Exchange Program and Budgeting for Students

Introduction

Students these days tend to go on an exchange program to learn about a different country's and explore them. The aim of this report is to investigate as well as determine the financial requirements required for this person travelling to Berlin in Germany on an exchange program in April 2020.

It is my responsibility to conduct and create a personal budget for this person to ensure that they are 100% capable to attend Berlin in Germany in 2020. To create a budget for this person I will be creating a monthly budget using a Xcel spreadsheet.

This budget that will be created will be used to save and investigate for the upcoming trip in 2020. The total amount of savings required for Germany will include:

  • Airfares
  • Accommodation
  • Travel insurance
  • Spending money for extra necessities
  • Spending money for food
  • Passport
  • Attractions

Once the calculations have been collected and I have calculated the amount of money required in Australian Dollars, the total amount of money required will need to be converted into Euro's.

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For this specific calculation that I will be doing I will need to discover the conversion rate in Euro's once a week for the next three weeks to keep up to date with the rate and how it varies.

Considerations

Observations

  1. The cost of the airfares tend to vary significantly. The fasted route to your destination is not always the cheapest and that's cause the cheaper flights often mean a long duration with some longer layovers. Purchasing airfares well in advance is likely to reduce the cost.
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  2. Exchange rates tend to change daily. It is very important to look for the best rates on a daily.
  3. Students can work a 12-hour week while school is occurring and 38 hours a week on school holidays.
  4. When attending a trip that is a year or two away inflation rates are most likely to occur resulting in prices going up or either down.

Assumptions

  • I will be assuming this person is a 16-year-old
  • I will be assuming this person does not need a new passport
  • I will be assuming what this person's pay rate is
  • I will be assuming this person is paying for their phone bill
  • I will be assuming this person started saving for this trip in February 2019
  • This person plans to explore four different events while in Germany
  • I will be assuming this person will be travelling to Berlin in Germany
  • I will be assuming this person will need a passport
  • I will be assuming this person has international calls included in their phone bill
  • I will be assuming this person has completed an RSA course

Developing the Budget

Income

Causal Job (See appendix 1)

This person is currently undergoing a casual job at Kenmore Tavern as a bartender earning $25.28 per hour while doing a 12-hour week each week due to still being a school student there are restrictions on the number of hours you can work. (GOV.UK Child Employment).

Total Income - Maximum Allowable Hours

  • Monday, Tuesday and Wednesday (5-8pm)
  • Sunday (4pm-7pm)
  • $25.28 per hour on weekdays normal rate and time and a half on Sundays earning $37.92 per hour
  • Earning (9 x $25.28) = $227.52 for Monday, Tuesday and Wednesday
  • Earning (3 x $37.92) = $113.76 for Sundays (Time and a half)

Expenses

Airfares

Flights in April in 2020 cannot be booked due to it still being a certain amount of time in advance. I have decided to go with flights in April 2019.

The most expensive flights were Turkish Airlines starting from $2933.00 return. Where the cheapest flights were Royal Dutch Airlines that started from $1554.00 return. There seems to be a big difference with prices as well as the layover's and duration of the flight. The Turkish airlines flight has layover's that are 3 hours where Royal Dutch airlines layovers were less than 3 hours long. Most flights seem to have 2 or more stopovers.

The flights that I have decided to go with is Air France Airlines return flight that starts from $1671.00 with a duration of just over 30 hours each way.

Travel Insurance (See appendix 2)

Travel insurance cost is $170.62 which includes overseas emergency assistance, medical assistance, cancellation, luggage, dental expenses, accidental death, permeant disability, hospital cash allowance, loss of income, etc.

Airfares and travel insurance (rate inflation appendix 3)

$1671.00 + $170.62 = $1841.62

Above is the Airfares cost due to inflation increasing

Cost of the airfares are likely to increase in the next year and 2 months due to inflation rates. I will be investigating and calculating the increased future cost. I calculated the mean of the rate from 2016-2018.

1.3 x 1.9 x 1.9 = 1.6

From the calculations above it has shown the average inflation rate was 1.6% over the past three years.

By using the 2019 airfare and travel insurance cost of $1841.62 and then applying an increased price of 1.6% due to inflation will result in finding the predicted cost in 2020

Predicted cost in 2020

1.6 x $1841.62 = $29.46

= $1841.62 + $29.46 = $1871.08

The amount has been rounded to a total of $1880, which I will be using for my budget calculations.

Accommodation and food (See appendix 4)

I have decided to go with the Homestay website, www.homestay.com, I have come across accommodation starting from $60 per night which is $351 a week. This includes a max of a 30 night stay as well as 7 home cooked meals out of 21 nights and it is also only 9.4km away from the Berlin Centre.

As 2020 prices are not available at this time and day due to it still being over a year away, I will budget for $180 per day which will allow for eating out as well as home cooked meals at the homestay accommodation.

