Introducing kids to the financial side of farming
Taking time to introduce kids to the basics of financial management helps prepare them to manage the farm business.
Taking time to introduce kids to the basics of financial management helps prepare them to manage the farm business from the office as well as the tractor.
Small tasks bring learning opportunities
For Tannis Axten, a grain farmer from Minton, Sask., broaching financial management with her children starts by having them help match receipts to credit card statements. Doing so gives them an idea of what it costs to operate the farm.
“It opens up the conversation on farm expenses, and for questions,” Axten says.
With a daughter also interested in marketing, she adds expense management, such as shipping costs, has helped show her grain marketing is “not easy or cheap.”
4-H programs centered on field crop management have been beneficial, too. Kids involved in these clubs rent (either literally or in name only) a small parcel of land from their parents and keep track of production costs throughout the year.
“It’s been a huge eye-opener. Some years they don’t make any money, so it really helps them understand,” Axten says, noting the opportunity for life lessons.
“It doesn’t matter what you do - there’s always going to be the business side. You can figure it out. It’s just easier when you’re younger and not in it already.”
Reinforcing the basics
A basic understanding of personal finance is also critical, according to Patti Durand, transition specialist with FCC.
“Do they know what income tax is? Insurance? Credit rating? We underestimate how soon it’s helpful to have these conversations,” Durand says. “Frequently within farms, personal and business is the same. Starting with a good personal acumen creates a good foundation.”
Discussing personal finance in a piecemeal fashion, says Durand, can be informative for children and young adults. Even explaining the purpose of a tool can be useful, such as how credit can be used, and how it can use you.
“Those are really great life skills we tend to leave off the table but expect them to figure it out,” she says.
Impart real business experience
Like Axten, Durand also says allowing junior partners to gain real business experience is critical. That means not skewing the partnership by, for example, providing free equipment.
“Money doesn’t have to change hands but put a value on it. Explain what the value is,” Durand says.
The world of finance, though, is complex. With this in mind, Durand reiterates resources such as financial management courses, expertise from trusted advisors, even resources from FCC Knowledge or the local chamber of commerce can help impart more in-depth knowledge.
“Identify where you can reach out. You don’t have to know everything, but know where to find it,” says Durand
Regardless, she says not to forget high-level conversations.
“Pull out farm financial statements and talk about them. Contextualize them. Plant seeds of interest so they can get a better understanding.”
Discussing the basics of personal finance and providing real learning opportunities on the farm can help farm kids understand – and get involved in – the business side of farm management.
Start them young, with jobs like matching receipts to credit card statements to give them an idea of monthly farm costs. Over time, explain terms such as income tax, insurance and credit rating to help them expand their financial knowledge.
Article by: Matt McIntosh