At United Advisers Marine we’ve developed a three-pillared approach to help professional yacht crew navigate their financial journey, and understand the priorities around achieving financial freedom. When you get the right structure and the key elements working together, these pillars will help you build a sturdy foundation on which to create your financial future.
Pillar one: Banking
There are many reasons to get your international banking sorted, including:
• Easy on-line transfers
• Currency management
• Multiple currency withdrawals and payments
• 24/7 access to savingsConvenience
Many yacht crew starting in the industry opt for a Standard Bank Seafarers Account that offers all of the above, with the leading advantages being the ability to have salary paid into an account in the same currency, and being able to efficiently manage multiple currencies, with a bank card dedicated to each currency account you hold. While there are alternatives to the Standard Bank Seafarers Account, we find yacht crew generally prefer the Standard Bank Seafarers Account because you can open it when you first start in yachting without a large deposit or a sizeable guaranteed salary.
If you’d like to know more, have a look at our post covering Standard Bank frequently asked questions HERE.
Pillar two: Tax
In a 1789 letter, Benjamin Franklin famously wrote:
“In this world nothing can be said to be certain, except death and taxes.”
We rarely meet clients who enjoy paying taxes; it’s merely a legal obligation that we all must follow. However, there is little point paying more tax than you need to or paying tax in the wrong country. Depending on your nationality there are often tax advantages available to you.
For example, the Seafarers Earnings Deduction (SED) is a unique piece of legislation that allows seafarers of British nationality to claim a 100% tax exemption on their earnings. South African yacht Crew used to be exempt from tax for the first 3 million ZAR earned; however, new legislation attempts to remove this tax benefit. To understand whether you are paying the right level of tax, you must make sure you have the correct residency. Often yacht crew believe they have successfully changed residency, but it can often be more complicated than you think and isn’t as simple as a passport change. We offer a suite of tax tools exclusively for yacht crew, from our tax partner Marine Accounts.
Pillar three: Savings and investments
Now you have a bank account suited to your needs, and you’re paying the right amount of tax in the right country. Bear in mind, however, that your seafarers’ bank account pays 0% interest, so finding a savings solution with a better return is key. We estimate that less than 10% of yacht crew successfully develop and follow a financial plan which allows them to secure their futures, so let’s have a look at how to make the most of the money you receive. Before exploring potential savings and investments, it helps to think about what you want to do in the future. You may not be able to plan every last detail, but you do want to start thinking about what matters most to you and your future lifestyle. Questions to include might be:
• Do you want a long term career in yachting?
• Can you afford to leave the superyacht industry if you want to?
• If you leave yachting, will you be able to maintain your lifestyle?
• Is owning your own home important to you?
• Do you want to own investment property?
• Would you like to start your own business?
• Can you finance your training courses and career goals?
• Will you have enough money to retire?
• Do you have a pension plan?
Once you’ve established what matters, you can start building a financial plan to achieve your goals. To help with this, you might decide to engage a financial adviser or a financial planner to test how robust your plan is or to employ an expert to develop your documented financial plan. Getting the right investment and savings strategy is essential in realising your financial goals. Sometimes investment opportunities are sold to yacht crew with “unbelievable” returns; the age-old adage is often true in this situation; if it sounds too good to be true, then it probably is!
• Make sure your adviser cares about you and your goals
• There should be an explicit conversation about the level of risk you are willing to take
• A good adviser should educate you about your investment
• You should have regular opportunities to discuss your future
• Your adviser should talk openly about their fees
If you would like to learn more about saving more of your salary, download our free guide HERE. We have also created a financial planning best practices guide to help you get started which you can get HERE.