21st Sep 2020
Why do crew shy away from financial planning?
31% of respondents to a 2019 NBC News poll about personal money management revealed they do not feel confident about their financial plan. Similar studies show this lack of confidence isn’t restricted to one generation: it cuts across them all, from boomers to millennials and generation X.
In this post, we delve into 3 key reasons for this lack of confidence and what you can do about developing your own financial plan if you haven’t already.
1. Short on time
Except for the COVID-19 season, crew never have enough free time when guests or owners are onboard. Understandably, when you do get back on shore, the last thing you want to be doing is spending time researching savings and investments and building your financial plan. It doesn’t mean that these things aren’t important, you just need to dedicate a good portion of time to it.
The lack of time to research leads to a lack of confidence. It is important to distinguish between a lack of time to learn and the capacity to learn. When financial planning and investing are explained correctly, crew quickly start to understand both the key concepts and the different ways they can shape their financial future.
Not making time towards financial planning can increase your concerns about the stability of your financial future. In the financial well being survey we found that the main concern of crew was the ability to be able to fund their retirement.
2. Fear and uncertainty
Not knowing where to start when it comes to savings, investment and taxes can put off a lot of crew. It’s important to remember that it’s:
- Never too late to start
- Ok to ask questions
- Normal to not know everything about money
If you are taking the first steps consider key milestones in your life, such as your ideal retirement age and where you would like to live when you move back on shore. Think of them as your lifestyle goals and retirement goals and incorporate them in your financial plan as short-term and long-term goals.
Committing to a savings plan and a specific goal can be daunting and it can be hard to get started. But personal documented financial plan is personal to your situation. Broad-based financial goals can help you initially, such as “save more and spend less”. However, the numbers and importance attached to those figures differ greatly for everyone. For example, are you planning on staying in yachting? Or do you have an exit planned in a few years’ time? Perhaps you’re leaving to start your own company?
Experienced crew may have the goal of strengthening their financial position, or investing in a higher risk portfolio now base investments have been built and are providing solid returns.
The most important thing is to prioritise your personal goals and align your financial decisions with those goals.
Our financial survey showed that the majority of crew are not in a financial position to exit the industry at a time that suits them best. While many crew want to stay in the industry long-term, some end up staying because of financial obligation. This isn’t good for crew or for the industry and is the reason why setting clear goals sooner rather than later is advantageous.
3. FLYING SOLO
We all know that we will struggle to achieve our fitness goals by simply signing up for a fitness app. It’s the commitment to working out that will help us achieve our health goals. Even then, it’s not always easy to motivate yourself to get to the gym. We often need an onboard buddy or onshore PT sessions to keep up the training.
The same principle applies to developing and following a financial plan: financial advisers act as accountability partners for your financial goals. They will tell you what you need to hear, not want you want to hear. Based on that, they will give you their experienced opinion and guidance for sticking to your financial plan to meet your goals. They also meet with you regularly to track your performance and tailor your plan. The same way you would for fitness goals.
But your financial buddy doesn’t have to be a financial professional. It can be someone you work with who holds you accountable for your saving goals. The same way you might commit to running or working out with a friend, you might both decide to sort out your financial planning and to support each other along the way.
you, you, you
Like any goal, fitness or otherwise, there is no point trying to shoehorn into someone else’s lifestyle. You may love spending and have no desire to change that, so it might be about developing a plan that lets you continue to live in the way you want.
The important thing to remember is that a financial plan shouldn’t make you miserable. Rather, it should make you excited about your financial future while you remain happy about your current situation.
How a financial planner can help
A qualified and reputable financial planner will ask you a lot of questions, some of which are uncomfortable to answer. Questions such as:
- Why do I have certain opinions about money?
- Who do I want to spend time with?
- What kind of legacy do I want to leave?
- Who do I feel financial responsibility towards?
- How would I feel if I failed in that responsibility?
- Could I be happy on a reduced income?
There’s a good reason why financial planners ask the tough questions and hold your feet to the fire: when you are honest and take stock of your financial situation, you are in a position to make reasoned decisions about your present and future.
It’s impossible to know exactly what the future holds but it is possible to create a financial plan robust enough to weather the storms. Contact us to learn more.