Is there value in a "gap year" after high school?
That's the question Jonathan Nikodem faced when he graduated and weighed the financial and personal benefits of taking a year off before university to consider his options.
"I just had no idea," the 21-year-old student said of his post-secondary career. "I thought that I wasn't ready."
Sentiments like those are enough to throw many parents into a panic about their children's future, but financial advisers say that putting school aside can offer rewards to some young Canadians, if they craft a proper investment strategy.
"It's a huge risk ... You could potentially put yourself in a situation where you wasted a year," said Christopher Dewdney, a financial advisor at DWL Financial Services in Toronto.
"You want to make sure you're going in the right direction."
On the flipside, spending a year in university for a program that you wind up hating can be like throwing money in the trash.
It's a factor that Nikodem took to heart when he decided to stick around his hometown in Sudbury to work at his mother's gift shop. His goal was to raise enough money to eventually live independently in Toronto while going to school.
Not every young person is quite so diligent when they take on a full-time job, said Dewdney, which is one reason that a "gap year" can be dangerous.
"It's easy to get tempted, and use that money to go out, buy clothing and have fun," he said.
"The lion's share of the funds should be invested."
Of course, before there's any money to invest, you need to have secured a full-time job before graduation, in order to avoid wasting time. Many graduates leave the job hunt until after school is finished, which means they're competing with a big crowd of other unemployed young people who are looking for summer positions.
Dewdney suggests that once you find a job, you should set up an automatic withdrawal to save about 60 per cent of your paycheque in an account that you can't touch.
"Because you're dealing with such a short time horizon, you should be looking towards fixed-income style investments," he said.
"It wouldn't really make sense to introduce you to a more volatile investment."
High-interest savings accounts, government and corporate bonds, GICs and conservative mutual fund portfolios are suitable considerations, Dewdney said.
Tax-free savings accounts are also a smart vehicle for short-term investments and allow Canadians, 18 and older, to stow away up to $5,500 per year without being taxed.
Students should also utilize the "gap year" to its fullest by staying with their parents to minimize living expenses and maximize savings.
Use that time to test your ability to survive on a tight budget, said Robert McCullagh, an advisor at Benefit Planners Inc. in Calgary.
"Get yourself clear on what you have to live on," he said.
"If you're going to have $2,000 a month for expenses ... do a dry run to see if you need additional financial resources, which might include grants, scholarships or student loans."
Amid all of the newfound responsibilities, it's tempting to give into the lure of exotic vacations or European backpacking trips that you might not be able to afford. If you have the passion to travel, but still want to save, set aside money dedicated solely to exploring, but don't go beyond your limits.
Nikodem put a financial cap on travel plans with a friend, and decided to visit South America for a short time and tour parts of Canada.
"I didn't want to waste all my money travelling," he said.
Regardless of your specific approach, a "gap year" also provides the opportunity to establish an emergency fund for school.
For Nikodem — who ultimately decided to take two years off before he enrolled at Ryerson University in Toronto — the fund gave him some leeway when securing a part-time job in the city proved more of a challenge than he expected.
All things considered, Nikodem said he's glad he didn't dive into more schooling before he was ready.
The extra money saved meant he was able to rent a downtown apartment within walking distance of the university and it also let him take a bit of time off while he eased back into academia.
But he said not all of the lessons of the "gap year" were tangible.
"It was the whole growing up thing that I took away the most," he said, while considering what advice he would give to other upcoming graduates.
"Don't rush into a program," he said. "You're only 18, you're really young. Just keep your eyes open."