5 things young farmers should know about finances

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corn kernels and dollar bills
(Farm and Dairy file photo)

Farming 101 financial tidbitsThese are the top five things young and beginning farmers should think about when it comes to their farm finances, according to Dianne Shoemaker, assistant professor and field specialist in dairy production economics at Ohio State University.

1
Balance sheet
Do a farm business and personal balance sheet every year. The balance sheet gives you a snapshot of your farm’s current standings.

2

Keep records
Make record keeping a priority on your farm and do it well. Knowing exactly what state your farm is in from a financial and production standpoint is beneficial in making sure you are on the right track for a successful farm business.

3

Costs of production
Know your costs of production. A cash flow statement can help you identify where money is coming in and how it is being spent on your farm.

 

4

 

Farm business analysis
Doing an annual farm business analysis forces you to do a balance and will help you to understand your costs of production. This will allow you to benchmark your business against other top producers in the area. A business analysis is also an excellent tool to monitor progress, set goals and monitor progress on those goals.

5

Family living
Know what it really costs you for family living — People tend to underestimate this. Plan and grow your business to meet realistic family living needs that will increase over time. A personal balance sheet can help you identify what those needs are.

More Farming 101 columns:

(Farm and Dairy is featuring a series of “101” columns throughout the year to help young and beginning farmers master farm living. From finances to management to machinery repair and animal care, farmers do it all.)

Source: Dianne Shoemaker, Ohio State Extension

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