Homestead Financial PlanningJul 03, 2023
Financial Planning for Your Homestead
Creating a Homestead Budget
You need to start with a detailed breakdown of common expenses, including animal feed, seeds, equipment, and utilities. Don't leave anything off the list, including house hold expenses so you know how much you have to spend on the farm and what you definitely don't have.
Some of the expenses that you need to plan for are recurring costs like veterinary care, maintenance, and supplies. We spend about $200 a fortnight just at the stockfeed store, and that covers chicken, goat and dog feed. The horses are currently being fed, other than the occasional biscuit of hay.
Another cost that can blow the budget very quickly is the costs associated with animal health, vaccinations, and preventive care. For a while last year I was joking that we couldn't get out of vet visit under 2K.
Don't forget to explore budget-friendly ways to provide quality feed and shelter for livestock. If you can grow pasture like we do for the horses, cows and Angora goats that will absolutely bring costs down.
I say it all the time to people, know your numbers! Don't guess how much something is going to cost, know how much. It will save you unwanted surprises.
Setting Homestead Goals and Priorities
Firstly you need to identify your long-term and short-term homestead goals.
Is this just to save money on living expenses or is your intention to go into business?
Do you have a mortgage? Are you urban or already rural?
Once you start, will it be a part-time hustle or are you going full-time? Do you have off-farm employment?
Prioritize your budget based on income in, versus income out. I will keep saying know your numbers!
If you have land already, what major projects do you need, and how will you pay for them? If you don't have land are you going to start urban homesteading first?
Tracking and Adjusting Your Budget
I really love the online systems that sort finances straight from your banking account into payment types. That being said I am hopeless at using them.
I actually prefer a spreadsheet or Google Sheets version, to keep accurate records and then monitor expenses and income.
Don’t just track but analyse the budget's performance and make necessary adjustments. If what it costs to make a bar of soap equates to a $10 soap bar, it's probably not worth it.
It reminds me how gardens joke that they grow tomatoes and they cost more than store-bought ones. Personally, there is something that's still worth it for me to have the home-grown version. My pasture meat birds taste so good that you really can't compare them to store-bought.
Saving and Investing Strategies
Depending on your age, you do need to consider what will happen when you want to retire. For Australian's this is your superannuation, in USA I believe it's 401K fund.
Diversifying your income and assets is the best strategy I have been made aware of. Don't have all your eggs in one basket. Share and stocks are good solid investment strategies for the homestead's future. I have also dabbled in Cryptocurrencies, with reasonable success.
You also need to consider estate planning and passing on the homestead legacy to the next generation. Some kids won't want your homestead! But others may fight over it. Plan now for the best outcome for everyone.
Managing Seasonal Variations in Income and Expenses
This is the biggest issue for all small business owners, and even if you don't intend to make an income keep in mind that those fluctuations will mean you need to purchase store-bought if the homestead is not producing. Budget during periods of high productivity so that when the low seasons occur you either have enough funds to cover what needs buying off-farm or that your income will be reduced.
Don't forget that maintenance usually happens off-season, when you have the least income coming in. Planning maintenance and preparation for the upcoming season includes having the money to do repairs.
Some craft items, like soap and wool, can be sold year-round. Even eggs if timed right will see you through winter. Our youngest girls came to the point of lay right at the start of winter when the old girls were all going through a moult and hibernation. Explore potential sources of income that would suit you and may cover the winter non-gardening months.
Other alternative income streams like agritourism, workshops, or farm-to-table experiences are all worth considering too.
Investments in Improvements and Infrastructure/Equipment
Big cost improvements like fencing, animal housing, solar panels, water tanks and garden infrastructure, need to be properly planned for in advance. They are not cheap exercises so planning ahead will save a lot of headaches.
We are desperate to upgrade our solar batteries at the moment. We tried second hand but unfortunately, they were not worth it! Cheap? Yes. Reliable? No.
I wish I had started putting money aside for battery replacements when we first moved in. They are our biggest expense in the house but with good new batteries, we will be set for another 5-10 years.
I used to be embarrassed at my frugality, but now I love it. And it's rubbed off on my kids, they know if they are getting a treat at the supermarket to pick one with a yellow sales tag! Mum is more likely to say yes to a $1 lolly than she is to a $2.50 lolly.
There are lots of free groups on Facebook that have tips for cost-effective gardening, including seed saving, composting, and crop rotation.
Budget for garden supplies or even get second-hand. Become friends with your local green shed, we made our goat milking stand out of an old coffee table.
Don't forget to consider sustainable options that save costs, such as rainwater harvesting or renewable energy. Big expense up front but then you are able to reduce that cost later.
But as I said before allocate funds for eco-friendly initiatives that benefit the homestead in the long run. So put money aside each week into a batteries, solar panel, septic tank and water tank fund.
You'll thank me later.
Seeking Financial Advice and Community Support
There are consulting financial advisors or experienced homesteaders.
The National Debt Helpline is there for those having serious issues. You can reach them at https://ndh.org.au/
It's important to remember, gone are the days of competitive competition. Homesteaders, even those making a full-time income understand collaboration is way more beneficial than competitiveness.
There are more than enough non-homesteaders to keep us homesteaders in business. We don’t need to be cut-throat about it, and as such most are happy to discuss costs and pricing with new homesteaders.
Reach out to me if you have any questions, I am more than happy to help.
Remember, financial planning and budgeting are crucial aspects of maintaining a thriving homestead.
Even if you're not intending to make a business of your homestead, they can be a very expensive hobby.
This makes it super important to create a realistic and flexible budget that aligns with your homestead's values, goals, and available resources.