Accommodation at Homestay and some days of eating out for 14 days ( 8th April - 22nd April)

Accommodation = $351.00 x 3 = $1053.00

Food = $180 x 14 = $2520.00

$1053 + $2520 =

Total Accommodation and food cost = $3573

Extra Spending Money

This person will need to be able to travel from their accommodation to their attractions in Germany as well as any other sights of Germany. Extra spending money of $100/ day for 21 days will also be budgeted for.

Extra Spending money = 21 x 100 = $2100

Attractions

  • City berlin hop on and off tour =$35.44
  • Segway Berlin tour = $ 78.62
  • Sightseeing cruise tour including lunch = $72.50
  • Berlin TV Tower skip the line =$34.64
  • Attractions = $35.44 + $78.62 + $72.50 + $34.64 = $221.20

Foreign currency exchange (See appendix 5)

Extra spending money of $2100 needs to be converted to Euro's. The exchange rates tend to vary and change daily which would be an issue. It would be ideal for the person to keep up to date with the exchange rate frequently to keep up to date with it and eventually exchange cash when the rate is approving and at its best.

After the total amount of spending money has been determined and calculated in Australian dollars, it will then need to be converted into Euro's after investigating the exchange rate. An online calculator has been used to determine what the exchange rate will be.

Exchanging Australian Dollars for Euro's.

2100 x 0.63 = 1323

When they convert their $2100 into Euro's, they will then have 1323.00

Passport

10 year validity passport (for persons aged 16 and over) $293

This person will need to order a new passport 6 months prior to their trip in 2020 which is a total cost of $293.00 for them to be able to join their trip in 2020 to Germany.

Budget Summary

  • A budget needs to be created and determined that should include:
  • This Person's regular income
  • This Person's regular expenses
  • Savings required for Germany, Berlin

Regular Income

This person's total regular income is $341.28 weekly from their casual job as a bartender.

Regular expenses (See appendix 6 for formula)

The person's regular expenses include phone bill, entertainment and extra spending for food or other necessitates. Estimated values for this person's budget are given in the spreadsheet below.

Savings needed for Germany (See appendix 7 for budget)

  • $1880 (airfares and travel insurance)
  • + $3528 (accommodation and food)
  • + $2321.20 (spending money and four attractions to be converted to Euro's)
  • + $293 (passport)
  • = $8022.00 total money required for trip.

Evaluating the budget

Can this person afford to attend the trip in 2020 to Germany?

By using the budget in the section 4.2 to save for costs required for the trip will help plan for the trip as well as keep saving accurately. According to the budget calculations that have been determined this person can 100% afford to travel to Germany, Berlin next year in April 2020. This person will have successfully saved the estimated amount needed.

Strengths and Limitations

The strengths are that the casual time job has successfully shown in the monthly budget that this person will be attending the trip. The total cost required included:

  • The cost of airfares and travel insurance, as well at increases due to inflation
  • Accommodation and food
  • Spending money for travel, entertainment and extra meals

There have been no limitations found due to this person having the saving required for this trip. There could be issues in the future but with this person being finically stable they will be prepared.

Excess Currency (See appendix 8)

Once this person returns home from their trip there may be some Euro currency unspent. It is being assumed that the amount remaining will be 5% of the amount originally budgeted for.

1323.00 x 5% = 661.50

Converting remaining Euro's back to Australian Dollars

661.50 x 1.59 = $1051.78

Remaining Euro's converted back to Australian Dollars would be $1051.78

Amount Required to save for trip

(See Appendix for budget formula spreadsheet)

The amount required for trip is $8022.00

Conclusion

From the calculations that have been gathered from investigating this person's budget shows that they will have earned enough money in from February 2019 to April 2020 which is exactly 1 year and 2 months. Due to having a well-paid job to travel to Germany, Berlin on an exchange program in April 2020. The budget takes into consideration that prices are likely to increase due to inflation.

By April 2020 this person will have earned $13100.68. Due to having earned this amount of money this person we be able to afford this trip even if there were to be an issue there would be extra money to use

Reference List

  1. Attractions Tripadvisor.com.au. (2019). Berlin: Tours and Tickets - TripAdvisor. [online] Available at: l [Accessed 23 Feb. 2019].
  2. Travel insurance Travel.allianz.com.au. (2019). Choose a plan - Allianz Travel Insurance. [online] Available at: [Accessed 20 Feb. 2019].
  3. Accommodation balcony, B. (2019). Big room own bathroom and balcony. [online] Homestay.com. Available at: [Accessed 1 Mar. 2019].
  4. Pay Calculator Calculate.fairwork.gov.au. (2019). P.A.C.T Home -. [online] Available at: [Accessed 25 Feb. 2019].
  5. Rate Inflation Rateinflation.com. (2019). Australia Historical Inflation Rate - 2017 to 2019. [online] Available at: [Accessed 26 Feb. 2019].
Updated: May 19, 2021
Cite this page

Exchange Program and Budgeting for Students. (2019, Dec 08). Retrieved from https://studymoose.com/exchange-program-and-budgeting-for-students-essay

Exchange Program and Budgeting for Students essay
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