This series of four posts is a very simple guide for you to explore where your farm’s money is going to and what you can do about it.
Remember this is about finding out where you are.
• If you choose to do this you will experience all sorts of emotions. THIS IS NORMAL.
• If you choose to do this you may not like what you find.
• You need to consider what motivates you to do the right thing with money
• This will help you explore your own view of money
• This is about understanding the cash in your farm business.
The tools in these posts are deliberately simplified and good professional advice should be sought to understand your farm and options. These posts in no way replace good professional advice, but rather provide a way for you to challenge yourself. You are not alone and there is always help available.• FCN – FARMCOMMUNITY NETWORK tel: 03000 111 999 email: help@fcn.org.uk• SAMARITANS tel: 116 123 email: jo@samaritans.org
• LRSN – LINCOLNSHIRE RURAL SUPPORT NETWORK tel: 0800 138 1710 www.lrsn.co.uk
Or view the organisations in the booklet on this link:
Money is the oil that lubricates the engine of life.
Keep a sense of proportion and think about what YOU really want and what would make you happy.
WHAT IS YOUR ATTITUDE TOWARDS MONEY?
• The following seven questions will help you understand how you view money. Answer each question A to E with the answer that best fits you.
Question 1: It is winter and you are buying seed, chemicals and fertilizer for next year. How do you manage this spend?
• A – use the overdraft as you figure it will be repaid by next harvest.
• B – you use the overdraft without worrying whether it will be repaid as that is tomorrow’s problem.
• C – you juggle the trade terms, get supplier finance as well as using overdraft and credit card
• D – you cut back on spending on fertilizer and chemicals hoping you can juggle the agronomy to maintain yields.
• E – you use the overdraft and trading terms having established a planned cash flow forecast that shows this is affordable.
Question 2: Bad news, you’ve just pulled your tractor into the yard for the night and the gearbox has fallen off.
• A – you go to the pub and have a few pints and worry about it in the morning.
• B – you can’t face thinking about it and sit in front of the TV drinking whiskey to take your mind off it.
• C – you phone the local dealer for a new tractor as you deserve a nice new shiny reliable machine
• D – you get out the extended warranty you bought and work out whether it is covered or who you can claim off.
• E – you phone a dealer to see if you can hire/borrow a tractor whilst you work out the best action going forward.
QUESTION 3 – You fear debts are growing month on month, year on year. Would you consider selling up and clearing your debt?
• A – no need to consider this as something will turn up.
• B – selling up is your biggest fear and keeps you awake at night
• C – you could never pack in as you enjoy the status, the large house, the range rover and big machinery that farming benefits from.
• D – of course I would. Why not?
• E – I would sooner get expert advice to analyse my options and act on that advice.
Question 4: How do you play Monopoly?
• A – opportunistic – buy every property I land upon.
• B – defensive – you pray youwon’t get caught owing money you don’t have
• C- high end – you make sure you own the best streets, Mayfair, Park Lane, Oxford Street, Bond Street, Regent Street.
• D – Aggressive – you focus on blocking other players.
. E – Flexible – recognising the role of luck you simply try to make the best choice upon each roll of the dice
Question 5: Which statement best describes your attitude to money?
• A – no use worrying about money it sorts itself out
• B – money is my biggest source of stress
• C – you work hard and deserve the best in life
• D – money flows to those that duck and dive
• E – money is important and needs attention, but other things matter more to you.
Question 6: Which description best describes your food shopping?
• A – I push the trolley around the supermarket buying whatever takes my fancy.
• B – I hate shopping at the supermarket and buy from the village shop ad hoc or at the garage when I get fuel.
• C – I only buy the best cuts of meat and branded items. I prefer to shop at M&S and Waitrose and avoid Lidl and Aldi.
• D – I get whatever I want and rack it up on one of my zero rate credit cards or whichever credit card gives the best loyalty points and discounts.
• E – I write a shopping list and stick to it rigidly.
Question 7: How do you plan to fund your retirement?
• A – My farm is my retirement fund.
• B – I don’t think about it. It’s a long way off. I possibly won’t retire.
• C – I cannot afford a pension. Life is for living now. Tomorrow will take care of itself.
• D – I keep buying lottery tickets plus I’m thinking of buying the Dragon Oil shares a bloke down the pub recommends.
• E – I pay my full NI and keep track at least once a year of its likely value and pay a little into a pension scheme each month.
So What Answers did you give?
Mostly “A” - I’m worried about you. You are not bothered yourself. You pin your hopes on a future that is unlikely to happen. You have two options, either take off your rose tinted specs and put your financial affairs in order or plan a future of declining wealth and potential destitution
Mostly “B” - You are an ostrich! Money is stressful. You avoid dealing with it by using the distractions such as work. You avoid the bank manager and creditors. You stick your head in the sand hoping money problems will go away rather than take affirmative action. My experience of ostrich people is that they surround themselves with people that tell them what they wish to hear rather than the truth. Remember in the play Julius Caesar surrounded himself with “men that are fat” and it didn’t end too well for him. The good news is that if you change, you can take action to remove the stresses you feel.
Mostly “C” - Big Spender – you like the status of a farmhouse, a decent car. You work hard and deserve every treat you give yourself and you family. Unfortunately you risk a day when you will have to pay the piper.
Mostly “D” - Wheeler Dealer – you will try and beat the system. Duck and dive like Del Boy. You have no safety net and nothing will catch you when you eventually fail
Mostly “E” - Well balanced – you take a planned approach to finance and you are relatively unstressed about your financial affairs. This does not make you immune from difficulty. Remember “God laughs at our plans.”
Remember!
• Whatever the outcome you can change. If you keep doing the same things can you expect the same results?
• Do not expect a onesize fits all solution. Assess your strengths and weaknesses, find a balance and seek help.
In my next post I will ask How do you feel about your farm and look at sources of help.