Don’t Take a Gap Year; Set Aside a Gap Fund

A gap year is traditionally a year away from school before going to (or back to) college or university. The idea is to dive into the real world to gain perspective and start taking responsibility before locking yourself into a long-term career or area of study.

More recently, the term has been applied to taking a break from work, either for learning (a sabbatical) or personal reasons (“mini-retirements”).

Rather than working the same job for 30 – 40 years, I feel it’s important (for sanity as well as personal growth) to mix things up every now and then, so gap years and mini-retirements are topics I contemplate often.

Rather than taking a gap year, an alternative approach for a mid-career break is to set aside and live off of a fixed gap fund.

The setup

Let’s say you have already landed a job that you don’t hate and has decent pay. You’re spending consciously and investing wisely. You’re also young enough that you (hopefully) aren’t yet fully encumbered by the American Dream and, ideally, your relatives are still healthy.

In other words, you are blazing a trail to financial independence. But a nagging sense of repetition has set in. You’re doing everything right, and starting to wonder if there’s more to life than just grinding it out at your job day after day, month after month, year after year.

It’s time for a break.

Funds vs. schedules

Rather than following a fixed schedule (e.g. “I will take a year off and travel around Mexico”), consider setting aside a fixed amount of money and basing your schedule on how long those funds last (e.g. “I will take $30,000 and travel around Mexico until the money runs out”).

There are a few benefits to this approach.

First, by setting aside funds for a big adventure (most likely in cash, so you’re insulated from market downturns), you are implicitly limiting the impact your time off can have on your journey towards financial independence (excluding the opportunity cost of not working–I’m assuming you’d rather have freedom than dollars if you’re reading this article). If traveling around in an RV is more expensive than you expected, you can always end your journey a little early.

Most appealing is that you can extend your gap year into a gap year-and-a-half or even longer by embracing frugality. Maybe you decide while backpacking around Europe that you prefer eating in hostels, so you can save a bundle on food and, by stretching out your trip, see more of the rich history of that continent.

Don’t go crazy, though

Unless you find a way to drastically pare down your expenses to the point that you could literally retire (in which case: congratulations!), you will need to go back to work as your funds wind down.

Make sure you plan for several months of “normal” expenses at the end if you’ll need to find a new job (a very likely scenario, given how hostile most companies seem to be toward long unpaid vacations). I would not recommend dipping into your emergency fund for this purpose (because it’s really not an emergency if you are planning for it).

That’s it!

Definitely not an Earth-shattering idea. All you’re really doing is saving up money to buy a taste of freedom (here is how Chris Parnell explains it).

What would you like to do that is incompatible with holding down your 9 to 5 job?

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