How a personal money strategy can take the stress out of finances
Establishing a personal money strategy can be stressful and uncomfortable, but the benefits of having one greatly outweigh the obstacles. It’s a road map that sets out your financial goals and objectives. And having a plan can help relieve stress.
This was a big takeaway from an FCC virtual event featuring Vanessa Stockbrugger. As a financial educator and coach, she helps farmers build financial strength and empowers them to make decisions through education.
Money talk creates money stress
Anyone can be stressed about finances. The goal is to start working on a plan.
Discussions about money often bring with them high levels of stress. Anyone, no matter how much money they have, can be stressed about finances. The goal is to start working on a plan. Once you act and start controlling the money instead of it controlling you, the more peace of mind you’ll have.
There are 3 steps to building a money strategy: gaining clarity and understanding, making the plan, and executing it. And while there isn’t an exact template to follow, farmers can take these actions to get started.
- Manage household cash flow
Know your household spending levels. Consider regular expenses that need to be paid, such as the mortgage, life insurance policies and utilities. Fluid expenses are the ones that can fluctuate, such as groceries, transportation and children’s activities. Think of what you can cut back if needed, such as vacations, dining out and entertainment.
- Create regular income
Those who work off-farm are usually paid bi-weekly salaries, but that’s often not the case on a farm. Take control of the situation and pay yourself a monthly or quarterly income.
- Strategize debt
Be strategic with debt. Think about withdrawing money from the farm operation to pay expenses to avoid creating personal debt at a higher interest rate. Debt can also be a good thing when the expense increases value, like when you use it for land or education.
- Put your money to work
Money should be earning a return. If it’s in a savings account, make sure it’s in one with a good interest rate, low risk and flexibility. Consider investing outside the farm, investing for the long-term in other assets, and diversifying.