What to Know about Planning for Financial Freedom

16 December 2021 By Sara Ventiera

Sara Ventiera is a contributing writer and former stewardess who covers food, travel, and other topics. Her work has appeared in a wide range of publications, including the New York Times, Food & Wine, NPR, Eating Well, and BBC Travel.

The COVID-19 pandemic has caused many to re-evaluate their priorities and to get prepared to face a more uncertain future.

The COVID-19 pandemic may be winding down in many parts of the world, but it has dramatically changed many aspects of modern life. Some were positive: many people got puppies, learned to cook, took up hiking, biking, and other outdoor activities.

But anxiety, depression, and the consumption of drugs and alcohol spiked. A whole lot of people lost jobs and were forced to tap into savings and even go into debt. The time at home and economic angst prompted individuals and families around the world to take a new look at their finances — and many yacht crew have since made some major changes in the way they manage their careers and money.

According to a Pew Research Center survey, about half of non-retired adults say the COVID-19 outbreak will make it more difficult for them to achieve their long-term financial goals. About 44 percent of those folks who feel their finances have been hit believe it will take them three years or more to get back to the same place they were a year ago. About one in 10 don’t think they’ll ever recover.

Investing in Your Future

After taking most of 2019 off to travel and spend time with family, Stewardess Pamela Colmenares started looking for another yacht job in January 2020. She had just started the season in St. Thomas on her new boat when “all hell broke loose,” she says, fearing that she would be laid off if or when the boat was going to be tied to the dock while COVID-19 was spreading around the planet.

The sensible thing to do, says Upton, is to consider how much it would cost you to live for a half year if you lost your job tomorrow and make sure whatever that amounts to is easily accessible.

When her captain assured her and her fellow crewmembers that he had a plan and no one would be laid off due to the virus, Colmenares still worried about what could happen to her family back in South Florida. At the beginning, she socked away all of her income just in case her sister got laid off or her parents needed assistance. “I was in a good place financially, so I was going to send them my paycheck if they needed it,” says Colmenares.

Even with the owners on board off and on for three months straight, Colmenares found herself with far more time on her hands than usual. She set up an investment account with Bank of America and signed up with a company that offers tips on where to invest money. “I’ve been told so many times, ‘You should invest,’” says Colmenares. “I finally had the time to do it.”

Pretty quickly, Colmenares began to study stocks herself. After talking to the third stew, who had made about $10,000 since the start of the pandemic through her own well-researched investments, Colmenares began doing the same. “A lot of people learned how to make bread and all of those things,” says Colmenares. “I didn’t do all of that. I became really interested in investing because I was thinking if she [the third stew] could do it, I could do it too. She was making all this money through COVID, and she started giving me tips on how to search companies we like to see if they’re public.”


Meet the Generation Investor

Colmenares is far from the only newbie investor to get into the market in 2020. A Charles Schwab survey released in the spring found that 15 percent of current retail investors began putting money into stocks and other investments during the pandemic. Although 44 percent of those novice investors were focusing on short-term trading while COVID-19 was raging, only 28 percent of those said they would follow the same course in 2021, instead focusing on investments for the long term.

According to Investopedia, the greatest returns or declines are concentrated in a short time frame. However, those who don’t live and breathe equities may have more trouble timing the market to make those high returns.

The number of new investors was so massive last year that Charles Schwab even came up with a term for those savvy individuals who jumped into the market for the first time in 2020: “Generation Investor.”

With the excess time and inability to spend money, many yacht crew jumped on board, too. From DIY Facebook crypto groups to seeking out professional advice, 2020 was a big year for crew to take their finances more seriously and into their own hands, says Mark Upton, director Crew Family Office. “From probably April and May of last year all the way through the rest of the year, crew were considering finances and tax a lot more than we normally see,” he says.

The details around finance and money, many have found, should come back to a core purpose — facilitating the life one wants to live.

While that financial consideration looked slightly different for everyone, to Upton and his team it appeared that many people began thinking more about the future than they did before the global pandemic shut down everything. “What COVID has done with a lot of people is it’s made them realize they’re not indestructible,” says Upton. “You can lose your job. People you care about can, unfortunately, pass away, and you can find yourself in a situation you never expected to be in.” Those realizations got many to start planning ahead in case something unseen does go wrong down the line.

Finally, many have begun to really understand why financial advisers have been telling clients to save up for six months of living expenses in case of emergency. Yacht crew, many of whom might just go back to their family home if they lose a job, have a bit more flexibility than folks with monthly rent or a mortgage payment.

