Oliver Maher is a director at United Advisers Marine. Disclaimer: UA/BFMI is a member of Nexus Global and an appointed Representative of Blacktower Financial Management (International) Limited (BFMI). BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC). UA/BFMI are not tax advisers and clients should always seek independent tax advice for their individual circumstances. +34 871 115 928; www.unitedadvisersmarine.com
Yachting’s golden handcuffs can make it difficult for crew to transition from life on board to life on shore. The longer you’ve worked in the industry, the tighter those handcuffs are.
As superyacht crew, you have higher disposable income and lower expenses. However, back ashore you need to cover those expenses yourself. This is where many crew get caught out. We often hear that the key reason why transitions don’t always run smoothly is because of a lack of money and/or lack of prep. The transition is physical, psychological, and emotional, so being prepared is fundamentally important.
The length of time you’ve been in the industry will inevitably impact your transition. If you’ve worked on board for only 12 months, the process is likely to be quicker and relatively pain-free as you know what to expect. If yachting is the only career you’ve known for 10-plus years, transitioning can be more challenging.
Build an Emergency Fund: An emergency fund is a readily available source of assets to help you navigate financial dilemmas or a change in circumstances, such as losing your job, falling ill, or exiting the industry.
It gives you peace of mind knowing you have a large cash cushion to fall back on. This is especially important when job hunting and leaving your onboard role. If your new job doesn’t work out or it takes much longer than hoped, you’ll be thankful for this safety net.
Our general rule of thumb for how much to have in your fund is:
- When employed on board, have an average of 3-6 months’ salary.
- When transitioning ashore, have at least 6 months’ salary to set up your new life.
The exact amount you need also depends on where you’re moving and your level of financial commitments.
Don’t move all your emergency fund savings into the currency you’ll be using when you’re back on shore. Foreign exchange services can advise the best time to transfer your money as opposed to moving it between banks. If you’re clear about your final on-shore location, you can move the fund over to that currency when rates are favorable or do this on a regular basis using a service like Revoult.
The transition is physical, psychological, and emotional, so being prepared is fundamentally important.
If you’re using your Standard Bank Account for your emergency fund, it won’t earn much interest. If you have surplus cash in your emergency fund, which is stagnating at zero percent, you may wish to do something to earn more interest.
Say you have €20,000 in a Standard Bank Account with a zero percent return; you risk up to a €600 reduction in the value of your money per year (based on the current rate of inflation in Europe). If you move that €20,000 into a savings account with a 1.5 percent interest, you could be rewarded with €300 interest per year. The amount of interest you’ll be able to earn from a savings account depends on availability (based on your nationality and tax status).
However, keep in mind that you’ll need liquidity (the immediate access to cash to pay upfront for day-to-day expenses and make withdrawals) to help your transition.
This article originally ran in the November 2021 issue of Dockwalk.