A budget is the key to better management of your finance
Research suggests that only 10pc of farmers prepare any form of financial budgets or farm business plans. Often, the notion of preparing a budget causes fear, stress and panic. Is this a fear of the unknown? It really doesn't need to be.
A budget can be as simple or as complex as you choose. The process can be as basic as drawing a line down the middle of a page, listing all income on one side and all spending on the other.
But if so few farmers prepare budgets, then why should you bother? A wise person once said "if you can't measure it, then you can't manage it". In other words, you must be aware of your financial commitments and when they occur so that you are in a position to plan for them. Banks generally request budget information as part of the loan application process. A well-prepared budget covering all future income and costs should help support your business case.
Some practical tips for preparing a budget include the following:
•Use a format that works for you, it can be paper or spreadsheet-based.
•Decide whether to prepare the budget on a weekly, monthly or annual basis.
•Set time aside to prepare the budget, when you are free from distractions.
•Keep financial records orderly -- it makes life easier.