Seven steps to financial success for seafarers
Last updated: 28/11/2019
As a happy yacht crewmember, it may be difficult to picture a life beyond yachting at present, but when you have decided it to be the time to leave the industry, or an incident sees you leaving unexpectedly, you want to make sure that you are prepared to make the jump.
We spoke with Sandy Paterson of Alexander Peter Wealth Management to uncover the seven steps of financial planning success for yacht crew to cultivate habits that leave you with choices in the future.
Seven habits for financial success
Make the decision to invest in yourself by taking on these seven habits. Let’s face it nobody else is going to!
1. Allocate spending money
You may be having more fun than you have ever had, and visiting more places than you have ever seen before, but it makes sense to have a plan in place to protect your financial interests while you're earning some of the best money that you may ever earn.
Sandy advises that you should set yourself a monthly spending limit. This ensures that you are not spending more than you earn, heading down a slippery slope to debt. He said, “Once your monthly limit is gone, try to stay on board where you cannot spend more. Without a monthly limit, nothing else will work.”
2. Best bank accounts and currancy brokers
When travelling the world, dealing in many different currencies, it doesn’t make sense to pay huge conversion fees for every trip, or to be losing money on exchange rates in every transaction.
Sandy instructs, “If you generally earn your money in Euros, have a bank account in Euros. If you need other currencies, open a multi-currency account. An Offshore Seafarer Account is probably best. When exchanging larger sums, using a broker will save you money long-term. Debit cards are easy, but stop and think what could you do with that money instead?”
3. Get out of debt
Whichever career you may be working in, or whatever lifestyle you may enjoy, we all know that it’s not ideal to be in debt. While you are living and working aboard, earning good money with few outgoings, it’s a good idea to work towards getting out of debt, or avoid moving into the red.
Sandy directs, “Start with the highest rate debt, check for 0% balance transfers on credit cards: 10,000 Euros in the bank earning 2%, whilst holding credit card debts at 22% does not make sense at all. Pay them off.”
4. Have emergency cash
Now all debts are paid, and unnecessary fees and exchange rates are being avoided, you can begin to build up a safety net should you need to get your hands on some emergency funds, or a ready-made nest egg should you look to return to ‘normal’ life once again.
Sandy counsels, “Ideally [you should work to save up] three to six months’ income in your Seafarers Account, then leave it alone. Immediate access is the priority, not interest rates.”
5. Invest in training and education...
As a yachtie looking to progress within the industry, or even a yachtie that is looking for a future shore-side career, education often holds the key to your progression. Sandy advises, “Decide which courses will further your career and set aside the money. Don’t forget, personal development outside of yachting. Invest in your education and the benefits will far outstrip the cost.”
6. ...And some property
While, as a current crewmember, you are spending the majority of your time living and working on board your superyacht, you may one day dream of owning a property ashore; whether for the occasional shoreside stay, a rental income or your life after yachting.
Sandy asks, “Where do you want to live, how much deposit is needed? This medium-term money should be in efficient savings plans, designed with seafarers in mind. Advice is cruicial to getting this right.”
7. Save for the freedom to decide
Whether in your long-term plan, or in the near future, yachting life will eventually end. Sandy concludes, “Invest for the future to give yourself options when yachting life is finished. This involves long-term investment and tax planning to ensure you reach your goals and professional advice is invaluable.
“Ideally save 25% or more of your monthly income. Yes, that’s a lot, but bear in mind if you were shore-side, you would be paying at least that much to the tax-man, so get saving!”
Other things to consider
Sandy’s top tips for financial success for seafarers include a few further points to consider. He advises that, whilst setting up for your future, you should consider establishing your residency, and don’t forget the freebies! Ask your captain what medical insurance, pensions and other benefits you get and consider asking for more.
Whether a current yachtie, or crew soon looking to return to shore-side life, seek out professional, independent financial advice from people who know the yachting scene.