Personal Financial Management, text version

To compensate for the somewhat mussy presentation, here is a text version that elaborates on the points mentioned during the session and includes the ones that were omitted for lack of time. The text is NOT the transcript of the presentation; rather, it’s my thoughts on and around the topic.

Money matters have always been and will probably always be an inexhaustible source of discussions, anger, complaints, self-pity, conflicts and wars in, among and between family, colleagues, businesses, governments or countries, and translators/interpreters are in no way different. Therefore I gladly accepted the topic of personal financial management offered by Csaba hoping I will be giving out practical tips coming from an experienced and pragmatic guy. But my self-confidence was shaken over the next few weeks in the course of my preparations: I discovered a few aspects (new for myself) that left me uneasy.

First of all, it’s indeed very individual. Even within families, the idea of proper financial management can range from maximum thrift (generally typical for the conservative-minded) to nearly absolute thoughtlessness (which is often characteristic for teenagers). Need I say that in an audience that is a much brighter mix of cultures, economic environments, ages and personalities, reaching common ground is even more problematic.

Second, there was another obstacle. I’ve probably talked to thousands of translators, and many of them, when asked “Why do you translate?” come up with “Because I like it” all-explaining answer. While it’s always nice when someone likes what s/he is doing, it does turn into a bit of a problem when “liking it” is the only reason for doing. In this case, the job becomes a kind of extraversive hobby (thanks for the prompt, Erik!), and income is either regarded as a recognition proof, or is of minor importance. The I-likers who are often in love with translation (which says nothing about the quality!) are, at the same time, often abhorrent of business, and sometimes reluctant of improving the commercial side of it scared that money might kill love… My experience says, a pretty large part of the audience at any translation would belong to that group, and they are often the hardest to reach to.

Yet another of my concerns had to do with the fact that the issue of personal financial management is actually quite diversified and can be viewed from different perspectives; and it’s the view that sets the foundation for any practical recommendations, approaches or even strategies.

As a result, I chose the easy way: I decided I would be describing my concept, my perception, my understanding, pointing out that any advice I give may be inapplicable for the specific situations other persons are in. The challenge was still there, and it added up to the excitement.

(I’ll tell you a secret: in most cases, when offering myself as a speaker at a new conference, I want to do a few things. Sharing my experience – definitely, and I enjoy it when someone finds it useful. The other, more subtle goals, include learning (in the course of the preparation) and assessment of my concept and views – before, during and after the session – through questions and feedback).

OK, the introduction is over, let’s get started.

Frame 1: Why do we Want More?

- Are you satisfied with the level of well-being that you get with your current income?

- Would you like to get a higher income?

Surely I anticipated some 50% of the attendees to say yes to the first question and 90% to 100% answer positively to the second one.

There is a seeming contradiction between the following two statements: “I’m satisfied with it” and “I would like to have more of it”, but if we look deeper, there’s no conflict whatsoever. The first question deals with reality, and true, some of us are happy with it while some aren’t. The second question aims at perception of “good life”, “proper living standards” or “well-being as I see it”. Thus, two yes answers simply mean that there is a gap between reality (what we have) and imagination (what we would like to have).

Frame 2: How is it All Put Together?

---- wishful and wistful

--- desirable

--- affordable

--- satisfactory

--- basic

  This diagram puts together all levels of our consumption / well-being / living standards. Going from bottom up:

- Basic level (survival kit): primitive; requires little or no effort/income at all; can hardly called well-being – rather, just being; of no applied interest and was added just to complete the picture

- Satisfaction: closely linked to common sense; is not a line but a range from “necessary minimum” to “more than enough”; it’s what I believe to be good/OK/sufficient for me

- Affordability: related to income; can be artificially raised by borrowing/loans that inevitably leads to increased expenses, even though postponed

- Desirability: from sound (the family is outgrowing the current home, we decided to move at a larger place) to daydreaming (I wish I had ……………. – blanks to be filled individually); very often derived from films, TV, advertising, exaggerated stories in media, etc.

- Wishful and wistful: “if I win a thousand zinzillion jackpot in the lottery, I will…”; has absolutely nothing to do with reality

Here’s a table to illustrate the diagram.

Basic	Satisfactory	Affordable	Desirable	W&W
Food	Good food	The food you consume	Chef meal at a fancy restaurant; exotic; gourmet…	Something you’ve never tasted before
Clothes	Good clothes	Clothes you wear	Fashionable / brand clothes	Exclusive outfit from a world-famous designer
---	Good/Czech beer	Good/Czech beer or the beer you drink	Brewery beer, every time new	---
---	(Good) car	Your car	A better / newer / posh / second car	Something no one else has
---	A vacation once or twice a year	Your vacation schedule / tours you make	A round-the-world trip / a week with your partner on an uninhabited island…	Something you never experienced before
You can go on with the game using any other items you purchase
???

