Budgeting lessons UAE university students must learn

For UAE students heading overseas to study for the first time, learning to budget their own money is a tall financial order.

Warren Fox will be heading back to the United States to attend college and his mother, Margo, will be keeping an eye on his budgeting skills. Delores Johnson / The National

Emily Haboubi, a student, quickly learnt the importance of budgeting at university.

The economics and sociology undergraduate splurged an entire month’s allowance during her Fresher’s week last year at the UK’s University of Kent.

Her parents had paid her on-campus rent for the year of £6,000 (Dh36,623) and £9,000 tuition giving her an allowance of £300 a month to live on.

“I didn’t budget very well at the beginning,” says the 19-year-old Briton. “I spent a lot on food, and had to spend £100 on books. There were loads of other costs I wasn’t expecting such as when you sign up for societies and sports, you have to pay for kit and membership; I signed up for rugby so my kit was £50 and the membership £50 too.”

While higher education can be the best investment a school leaver can make, for those raised in the UAE now opting to study overseas, learning to live on a budget can be a tall order. So how can parents here help their teenagers live within their means, without maxing out the emergency credit card?

Judy McNary, a financial adviser and regular contributor to universityparent.com, advises parents to draw up a budget with their teenagers before they fly the nest, to prevent initial financial shocks. This is especially important for long-term expats not familiar with the day-to-day cost of living in their country of study.

“College is the perfect time to master the life skill of budgeting,”, says Ms McNary. “Each family has its own set of values and financial constraints but, regardless of whether you plan to pay the full cost of your child’s college education, part of it, or none at all, make a point to sit down together to create a budget.”

But the reality can be very different. “My parents didn’t really give me advice, they just said ‘get on with it’, So I’ve been learning myself as I go along”, says Ms Haboubi.

American Warren Fox, 18, is about to embark on a journalism degree at Cal Poly University in California. “I haven’t yet worked out a budget, but my parents have been really drilling it into me for the past few years,” he says. “I’m just going to play it day by day.”

Mr Fox, checked his university’s website to calculate how much expenses such as transport and books are likely to cost. Universities often provide an online breakdown of living costs, to help students plan for the coming year. “But there are US websites who source the books for half the price the university sells for – so I’ll pay $900 instead of their suggested $1,737.”

His mother, Margo Fox, 58, who lives in Al Khalidiya in Abu Dhabi warns her son that his allowance will be based on how often they hear from him. “You have to communicate with us – then you’ll get money. We’ll set up regular times to touch base.”

The Foxes plan to open an American account with a debit card for their son. “I’m thinking of initially putting money in weekly to help him budget, so if he loses all his money, at least it’s only a short time until he gets more,” says Mrs Fox. “After that we’d move on to two weeks, then every month. I’m thinking $200 a month is enough for the shaving cream or mouthwash he’ll need, or if he wants to see a movie. We’ll see. Of course, we’ll pay for his flights home too.”

Mr Fox got a taste of the pitfalls of communal student living during a recent villa holiday with school friends in Ayia Napa, Cyprus. “No one would buy food, or anything to clean the villa with. I ended up phoning mum and was like ‘I just need some money to eat. I was being serious, I was so hungry.’”

Luckily, hunger won’t be an issue for Mr Fox during his freshman year. His parents have paid for a “dining plan” that will enable him to use a points card to choose food options from the 18 campus food outlets on offer. “College food isn’t the best,” admits Mr Fox. “But at least I won’t be eating the same thing all the time.” A first year dining plan package costs around $5,000 and his shared dorm room will set his parents back $10,677.

Budgeting is something the Briton Megan Wallis, 19, is not averse to, as she’s chosen to embark on a degree in accounting in September at a UK university. “I try to save most of the time, so I like to think I’m good with my finances. My weakness will be on meals out with friends.”

At her former Abu Dhabi school of Al Khubairat, Ms Wallis’s class drew up plans to help them budget their student expenses. “The teacher recommended websites to help; Tesco supermarket has a meal planner but it was difficult to draw up an overall budget from Abu Dhabi because I didn’t know how much most things cost.”

Meanwhile, after a year of studying, Ms Haboubi has now learnt to halve her food budget. “In my first semester, I spent £120 every month on food, and now I spend about £60. You don’t necessarily need well-known brands. It’s all the same food at the end of the day.”

Although Mr Fox doesn’t need to worry yet about food bills, he benefited from a school course he took at American Community School of Abu Dhabi called College and Careers, which included a whole unit on washing clothes.

But it is not only students that need to budget ahead of university. Many parents choose to finance their child’s tuition fees themselves, an expensive exercise considering higher education costs are rising globally.

Australia is now the most expensive country for overseas students, according to research last year from HSBC. The combined average cost of university fees and living expenses in Australia is US$38,000 per year, compared with $21,371 for international students in the UAE.

In recent years, Finland (in 2010) and Hungary (in 2013) introduced tuition fees for students, while other countries, such as the UK, have vastly increased their tuition costs.

Thankfully all three students have all successfully applied for home status in their respective countries, meaning they pay lower fees than they would if they registered as an overseas student.

Cal Poly, for example, is a public college that charges lower tuition fees to those like the Foxes with California residency than those with an international status. It will cost Mr Fox and his family $9,000 a year for the four-year course instead of $20,157 for an international rate. Resident status in the US is based on state residence, not national citizenship. So students must establish a residence in one of the 50 states. Each state has its own law on establishing residency. Generally, you must live in the state for a year and pay your taxes there but there are other ways to secure home status.

“It’s a state school, and we do still make a point of paying California taxes, and we have a car registered there too – so we have been determined to retain our residency and they’ve accepted that we are still residents there,” says Mrs Fox. “Most Americans living in Abu Dhabi would be paying the out of state rate.

“We could have opted for a private school, which would have been $60,000 or $70,000 a year. That’s not something we could do. A lot of people take out loans, but for him to get saddled with a big student loan coming out was something we didn’t want to happen.”

Ms Wallis, however, is financing her £9,000 annual tuition fees (as opposed to £11,933 for international students) herself. While her grandparents are paying for her accommodation, she’s taking out two student loans to cover her other expenses: tuition fees, and maintenance costs of £3,850 a year, leaving her with a weekly allowance of £80 to spend. UK student loans can take up to five weeks to process, so it’s advisable to apply in advance. You can choose to receive the whole amount immediately, or to have it divided up into three payments – one each term.

“If I hadn’t been awarded home status, I wouldn’t have been able to get the loan out”, she explains. “Some of my friends aren’t UK nationals, so they decided to go to Canada, where it works out cheaper for them.”

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