Basic Guide About Personal Financial Planning for Seafarers

16 January 2023

Inquire Now

Filipino seafarers are among the professionals that are getting paid well. Based on the latest data, an ordinary seaman has an average salary of almost P 300,000 per year and can reach up to P 2.2 million per year for higher ranks. This does not include their overtime pay, bonus, and tips.

However, they must sacrifice themselves to be away from their loved ones for months or even years before they can dock off to go home. Moreover, they also need to overcome financial management as they will wait for several months before their contract is renewed. Otherwise, all their hard-earned money will turn into such a waste.

So, come aboard and learn the basics of personal financial planning to achieve financial freedom and secure your future.

7 Money Mistakes Seafarers Make and How to Avoid Them

Many people think that once you work overseas, you also earn lots of money since you earn foreign currencies. This is also the main reason why most overseas Filipino workers, including seafarers, spend more money on many things. This so-called “pasikat-mentality” causes OFWs not to save money for their financial future.

So, take a look at these common mistakes seafarer makes and know how to avoid them.

Uncontrolled spending

Seafarers love their families, relatives, and friends so much. They want to spend their overflowing income on them to show that they have enough money to spend on them. That is why they usually hold extravagant parties, host beer-drinking sessions, and buy the things they used not to have.

It’s OK to spend their money because they work hard for it. But, it would be ideal to make smart choices and spend their money with financial discipline.

Not saving early

Seafarers can afford to live in luxury, knowing the salary they receive. But, the initial years for seafarers are crucial because they don’t have bigger responsibilities yet. Once they start growing a family, unforeseen expenses arise, such as their basic needs. They need to provide a house and lot in the Philippines for their new family, food, education, and many more.

Therefore, it is essential to save early to have sufficient funds to fall back on when an uncertain situation comes.

No sufficient savings

Some seafarers also manage to save a few of their salaries. But, it’s not enough to fund their needs in the future. Note that seafarers must wait for at least three (3) to six (6) months before they can set sail again due to contract renewal. During these times, there’s no source of income, but expenses continue. As a result, they don’t even save sufficient savings to fund emergencies.

So, it is recommended to set savings goals to help achieve financial freedom.

Lack of insurance

Most seafarers also lack insurance, may it be life, health, or medical insurance. While it is true that they have adequate life cover and benefits when they are on board, such life insurances does not cover them if they are back home. Their families can get almost half a million dollars in insurance if, for instance, something terrible happens to them while sailing. But, once they took a vacation or ended their contract, they had nothing, even life insurance policies.

To secure families’ future, it would be ideal to opt for voluntary contributions to different insurance with full coverage and benefits. Apart from savings, they should also look for other sources of income. They can put up a business or provide skilled services.

No retirement or investment plans

Working as a seafarer enables them to earn more if they start young. They wanted to keep doing this because they knew they couldn’t work on a ship forever. But one thing they forgot to consider - they have no retirement or investment plans.

Unfortunately, half of the country's working population doesn’t have retirement and investment plans. Although some bought affordable house and lot properties, these were not well-maintained because they were busy working and making money. Lucky are they if they have loved ones who know how to value their hard-earned money.

Our country is not immune to inflation and the global financial crisis. Thus, having a retirement and investment plan can save them from financial constraints when they grow old. One of the best retirement and investment plans is to engage in real estate since they have the purchasing power to buy properties. They can have it for lease or sell them when the time is right.

Taking out huge loans

Sometimes, it took months for seafarers to send money to their loved ones. That is why they take out huge loans before leaving home. Believing that they can pay these loans in due time, little did they know that it is slowly eating their resources.

Worse, they are forced to work more or extend their contract to pay off their debts. Hence, they must endure not seeing their families for a long time. It’s no wonder most seafarers have broken families, and children are too distant.

Although taking out loans cannot be avoided before their departure, they must not borrow a very high-value loan. They should be realistic and stick with how much they can afford to pay to save their extra earnings. Otherwise, these can hinder their professional and financial progress.

Sending excessive remittances

Filipino families are known to be close-knit and tend to live in one house with their extended families. In addition, Filipinos are also generous and merciful, giving more than what they need. That is why seafarers also send too much remittances to their loved ones. As a result, they forget to set aside money for savings and also the life aspirations they are dreaming of.

Helping a family member is good but let them find their own feet. Rather than pampering them, give them something they can earn, such as managing a business.

Being away from your loved ones for a long time is given. It’s a sacrifice in exchange for providing a better living for your family. So, why not invest in something valuable to make your sacrifice worthy, such as purchasing your dream home?

Lumina Homes offer affordable house and lot for sale units suitable for seafarers. It’s a perfect community to settle with your growing family and an excellent haven to retire and enjoy the rest of your twilight years.