![]() What expenditures will you have this year, such as school lunches, car payments, and dental work, that you did not have last year?ĭo you have separate bank accounts for family and business expenditures?īudgeting, financial record keeping and income tax preparation are all simpler if a farm business bank account is set up separately from the family account. What expenditures did you make last year, such as for a vehicle, furnace, or preschool tuition, that you will not have to make this year? Adjust for inflation by increasing the previous year’s expenditures by a projected rate. You may need to adjust last year’s expenses due to changes in the family situation, such as a child entering school or a debt being repaid. What sources of off-farm income do you anticipate having this year, how much income do you expect (after deductions), and when do you expect to receive it? These earnings can be used to pay a significant portion of family living expenses and investments. In many farm families, one or more members receive earnings from off-farm employment or businesses. Whether handwritten, online banking, or computer systems are used to track family living expenses, both farm and family records need to be updated regularly. Many farm record books and computer systems contain sections for recording living expenses. Were you unsure about some of your answers? Projection and control of family living expenses is difficult without records of past spending habits. How much do you estimate your family spends each month?ĭuring which months is spending greater than the average? Projections of expenditures for food, clothing, personal items, health, education, home maintenance and utilities, education, transportation and giving can best be made from your own past records. Have you ever made a household spending plan?Ī careful estimate of how much is needed each month for family living expenses is important but not easy. Hand worksheets and electronic spreadsheets are included. Tips on cash flow budgeting can be found in Extension publication FM 1792 and Ag Decision Maker file C3-15, Twelve Steps to Cash Flow Budgeting. Subtracting your best estimates of costs for feed, seed, fuel, chemicals, hired machinery and labor, livestock, repairs, taxes and other expenses tells how much will be left over for paying debts and family living expenses. Will you need to make any large investments in machinery, livestock or land in the coming year? What are the major production expenses and loan payments in your farming operation? What are the major sources of cash income in your farming operation?īy combining your expected yields and livestock production with your best estimate of possible selling prices you can project cash inflows or income. You can estimate how much short-term borrowing will be needed during periods of little or no income, and when operating loans can be repaid. Mapping cash income and cash expenditures for the coming year helps you plan ahead. Have you made out a cash flow budget for this year? Have you ever made a cash flow budget for your farm? There are no automatic retirement plans that are funded each month.Many items, such as vehicles, office equipment, machinery, and travel expenses, can be at least partially tax deductible even if they are also used for family purposes. Controlling family expenditures may be difficult when a farm couple is accustomed to spending large sums for farm inputs. Household expenses are small compared to farm expenses.Deciding whether to reinvest profits in the farm business or to make expenditures on the home or family is a difficult matter for young farm couples. Farm and home compete for surplus cash.There are usually no employers to pick up part of the cost of employee insurance plans, and individual coverage usually costs more. Insurance and health costs may be higher.Home gardens and homegrown meat and produce can trim grocery bills. Food expenditures may be lower than for non-farm families.For many farmers a large portion of their housing costs is included in the farm rent or mortgage payment. Prices and costs can vary widely from projected levels. Except for some enterprises like dairy production, farm income fluctuates widely and is often received in a few large amounts during the year. Although living standards on the farm have become more and more comparable to those of non-farm families, there are some important differences in managing farm family finances. ![]() Farm income can be both irregular and unpredictable. Computing benefits from adding additional off-farm work Managing Farm Family Financesĭo you find it difficult to know how much to spend each month for family living needs? Many farm families do.
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