How to Budget for a Whole Year on Farm Income
Last week I got the question: how do you budget for a whole year on a farm income?
First off, let me say that I am not an expert, however, I will tell you what we do! Several years ago we found Dave Ramsey and Financial Peace University and it changed our finances, our marriage, and our entire lives. Note: If you don't like Dave then Suze Orman, YNAB or any other budgeting tool will do the trick.
Since farmers only get paid once or maybe a few times per year, you know that the amount of money you have has to last you the rest of the year. For us, since we are row croppers the money we have in now (in February) has to last 8 months.
Here are a couple simple steps to figuring this out:
Step 1. Take the profit from the farm and divide that by how many months there are until the next time you get paid. That is your monthly spending amount.
Optional Step 1.5. If you have other income then add it to your monthly spending amount to get your total monthly income.
Step 2. Take that total monthly income and plug it into the budgeting tool of your choice. You can find my favorite on https://www.daveramsey.com/ Note: This is not an ad, I am not getting any sort of payment or kickbacks by promoting this tool, it's just the one that we use.
This budget will help you determine how much money you can spend on gas, groceries, clothes, insurance, housing, utilities, etc. If the numbers are not feasible and you can't make the budget work, then either pear down your budget or pick up some side work or another job.
Remember, that as emotional and scary as money and finances can be, this is math. It's an equation and if it doesn't add up in the end, then it's up to either decrease your expenses or increase your monthly income.
You can do it!! Taking control of your finances and your situation is empowering, you just have to take the first step and figure out where you are, and where you have to go.