While I have discussed strategies for individual investments, banking and insurance, I wanted to present what I believe to be the “Basic Rules,” which, if followed throughout your yachting career, will maximize your chances of financial success.
- Have a bank account in the same currency as your income.
- Have other currency bank accounts if you spend considerable time in other currency jurisdictions.
- Use a currency broker account to move money between accounts; this gives you control and saves money on the exchange rate and commissions.
- Clear debts as soon as you can, especially those with high interest rates.
- 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 not on board.
- Conceptually plan out different financial “pots:”
* Emergency: at least three months’ salary in a bank account (preferably six months)
* Education: when and how much (is it for the next course?)
* Spending money: limit yourself to a set amount each month
* Property purchase money: how much will you need for a deposit, and when
* Long-term money: 25 percent of your salary
- 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 the most time
* Where your “dependent family” is based (your home)
- Save at least 25 percent of your income for the long term; you don’t pay any social security. If you worked on shore, your salary would be at least 25 percent less due to this.
- Invest time in your own financial education. Read my column in Dockwalk every month, look at investment websites, learn about inflation, property leverage, risk and compound returns.
- If in doubt, take advice. Understand your 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 follow just one).
When you get to the time when you want to leave yachting (be it after 5 years or 25) it is great to be able to do so because of the way you have managed your own resources… many people cannot leave the industry at the time they want to because they have not taken control of their futures.
Follow every one of these simple rules and you I am certain that you will get the most out of your yachting career…and will leave it feeling that it not only gave you great memories and friends but helped 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.