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Are you thinking about going back to school? First, create a financial plan, experts say

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Returning to school can be a great way to advance your career, whether by earning a master's degree or participating in a certificate program to add additional skills to your repertoire.

Returning to school can be a great way to advance your career, whether by earning a master's degree or participating in a certificate program to add additional skills to your repertoire.

But it's also an important financial decision, since school isn't cheap — especially if it could keep you from your job.

For this reason, some choose to continue working and go to school part-time.

Omar Jamal did just that last August. He kept his job at Scotiabank and began studying for an MBA part-time, hoping the degree would accelerate his career at the bank and expand his opportunities in the future.

This means that the costs of the program are spread over a longer period of time and he does not have to forego his income, explained Jamal.

“It’s an investment in yourself and I believe it’s been worth it,” he said.

Others choose to quit their jobs and go to school full time, like Paige Kezima.

Kezima had wanted to get her master's degree for years, but was put off by the cost and instead chose to continue working full-time. But when she inherited some money after her father died, she realized she could finally make the philanthropy degree she wanted to pursue a priority.

She left her full-time job for the program, which was a difficult decision as it meant foregoing a salary. She took a part-time job to cover some expenses.

But like Jamal, Kezima sees the program as an investment in her future.

“It was really scary. But I don't regret this decision at all because I think in the long run this will be something that will lead to more sustainability in my life.”

Before you decide to go back to school, experts recommend taking some time to think about why you want to go back to school.

“Take a year to save some money because then you'll have time to do the proper research,” says Jessica Moorhouse, financial educator and host of the More Money Podcast.

This research may include conversations with people who have done the program, Moorhouse said.

To determine whether the program is a good fit, consider starting with part-time study or even taking a single course before fully committing, she said.

“If you can dip your toes in, take a class if possible to see if this is right for me?” she said.

Consider joining a program that you can do online, Moorhouse said, and that can save you money on things like transportation. You can also look for cheaper programs in other provinces that you can do remotely, she said.

If you work full-time, you may be able to take a leave of absence from your job instead of quitting or switch to part-time, Moorhouse said.

If the education you're pursuing is related to your career, you should talk to your employer because they may actually be able to help you, said Angela Iermieri, a financial advisor at Desjardins. Some employers will help you pay tuition fees, while others will allow you to defer part of your salary so you can receive it during your vacation.

If you choose to work part-time while attending school, it will help financially, but the downside is that your degree or certificate will take much longer, Iermieri said.

“Do you want to do this relatively quickly, or do you want to extend your studies so you don’t have to reduce your income?” she said.

Once you've decided on a program and decide whether you want to continue working, it's time to create a financial plan, Iermieri said. Consider not only the cost of lessons, books, or other supplies, but also the costs of not working or working less.

Make sure your plan also includes at least a 10 to 15 percent “buffer” for any surprises, Iermieri said.

Once you've cut your budget, try living with it to see if it's sustainable, she said.

“Actually, something can always happen,” she said.

“Estimate the cost and live with that budget for a while. This will give you a better idea than just jumping into the project.”

There are financial resources that could help cover some costs, Iermieri said, such as government grants.

There's also the Lifetime Learning Plan, she added, which allows you to withdraw up to $20,000 from your registered retirement plan over four years. Later, these RRSP withdrawals must be repaid.

Many people are unaware of this option, she said.

If going back to school ultimately helps you increase your income and gives you better performance in the long run, then it might be worth it, Iermieri said.

Kezima said she wished there were more resources to help people navigate such an important financial decision. Some of the advice she found online seemed very general, she said.

“It also requires a lot of knowledge about financial literacy,” she added.

One thing Kezima had to consider that many others don't consider was the cost of healthcare. Because she is a person with a disability, her monthly costs are high and a significant portion of them are not covered by her student plan.

“I think there's an assumption that people who have a bachelor's degree or some type of prior post-secondary education have this knowledge of budgeting and finances and preparing for graduation and all that stuff,” she said.

“But I don’t really think that’s the case. I think that's just an assumption. So I think there’s a lot more that could be offered in the area of ​​financial literacy.”

This report by The Canadian Press was first published May 16, 2024.

Rosa Saba, The Canadian Press