Top 5 must-know financial tips before your child studies abroad

Study abroad rates in the US have been on the rise following a sharp decline during the pandemic. As more American college students seek out new experiences in another country, they also face a number of logistical challenges to start and maintain a new chapter of life abroad. Not least of which is managing money internationally.

For many, this means turning to their parents for help. This can put parents in a tricky situation, as they now need to manage a new currency for things like tuition fees, living expenses, travel costs, and everyday necessities. Unfortunately, recent research commissioned by Wise revealed that while parents feel confident in much of the financial advice they offer their children, that is not the case when it comes to international finance. Just 4% of parents feel confident in helping their children with international finance, and they broadly lack confidence in handling specific issues that come up frequently while studying abroad, like currency conversion (11%) and sending money abroad (14%).

To help those parents looking to build up more confidence in international finance, we’ve put together five essential tips for those who have a child kick-starting their studies abroad.

1. Understand Currency Exchange Rates

Currency exchange rates can significantly affect the amount of money your child will have access to while abroad. Exchange rates fluctuate regularly, which means your dollar might go further in certain countries, but not so much in others. Understanding how these rates work and how they impact the funds your child receives is critical.

One way to track these changes is to set up alerts based on exchange rate fluctuations for specific currency routes. This allows you to see what’s going on with the exchange rate and to transfer money to another currency or international account at times when it’s lowest. 

2. Watch Out for Hidden Fees

Many financial institutions that promise a “no fee” or “fee-free” international money transfer service are actually hiding fees in an inflated exchange rate. These deceptive practices make it almost impossible to tell what you’re paying and whether you could find a cheaper option somewhere else. 

Many may also unknowingly fall victim to unfavorable exchange rates when converting money through banks or airports, which can leave their child with less than expected. What some providers do is add a hidden fee or markup to the exchange rate. This means what you see as the exchange rate isn’t the real one, and you’re actually getting charged extra for the transaction. Always make sure to compare the exchange rate being offered with the one on Google to make sure you’re getting the mid-market exchange rate and aren’t taking on any hidden fees.

Credit cards, while convenient, can also carry high foreign transaction fees if they don't offer no-fee options on international payments. If your child is planning to use a credit card abroad, ensure it doesn’t charge foreign transaction fees.

3. Consider Setting Up a Local Bank Account (or Use Wise)

Depending on where your child is studying, they may need a local bank account to handle direct debits or to make certain in-country payments. While opening a new account can be useful, it can also be time-consuming and a hassle to close at the end of your child’s tenure in-country. 

An easier and more flexible alternative is using a multi-currency account with Wise. With a Wise account, your child can manage money in multiple currencies and receive local bank details for select currencies, including USD, GBP, CAD, EUR, and AUD. That means they can pay bills and direct debits directly from their Wise account like a local and directly receive any money in local currency they earn from part-time jobs or that their friends want to send them after dinner out. 

4. Stay Vigilant with ATM Fees 

There may be less need to withdraw cash than there used to be, but in some countries cash is still a necessary part of day-to-day life. Withdrawing cash abroad can be an expensive experience, and you can be hit with higher fees than expected. A few ways to avoid this include finding ATMs within your bank's network to avoid fees, planning your cash needs in advance, and withdrawing larger amounts to reduce the frequency of ATM visits and potential fees. Find out more about where fees are the highest and how to avoid ATM fees and here. 

5. Find Efficient, Convenient Ways to Send Money Abroad 

As a parent, perhaps one of your biggest concerns is how you can send money to your child quickly and efficiently if they need it. While they may be seeking to gain a fresh sense of independence as they study abroad, you’ll always have their back. That means parents must understand the best methods for making international payments. 

Sending from a US bank account to a foreign one often comes with high fees, inflated exchange rates, and long processing times. If your child needs funds urgently, this is not your best bet. Look for specific international payment providers that allow you to send money internationally faster, more affordably, and conveniently and give you and your child peace of mind the entire time they’re away. 

To help you find the best option, check out our price comparison tracker here. 

Understanding international finance is becoming essential for parents and their children. While international financial management might seem overwhelming at first, with the right tools and knowledge, you can ensure your child’s study abroad experience is enriching and financially stress-free. With the right resources at your disposal, you can rest easy knowing that money matters are taken care of, allowing you and your child to focus on the adventure ahead!