NW Call to Action “A part of all I earn is mine to keep.” – The Richest Man in Babylon by George S. Clason
The Richest Man in Babylon is an extraordinary book with countless lessons on creating wealth. It tells stories of fictional characters living and learning about finance in the age of Babylon. Every single one of these simple stories can be applied to your life today.
When you generate income, who’s money is it? When you sell grain after harvest, is that money yours? Unlikely.
A large portion of that money probably belongs to the bank. If you borrowed money on an operating note to pay for seed, chemical, fertilizer, and fuel, you now need to pay that back. Have all your landlord payments been made? What about the equipment used to raise the crop? Those payments need made as well.
Don’t forget land payments and property tax. There is the income tax, too.
You know there are a lot of expenses to raise a crop. How is any of what I earn mine to keep, as the quote above says?
The key here is to pay yourself first. When income is received, immediately set aside 10% of that income for yourself before making payments to anyone else.
Here is my personal example:
My wife and I earn a monthly wage and pay for expenses out of a checking account. When the checking account hits a certain amount, we feel very comfortable with our position and feel we can afford things, when the account is low, we tend to hold off on purchases.
To make our account always feel lean, we automatically have the following transfers taken out of the checking account every month:
An emergency fund, this keeps growing as we add kids.
Car fund, so when one needs replaced, we can pay cash.
Vacation fund, to give our kids experiences.
We need to start regularly contributing to a college account!
This can be done on the farm. Is extra money earned put toward upgrading equipment and tax write-offs, or could it be set aside as the down payment for a new farm?
Cash flows for 2024 are very tight, I get that. Farmers are very resilient and innovative, I believe that you can make it work. If you knew you had $800/a to raise a crop, you would find a way to do it. What if you penciled in paying yourself $50/a and raise the crop on just $750/a? Can you find a way to do that?
Make sure you aren’t working for nothing. The more money you can keep for yourself, the quicker you can get ahead. P.S. The Balance Sheet + Scenario password is: farm
Have a great week!
Grant
All views expressed on this site are my own and do not represent the opinions of any entity whatsoever with which I have been, am now, or will be affiliated. Information provided is authentic to the best of my knowledge, and as such, is prone to errors and the absence of key details. The content of this blog is for entertainment and informative purposes and should not be seen as professional advice to finances or any other field.