Planning for the yachting season ahead
You spend much of your professional lives working hard for other people; this season I want to challenge you to do one thing for you and your future every month.
MARCH (i.e. now):
Consolidate your bank accounts – you don’t need them all.Have an account in the currency in which you are paid and another in any other currency you regularly use. You don’t, need lots of accounts, but make sure your total balance is below the compensation limits for the jurisdiction in which you hold the account .
Don’t spend money just moving it around, open a currency broker account. If you need to move money from one currency to another, don’t use your bank, your currency broker can save you a small fortune on exchange rates and fees.
Invest in yourself! What are you going to do at the end of the season? Consider now what your next set of exams will be and when you can do them. Put money aside for fees and living costs. Check your visas and passports if you are crossing to the U.S. later in the year. And start a diary (see November…).
This is the really busy time; stop and consider your longer term future. How long do you want to stay in yachting? What do you want to do after yachting?What do you want to get from yachting (personally and financially)?
The season is calming down – are you really covered? Time to check exactly what health insurance you have on board and if there is any accidental injury or even death in service protection for you and your beneficiaries while you work. When you know, tell someone at home so they can claim on your behalf if necessary.
Cash is no longer king. At the end of your season you may have a pot of cash that you can’t get into your bank (due to strict money laundering rules). Negotiate to have tips paid directly with your salary into your bank account, keeping only the petty cash required. Many Captains will do this.
Tax residency is a matter of fact. Get organised and keep a diary of your travels. Yacht crew are “approached” by various tax authorities that believe you might be a resident. It’s not down to them to prove that you are a resident in their country, it’s down to you to prove you’re not. Understand the residency laws of the countries where you are most likely to become a resident, then keep a diary and flight ticket stubs, to support your case.
If you’ll be in the yachting industry for more than two or three years, seriously consider saving for your future, Your friends on land are paying tax and social security, which will give them something at retirement – are you? It’s up to all crew to put something aside (I suggest at least 25 percent of salary) while they’re in the industry to try and secure their financial wellbeing. The million dollar rule – to retire on an income of $/€3,OOO per month in 15 years, you will need approximately $/€1.1million in assets.
Don´t bank on low charges
Wouldn’t it be great if every time you were paid your pension or other income, you were paid a commission for receiving it? Then, each time you pay a bill, you receive a commission for paying it? You could make commission twice on the same money! Of course, this is not possible for us. It is for the banks though.
Let’s take an example based on real charges of a well-known Spanish bank and a couple selling a property in Spain for €300,000 and then re-purchasing a smaller property for €200,000 and investing €100,000 in an income paying bond.
On sale, their purchaser pays them €300,000 through a transfer to their bank. The bank charges 0.2% for receiving the money (€600). They then transfer the money to buy the next property and get charged 0.4% on €200,000 (€800). Finally, they transfer €100,000 to a Spanish compliant company based in another part of Europe for their investment. They are charged a further €400.
In total they will have paid €1,800 in bank charges for transactions other banks may not have charged anything for. The main aim is to choose a bank that does not charge. If high charges are the default, perhaps one should move to another bank. We can recommend a bank with no, or low, transfer charges along with no annual account fees.
One must also be aware that banks will probably earn a healthy chunk on currency exchange, selling the benefit that they do not charge a fee. With GBP falling back against the Euro, it is even more important to obtain a competitive rate. Whether it is for regular income payments, or one off lump sums, we can help you get the best deal.