse buys later. From the
minute you arrive, write down everything you spend; keeping written
documentation will help you better see how much you've spent and where
your money is going. This may be especially helpful if you are in a place
where you can't check your account online easily.
2. It's hard earning your own way in life. The number of young adults living with their parents in the UK
has increased by 25% since
than a quarter of 20-34-year-olds live with their parents. A gap year
can teach you independence and ensure you do fly the nest. You can learn
it is possible to survive without your parents bank-rolling you.
3. It's easy to spend money when you're away from
home. But remember -- once you've spent it,
it's gone. Blow the last of your Euros on
coffee in the sun-lit village square and you will not have the money for
your bus fare home. You can, however, recover financially with the help of
4. Working -- no matter what job -- is not beneath
you. Gap year activities can cost hundreds or
even thousands of pounds. Without a job, it can be quite easy to end up
with a pile of debt -- or worse, stranded in a foreign place. Never look
down on any kind of work.
5. Foreign transaction fees stack up quickly. Depending on how long you'll be visiting a particular area, you
may consider setting up a bank account while you're there. You could save
on currency transaction fees by opening an account in whatever currency
6. A credit card is not a "get out of jail
free" card. Chartered financial planner
Susan Hill advises against taking a credit card on a gap year. The experience
can teach you to live within your means. If you do take a credit card with
you, use it only in emergencies. Use cash or a debit card for everyday
7. Adequate insurance is important. Trips longer than one month may require a specialist policy. Standard policies may not cover riskier activities, such as bungee jumping, water sports or skiing. Be sure you're covered while working or volunteering, especially if you are doing any manual labour.
8. Learn to protect your money. Not everybody you meet on a gap year will be honest. It's impossible to tell if a stranger is a thief; even your roommate on the same good-Samaritan trip could be waiting for an opportunity to pounce. Never tell anyone a password or share sensitive information. If anyone suddenly starts asking for personal information, be wary.
Published: 4 April 2014
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