Gap year financial planning for students

Now that the A level results are out, adventure beckons and thousands of youngsters will be taking a year off from studying before settling down for their chosen degree course.

However, when plotting your route around the world, in the excitement of it all, it's easy to overlook some of the practicalities. There are budgets, travel money, visas and travel insurance to consider. While it may never happen, it is wise to prepare for an emergency - just in case. What happens if you get ill, lose your passport or have to get home quickly - how would you fund it?

As money is a restricted resource, for most of us that is, the better care you take of it, the further it can go. Before you pack your backpack, you need to work out a budget. You have to look at the total available and then take off fixed costs for travel, travel insurance, clothes, visas, vaccinations and emergency money. What you have left is what you will have to live on.

To make the most of your cash, you will need a bank account that pays interest and one that you can access anytime, anywhere. Most of the banks offer current accounts suitable for gap year travellers but the interest rates on credits can be poor.

However, some such as HSBC's account for 18 to 21 year olds offers commission free foreign currency while Lloyds TSB pays 3.3% on its under 19s account and it offers a Visa debit card with access to the worldwide Visa ATM network and commission free travel money.

You'll get a debit card with this type of account but they can be an expensive way of withdrawing cash because there are charges of around 2% when you withdraw cash at an ATM. There is often another charge made for currency exchange. Nationwide's Flexaccount is one of the few that doesn't levy charges on overseas withdrawals.

13 March 2007 © Moneyextra.com

back

Moneyextra.com recommends you should consider taking independent financial advice before acting on any article. Please contact us for help with your individual circumstances if any assistance is required.