If the theory starts to wear you down, I suggest an exercise that is not only interesting but also quite revealing. It’s called “categorize your purchase”. List all of your expenditures over a given time period and try to identify which category each of them belongs to. Mind that the same items bought in different circumstances can be in different categories, and sometimes an item may belong to more than one category. For example:

- Book: entertainment – if it’s fiction (or education – if it is my International Freelancing: Practical Guide for Translators (search the web for comments); or business – if it is a dictionary; or social duty – if bought to be given to a friend on his or her birthday)

- A visit to a restaurant: food (or social duty – if it’s a party you would prefer to skip; or pleasant emotions + social duty – if it’s a family celebration; or status – if you then start bragging to your friends about the lousy meal you were offered at that creep joint with – who would have thought? – three Michelin stars)

- Yoga lessons: health / safety – if you really believe it will help you cope with the health problems you start noticing (or status – if you joined the trend that is popular in your community)

- An apple at the local grocery: food – if you were hungry; whimsical dream-come-true – if you were passing by the grocery and suddenly saw it, fresh, big, ripe, yellow and red, juicy, so appetizing and promising all gastronomic pleasures of the world… it turned out to be waxwork after all, so you had to put up with another one, green and less seducing but real – so it is food, again!

This exercise is useful to understand one simple thing:

Income ≠ well-being

A somewhat confusing (for those who don’t look too deep) and absolutely logical (for those who do): the same income level may, even under similar circumstances, make some of happy and leave others miserable. I guess it’s because the well-being is largely based on our own perceptions.

It would definitely be much easier if we had a table of proportional weights of the following type: 1 Unit of Income = 0.1 Unit of Satisfaction = 0.01 Unit of Well-Being, or 1 Liter of Czech beer = 0.0013 Unit of Satisfaction – 0.00052 Units of Health x 25 minutes + 2 Units of Drunken Happiness x 2 hours. We would then have scientific formulae to calculate the required income and ways of spending it to feel satisfied with our lives!

Alas, it all works differently. We have to do it on our own, trusting our intuition, common sense and other people’s experience, and even with these, the outcome is not guaranteed.

Frame 3: What About Personal Financial Management?

Yes, we are almost there.

Hopefully I was persuasive enough in showing show that income per se is not the purpose; in fact, it’s an instrument, a tool… or can I say, a transport (oftentimes the fastest one) which is supposed to take us wherever we want. Hence the logic: higher income gives more opportunities. That’s probably true; but it’s only part of the truth – otherwise the richest would always be the happiest. Do you think they are?

I believe the solution is in bringing the “satisfactory” and “desirable” levels as close as possible and keep them below the “affordable” line. The ways and methods to do it are numerous and various, they include pushing the “desirable” line down by giving up attempts to achieve the unachievable, cutting down the expenses that qualify as “prestige” or “status” or getting rid of the nasty habit of daydreaming. At the same time, it requires psychological efforts which are not exactly the content of the current publication.

We finally approached the income issue (other technique will be mentioned where appropriate). The Raise your Income list is copied from the presentation, and I commented on most of them during the session. So I’ll only add a few notes.

-          Increasing rates

-          Always looking for new clients

-          Optimizing one’s cashflow (invoicing, banking…)

-          Cutting cuttable expenses (e.g., by combining them)

-          Diversifying

-          Creating additional sources of income

-          Investing

Looking for new clients: a few interesting things have been mentioned at conferences and in conversations of the past few weeks.

1.       Being where the clients are: conferences of translation agencies (ELIA?); fairs, sectoral events, exhibitions; web forums(!) – the latter is an especially good idea if you are in IT.

2.       Spamming out – but sending cooperation offers to newly created companies instead of to all in the database or even short-listed.

3.       Web platforms (though not of them) are still useful; mind that different tactics should be used, for example, at ProZ.com and Upwork

Cutting cuttable expenses: in my view, time shown by watches sold at two quid for a handful is the same as displayed by a Rolex; still, I realize that no amount of reasoning would make boys forget about their toys. I even have a few of mine, too, and soothe myself with the thought that they were chosen for known and proven quality, not for being prestigious or fashionable.

Diversifying: I tend to interpret the term in a very broad sense. Very close to the diversification are creating additional sources of income and investing. Whether it’s real estate, art objects, new skills or a garden you invest in, do take into account the changes happening around you (locally and globally), as well as changes happening with you (e.g., ageing), anticipate them and adapt accordingly. (I made a publication on diversification earlier, it’s in Russian but Google translate may help).

To illustrate my approach to diversification/creation of additional income sources/investment, I have a dacha. The flowers blossoming from March (crocuses, snowdrops and other early bloomers) till probably November (colchicum) and occasionally during warm spells in winter (hellebores) are a joy for the eye satisfying my urge for the beautiful while some 200-400 kg of vegetables and fruit (with assortment exceeding 80 titles – from tomatoes and reddish to honeyberry and figs, the latter being quite a rarity for our parts) are a feast. The virgin territory of about 5,000 m² turning into a comfortable, efficient, ecological and, to an extent, live art space is a way to release my creative itching, and selling bulbs from 120+ cultivars of lilies or transplants with 3-5 varieties of apples or pears on each helps to keep our family budget safe. And, of course, it’s a great place to escape from the urban life: see the cover picture of my FB page!

Frame 4

There’s little to add to the last two slides of the presentation:

How much should one earn?

Ideally, enough + a little extra

What is it all about?

It’s not about how much money one earns or has at his or her disposal.

It’s about being happy.