Manage Money Conflicts
By Mark Caygeon Junkin
One of the biggest ongoing arguments between Generation Y farmers and their parents revolves around personal spending.
The old guard has been frugal their entire lives so that they can offer Generation Y the opportunity to farm. They fear that once farm succession is complete, the younger generation will fritter it away. Generation Y must prove to the elder generation that they’re capable of taking over the farm checkbook by demonstrating self-restraint.
Based on my experience as an ag management consultant, I strongly suggest that a Generation Y farm family works with a professional third-party financial planner, and the couple agrees to put aside 10% of their personal annual draw (or monthly wage) from the farm into a personal savings portfolio. Doing this achieves four goals:
1. It forces the newlywed couple to live 90% within their means instead of at +125% of their means. I have seen too many situations where personal debt has crept up on couples killing their credit and the future of the farm. Once the secret gets out, it’s a major hurdle to succession plans.
2. Young couples will spend their personal money differently than their parents would. It’s only natural. If the younger generation turns to a third-party financial planner for help to live within their means, parental concern about their children’s spending subsides.
3. The couple has a financial cushion to cover personal emergencies without having to raid farm bank accounts.
4. Saving 10% of wages will help Generation Y’s succession planning 30 years later, allowing their kids to get into farming cheaper.
Saving 10% of personal wages, with help from an objective third party, is minor in the grand scheme of farm financials. But it’s huge in terms of family dynamics and succession. It’s a major problem solver!