The Latest On Farm Family Living Withdrawals
I am in the middle of teaching my summer agrilending schools. It is a treat to discuss some of the challenges and issues facing ag lenders at the different schools around the country. At the Kansas/Nebraska school in Kearney, NE, the issue of family living withdrawals was raised.
The average family living withdrawal for a farm family made up of three or four individuals is slightly over $50,000 annually. However, there is a wide range of withdrawals depending on the family lifecycle, lifestyle expectations and region of the country.
For example, examining the fine work done by the Nebraska Farm/Ranch Business Management Education program provides insight. The top one-third of farm families participating in the survey averaged slightly over $60,000 annually while the low one-third was just over $36,000.
What were the family living budget busters? Medical care, gifts, donations and educational expense tended to be high. An observation nationwide for farm families finds that health insurance and care frequently require 20% of the budget. With health care premiums doubling every six years, this budget buster will not go away anytime soon.
Recommendations concerning developing your family living budget include:
- Estimate on a monthly basis and add 2%.
- Second, truly know what your family living cost is by estimating the perks like fuel, insurance and ATVs that are co-mingled with the farm expenses.
- Finally, realize family living withdrawals are overhead costs that need to be included in cost of production estimates and your marketing plan.
The Road Warrior of Agriculture
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Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.
To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.
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