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In this post, I want to go over the most basic concepts for managing your personal and household finances.
When you have a financial deficit, there are two ways to balance your earnings and expenses.
One of the ways is to increase your revenue. This is very important. If you want to reduce the burden of your initial and fixed investments, you must increase your income. This is something I’ve talked a lot about in previous posts, so I won’t discuss it again here.
The other way is to reduce your spending. This spending that I’m talking about here isn’t so much business expenditures but rather the translator’s living expenses. Translators don’t have to make a lot of business investments and their proportional costs aren’t high, so most of a translator’s earnings become his/her real income. (Of course, things are a little different depending on your tax laws. It probably differs from country to country, but Canada gives income tax deductions for some home or car maintenance costs to sole proprietorship, small-scale partnership, etc., so you can significantly reduce your taxable income. This is a huge benefit when the tax rate is high. However, I’m sure this differs depending on your country so I’ll move on and continue writing with the assumption that the real income is the revenue instead of the after-tax income.)
To put it simply, you should increase your translation income and reduce your cost of living. Reducing the cost of living isn’t a topic directly related to translation nor is it my field of expertise, but the reason I’m covering it here anyway is because it’s such an important issue in the life of a translator.
Someone once said this: if someone makes $1000 but spends $1,010, that person’s life will be full of misery, but if a person makes $1000 but spends $990, that person’s life will be a happy one (the numbers are translated, so it’s not completely accurate). It’s a small difference, but whether you have a little bit of money left at the end of each month or are a little short at the end of each month is a very important issue.
This important happiness-related issue is not dealt with at all in primary education or even in higher education. My undergraduate major was economics, but even I was ignorant about this. It’s truly sad. (It seems they now teach personal finance in Canada.) I thought my own knowledge in this area was so lacking that I bought some books a few years ago and started studying them. I’m going to introduce just a few of them to you.
These books were written by Canadian financial consultant David Chilton and the first book sold over two million copies in Canada alone, which is amazing. I’ve actually read the sequel to that book and it was so enjoyable. He will split your sides with humor on par with any comedian. Then, when you finish reading, you will feel like you can really understand the ways of the world.
This one was written by a woman named Gail Vaz-Oxlade and although it’s a thick book of around 500 pages, the content is easy to understand and you can just pick and read the sections you need so it’s not such a burden. You can even find her on a reality show where she meets with families in a lot of debt, analyzes their situation, and teaches them how to get out of that situation. She makes no bones about swearing, but I felt like I was exactly the kind of “money moron” that she always talks about, so I read it through to the end and it was extremely helpful to me.
Both books were written with the Canadian situation as the focus, so they won’t be a perfect fit for those of you in other countries; however, except for a few specific items, I think the main principles apply anywhere and everywhere. I also strongly recommend that those of you in Canada read these books.