How managing financial stress can improve your mental health

3 min read

It’s no secret that the volatile and unpredictable nature of farming creates financial uncertainty. Whether the farm is facing hard times or is just going through the normal ebb and flow of the business, financial stress is common among many farm families.

Financial performance has a huge impact on a business owner’s mental health and wellness, especially in agriculture.

Financial performance has a huge impact on a business owner’s mental health and wellness, especially in agriculture, says Denise Filipchuck of Filipchuck Management Inc., a farm management consultant and certified financial planner.

“A lot of farmers feel that a heavy coat of responsibility for their farm and family is on their shoulders all the time,” she explains. “As financial stress levels get higher, the weight gets heavier and heavier.”

Getting to the root of the problem

The Healthy Minds, Healthy Farms study conducted by Farm Management Canada indicates three out of four Canadian farmers are moderately or highly stressed. External unpredictability, financial pressure and workload pressure were reported as the top three causes. Financial pressure was noted to include price margins, debt payments, employee payroll and the rising costs of inputs and other expenses.

While poor performance is likely the leading cause of finance-specific stress, Filipchuck has also found a significant number of farmers who experience stress because they don’t know how their business is performing.

She sees financial stress erode confidence, negatively impact management decision-making and result in feelings of fear, anger, anxiety and helplessness.

How to improve your financial know-how

Some financial stress can be relieved by improving your financial knowledge and better understanding your business’s position. To get started, Filipchuck shares four practical suggestions:

Keep current records
Make sure bookkeeping and financial statements are up to date, so you have current information available to make decisions. Create a market value net worth statement so you can see where you stand in terms of assets and liabilities.
Know your working capital and cash flow position
Calculate and record your sources and uses of cash for the year. Use a monthly cash flow analysis to estimate your cash position for the next 12 to 18 months. This analysis gives you the information you need to assess your situation and address timing issues in advance.
Make a capital budget plan
Think about the next five years and estimate what capital expenses your farm will require, such as equipment upgrades or purchases, grain storage or building repairs, or additions or land purchases. This plan will show you what the farm needs to prepare for and financially support.
Understand your credit portfolio
Review the types of credit facilities you’re using, what your loan terms and agreements are and what your loan to security position is. Knowing this information provides peace of mind and may spur new questions to ask your lender.

Don't be afraid to ask for help

Reaching out and asking farm advisors – such as an accountant, financial planner or management consultant, or all three – to help make sense of your financial data can be an important step.

“Most farmers consider themselves a jack-of-all-trades, but there are too many trades in the business of farming to be an expert in all of them,” Filipchuck says.

If you’re looking for a new advisor, she recommends booking a complimentary discovery call first to explain your situation and see if the advisor is a good fit.

Path forward

FMC’s research indicates that using a written farm business plan – including financial analysis and budgeting components – contributes to peace of mind, more effective coping mechanisms and the adoption of other beneficial business management practices.

Here are some resources:

10 steps to a solid business plan
How to create a business plan that fits your transition vision

When it's all too much

Those who have already reached the point of feeling overwhelmed should talk to a partner or trusted confidant and utilize mental health resources such as those listed on the Do More Agriculture Foundation website.

Article by: Rebecca Hannam

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