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Decrease your money woes by tracking personal expenses

Elaine Froese for Progressive Dairy Published on 03 September 2021

A wise person once said you can have more money over a long time if you make more than you spend or spend less than you make. The roller coaster of grain prices has pinched many farmers who are saying “I shoulda … ”

What you can do is keep better track of what you are spending on your farm for family living. This is very personal and fuel for many fights.



Dr. Brent Glory, on a webinar called “2 Economists and a Lender,” said fixed expenses are difficult to measure, yet they change over decades. He mentioned that family living gets pushed into the bottom of the “too-hard drawer,” yet there can be great outcomes if you choose to tackle this issue. Dr. David Widmer, another economist, agrees there are many hidden variables on farms, such as shared expenses like vehicles, utilities and property taxes, that may get muddled.

What gets measured gets managed.

Imagine you think you are spending $38,000 a year on family living, but the real number is $72,000. A study in Illinois found the top third of farm families were at $144,000 U.S. dollars, the low third at $57,000 U.S. dollars, and the middle were at $84,300 U.S. dollars per year. On our farm, our number for family living is $75,000 annually, and that doesn’t include any mortgages for housing nor rent. We also don’t include our charity in that number.

What portion of your family living does the farm need to cover? Many farm partners are working hard off-farm to create a decent cash flow to the farm for family living and debt servicing. Is this number being recognized and appreciated?

The economists recommend avoiding what they call “black hole calculations,” using a number for family living that is the gap between earnings and equity changes. You need to balance short-term versus long-term payoffs. Recognize there is “family living creep.” The number gets bigger during lifestyle changes, inflation and living higher than the farm can really afford.


Economists want you to read the billboard that says: Don’t spend it. Rebuild your liquidity in times of higher farm profits.

Once family living expenses go up, it is hard to pull down. A South Dakota family of four spends $75,000 U.S. dollars, and this number depends on health care benefits, retirement and whether there is off-farm income. If two people are frugal, perhaps $50,000 is a reasonable family living number with no debt.

My friend Dick Wittman, a rancher, farmer and wonderful management consultant, has a tool called the compensation worksheet. It can be used to work out the farm perks such as housing, cellphone, internet, a pick-up truck with fuel, contributions to bonuses, etc. end mark

Elaine Froese is a home economist by degree and wants all families to have a great quality of life. Email her for financial resources mentioned here or book time with her at Elaine Froese.

Elaine Froese
  • Elaine Froese

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How can you make tracking family living easier?

1. Have a personal account for family living, not mixed in with the farm account.

2. Use your bank statement to get a quick idea of family living expenses.


3. Use your debit card or cash. People who use credit cards typically spend 34% more.

4. Talk to your creditors if you are feeling financially squeezed; keep the debt servicing conversation respectful and open. This may also be important if your crop contracts are not going to be met due to the drought-stressed yields.

5. Consider using a financial planner. You can start with your bank or credit union’s free service, or I can refer you to fee- for-service planners who know farming.

6. Entertain yourself with Dave Ramsey and Financial Peace University videos; he has a great success rate with getting people back on track, even though his methods may be a bit far out to you.

7. Give your kids a spend, save and give jar – three different jars to start having more money conversations. Ramsey doesn’t use the term allowance; he says, “Here’s your commission for being part of this family.”

8. Get rid of secret accounts. Money is a form of energy, and secrets are not helpful.

9. Consider cleaning out the shop after harvest. New parts that were never used and other things no longer needed amounted to $40,000 for a farm family who spent a week re-selling the stuff from the shop. You may have things you can convert to cash, but it will take time and discipline to sort that out.

10. Make your own coffee and tea. Avoid the “latte factor.” Small things add up.

11. Celebrate small wins. Build on the good choices you are making to decrease your family living expenses.