The sensible thing to do, says Upton, is to consider how much it would cost you to live for a half year if you lost your job tomorrow and make sure whatever that amounts to is easily accessible. That emergency fund doesn’t necessarily have to be sitting in a savings account earning nothing, but it needs to be in something that isn’t volatile (like crypto), and that won’t penalize you if you need to access your money in a hurry. “A lot of crew panicked a bit,” says Upton. “You hear stories of crew just going home without thinking of the consequences.”

Early on, Upton and his team talked to crew who went home to the UK thinking they’d be able to get unemployment, and quickly discovered they were ineligible because they quit their jobs rather than getting laid off.

Those without substantial savings ran into problems. “While an emergency fund cannot make up for losing your job and facing long-term unemployment, it can help to reduce the impact of shorter-term economic disruptions…,” Scott Baker, associate professor of finance at Kellogg School of Management at Northwestern University recently told The Wall Street Journal. “In addition, those facing longer-term unemployment often had to wait weeks for benefit checks to start to flow in.”

iStock/Nuthawut Somsuk

Advance Planning

Immediate emergencies are top of mind for many investors these days; however, the crew that have been coming to Upton’s team for advice are thoughtfully considering their investment options and planning for five or 10 years in the future.

There are a variety of investment plans that advisers suggest. Speaking to The Wall Street Journal, Brian Walsh Jr., senior financial adviser at Walsh & Nicholson Financial Group in Pennsylvania, hails what is called the three-bucket strategy. “This approach will prepare investors for any short-term risks that arise, such as Coronavirus-related recessions, without sacrificing the integrity of their portfolio,” he says.

The first bucket should focus on short-term expenses with things like cash and short-duration bonds. The second bucket (the intermediate-term bucket) should include money that won’t be needed for two to five years in instruments like core bond funds. And a long-term bucket should include equities and other investments that won’t be needed for at least five years.

While it’s not as sexy as some of the au courant investments, research does show that long-term, a buy-and-hold strategy tends to outperform short-term buying and selling.


Finding Your Purpose

The harsh realities of 2020 prompted many to look at the “why” behind their financial life, thinking deeply about their values and what they consider to be the most meaningful aspects of life.

Jared B. Snider, partner and senior wealth adviser at Exencial Wealth Advisors in Oklahoma City, Oklahoma, told The Wall Street Journal, “Many people have reconnected personal finances with the things most important to them: how they use their time, how their money fuels their family and home life, what their investments support and fund, and how their careers enrich their lives. Personal finance does not exist in a vacuum; it exists in light of what we value most.”

Last year reminded people of what they value. The details around finance should come back to a core purpose — facilitating the life one wants to live. That has real-world impact on the decisions that are made about how income is derived, how resources are spent, and how funds are invested.

A November report from human resources company Morneau Shepell found about a quarter of U.S. adults said they were considering a career shift due to the pandemic.

Yacht crew have been no different. Some have decided to make the move to land in search of a better work-life balance. Like the aforementioned crew who packed up and went home with the lockdowns, veteran Stewardess Jessica Price did the same, heading to Central Florida to weather the proverbial storm with her family before realizing a long-term dream of moving to the Pacific Northwest of the U.S. “I’ve been turning away work since COVID, so I haven’t learned anything about finances,” she told Dockwalk, somewhat joking. (Aside from the three-month stint at home with her parents, she never went without work during the pandemic.)

iStock/Olena Kychygina

Re-evaluating Your Life

Although Price makes light of the big life changes she’s made during the pandemic, re-evaluation is a common reaction to sudden stillness like that brought on by the pandemic. Studies show that natural disasters and other traumatic events often push people to make big adjustments in life such as getting married, divorced, or having children.

And Prudential’s recent Pulse of the American Worker Survey found one in five workers changed their career entirely over the last year. Some of that is due to layoffs; however, many of the workers surveyed claim these changes were driven by finding better work-life balance or a desire to try something new.

“If I’m being honest, I’m not sure if COVID is what had me finally make my decade-long dream of living in Washington and actually moving,” says Price. Regardless, she chose 2020 as the time to take the leap. For others, like Digital Advertising Specialist Allison Lee, that nagging feeling that she was wasting her time sitting at a desk from nine to five meant packing up her apartment, heading to Fort Lauderdale, and seeking out a job on a yacht.

Regardless of whatever change a person makes, Upton says there’s been a big difference in the crew he works with — COVID has prompted people to change the way they not only handle their finances but live their lives. “Crew have been thinking of the future planning side of things, like, ‘I need to make sure my life is organized.’”

This feature originally ran in the September 2021 issue of Dockwalk.


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