Financial tips for young farmers
It’s tough to get started in agriculture. Young, beginning farmers have lots of enthusiasm and energy, but may not have the capital or financial savviness to get off on the right foot.
Alex White is an advanced instructor of dairy science at Virginia Tech, and also a financial consultant for farms and small businesses. He says young people tend to think financial matters are too difficult or confusing, so they don’t know where to start. They also think they have plenty of time to do it. But step number one in the financial process is to make the time now.
"Every week or every month whatever fits their schedule, slot some time just to take care of personal finances. If you don’t, it’s just not going to happen. Sort of like going to the gym, if it’s not on your calendar it’s really tough to get there," says White. "Once you do that, then I’d say the next step is setting goals. That is crucial. Financial professionals can’t help you if you don’t know what your goals are."
Start with your long-term goals. Once you know what you want to do five, ten, twenty-years down the road, set shorter term goals to move you in that direction. White says it’s also critical to have health insurance, an emergency fund, and a good idea of how your money is being spent.
"They need to build a monthly living budget for their household just to have some idea of what it’s going to cost them to live for the month. I realize it will be different by the month, so just sort of come up with an average. Or, if they want to do, like, a quarterly budget that’s fine. That helps them figure out how they want to use their money," he says. "Next thing, I’m going to ask them to track their expenses for a month so they actually see how they’re spending their money, and then compare that to the budget to see how they did."