The monthly and annual spending plan worksheets located in the Cultivating your Farm’s Future workbook can be used to attribute expenses to the household and farm. In a farm succession, these worksheets can be used by both the owner and successor generation. For many farm households, there are expenses that are both farm and home related. For example, electric bills and property insurance may not be separated for the house versus farm buildings.
Household Expenses/Spending Categories
During times of farm transition, separating these expenses can be helpful to understand what it might cost to live in the home without including farm specific expenses. You’ll notice two columns on this worksheet – % family living and % farm cost. These columns will assist you in allocating percentages of an expense that may be combined together and currently paid as a total cost. Think about what percentage of an expense is personal and what percent is farm related. For example, your insurance agent may be able to assist with determining what costs are for your home versus the farm buildings and farm property. You may not have a split percent for every expense as this may apply for only a few spending categories. Total these expenses on this worksheet to determine your annual living expenses and what may be your annual family living cost.
As you complete the household expense worksheet, think about which of these expenses may go up or down as you transition.
- Expenses like home mortgage or rent – will you be moving off the farm and have a separate mortgage or rental expense?
- Will there be property taxes on a separate property not owned any longer, or paid for by the farm?
- Any utilities, gas or fuel for vehicles or for your home that will need to be paid personally?
- Will there be insurance premiums owed on home and auto that will be excluded from the farm?
You may want to examine any debt payments that are currently paid by the farm. Are these payments for things that are used for both the farm and family? This section of the worksheet assists in allocating the percentage of the payment that may be farm versus family expense. Debt payments may include an auto loan that the farm makes the full payment; however, use of the vehicle is for both farm and personal. If you have not listed the family cost of the farm mortgage payments on the previous worksheet, you may want to record it in this section. Also list loan payments for a personal residence and other non-farm property, student loans, credit cards and other debt payments. Again, think about which of these payments may go up or down as you transition. Maybe the farm has not contributed to debt payments and will be paying for a portion in the future.
Part 2 of Monthly and Annual Spending Plan focuses on household net income, comparing total monthly and annual spending and income, and historical farm family household and personal expenses.