I am often asked by junior and senior crew alike what would be my top 10 financial tips for anyone beginning a career in the yachting industry.
Many captains also ask me to present to their crew onboard the yacht to give them all a good idea of what sort of things ‘they should do with their money’.
I often challenge the senior crew to see how many of these ‘rules’ they abide by; very few answer yes to more than six, but it is never too late to start planning for your future and for your life after yachting... whenever that time comes.
Some of these may seem obvious, but it’s surprising how few are actually practiced by crew members, old or young. However, if you stick to these guidelines throughout your yachting career, you will maximise your chances of financial success.
Some of these rules will help you make more money, some will help you establish good financial habits and others will help you save money... when combined they should help you grow your wealth throughout your yachting life.
1. Have a bank account in the same currency as your income
If you are earning euros and the money is not being sent to a euro bank account, you are losing money on exchange rates and fees EVERY month.
2. Have other currency bank accounts if you spend considerable time in other currency jurisdictions
Don’t take USD out of your euro account... the rate you get on exchange is often dreadful, plus handling fees and commission are added every time.
3. Use a currency broker account to move money between these accounts
This gives you control and saves money on the exchange rates and commissions.
4. Clear debts as soon as you can
Especially those with a high interest rate.
5. Check the medical cover available to you from the yacht
Offer to pay a small supplement if it doesn’t cover you during holidays or when you are not on board, or get the captain to look at reviewing it for the entire crew.
6. Think in ‘pots’
This can be in the same account but think in terms of different financial pots:
Emergency pot – at least 3 months’ salary in a bank account (preferably 6 months).
Education pot – when, what for and how much?
Spending money – limit yourself to a set amount each month... then stay in or find lower cost things to do... this is a vital habit to form.
Property purchase money – how much will you need for a deposit, when and in which currency?
Long term money – this should be at least 25% of your salary.
7. Understand your tax residency status
Keep an accurate diary of where you spend your time. The places where you are most likely to be considered resident are:
Your country of citizenship
Where you own real estate
Where you spend most time
Where your ‘dependent family’ are based (your home).
8. Save at least 25% of your income for long term
You don’t pay any social security, if you worked on shore your salary would be at least 25% less due to this; put this aside for your life after yachting. If this is more than 5 years away then you should definitely consider investing it rather than leaving it in a bank account.
9. Invest time in your own financial education
Read investment websites, learn about inflation, property leverage, risk and compound returns. Think about your plan for leaving yachting - what do you want to do, when and how much will it cost. No one plans to fail, many fail to plan!
10. If in doubt, take advice
Understand your own limitations and build a team of trusted advisers in different fields; speak to other crew about what they do with their money (but don’t just follow blindly).
When you reach the time when you want to leave yachting (be it after 5 years or 25,) it is great to have choices because of the way you have managed your resources. Many people cannot leave the industry at the time they want to because they have not taken control of their futures or accrued savings.
The longer you wait to think about your future the fewer choices you will have when you get there.
Follow every one of these simple rules and you will get the most out of your yachting career, knowing that it not only gave you great friends and memories but it allowed you look forward to a long and fruitful second career or retirement.
This article is for information only and should not be considered as advice.
Peter Brooke is a financial planner to the English speaking expatriate community. He is based on the Cote D’Azur and is a member and partner with the Spectrum IFA Group who have created the Horizons Financial Solution specifically for yacht crew.