I, like many people (maybe most people) have a strained relationship with money. In our first few years of farming we were working full-time on the farm (about 40 hours) plus 1-3 off-farm jobs up to 20 hours per week. I felt sick to my stomach every time the 10th of the month rolled around (my credit card payment date) because I never knew what the amount was going to be, but it was usually more than I had in my bank account. I felt like I had no control over my money. It felt like I just needed to work MORE, because more work meant more money, and what I needed was more money...right?
A dear friend of mine is an accounting wizard. She worked at one of the "big 4" accounting companies, has helped big-budget Silicon Valley start-ups create accounting and bookkeeping systems, and was there for me when I had a mid-20s crisis in 2016. We had weekly phone check-ins (everyone needs a gal pal like this one) in which we talked about our goals, what we were reading, and attempted to dig deep into the root cause of my unhappiness. For me the cause felt like money. I just needed a little more and everything would be fine. After weeks of talking about what that really meant, I realized I needed to discover what that money was actually going to pay for in order for me to feel "fine". I also needed to define what feeling "fine" meant to me. I'm a real list-maker, so I started making lists of things that I felt like I wasn't able to do that I wished I could do. For example, "Buy a pair of pants." (I don't know why this felt significant, but I really got stuck on not having off-farm pants as a sign of my failure as a business-woman.) Then I wrote out why it felt like I couldn't do those things. "Not enough money after bills are paid, and no time to go to the store to try on pants." Then I asked myself if I actually couldn't do those things, or if it just felt that way. How much do pants actually cost? Do I really not have that much? What else am I spending that money on if I can't buy a pair of pants? Then I realized that so much of my anxiety was coming from not understanding my money, and being afraid of that monthly credit card bill.
It was time to make a budget.
I think I googled "how to make a budget" and found YNAB (You Need A Budget). I signed up for the free trial then got freaked out that it was reading information from all of my financial institutions and cancelled the subscription. I also looked into Simple, which is like YNAB but it's an actual online bank, but got weirded out by the safety of an online bank. (Plus it was in beta mode and that felt suspect as well.) I downloaded free excel templates and online step-by-step budget crash courses, and halfheartedly filled them out.
The reason that I seriously needed to know my personal money needs was because Step 4 of Hippo Camp is to write out your farm budget, and the first number you need is your personal budget. This concept, of setting your personal budget as the foundation of your farm's budget, I got from the Holistic Management Institute (HMI). The idea is that you need to take care of your people first, or how can your people take care of your farm?
Months after my first, failed attempt at budgeting, I was on a trip to Seattle and one of my traveling companions said that she had used Simple to pay off her student loan debt. I asked her how she felt about having an online bank, and after reading every scrap of legal information on their website, I jumped in. Shortly after I joined they introduced Shared accounts, so I signed Jake up as well and we committed to tracking our expenses for 3 months in order to get a better idea of how much money we spend.
Simple operates on the classic "envelope budgeting" idea. Basically you create virtual envelopes for all of your monthly expenses, and you tell the app when and how much money to save in each category. For example, mine pulls out $10.59 on the 2nd of every month and saves it for when my Spotify payment goes through on the 25th. After it assigns all your money to expenses, it tells you how much money you have leftover that's "safe to spend". Then you can take it to the next level and tell the app to start saving for things. This year I told it to save for a trip home to California. It took out a few dollars a day all year long so that I'd have $1,200 saved by December 1. The thing I like about it is that it kind of hides how much money is in your account. If I open the app it tells me I have $200 safe to spend, but there's probably $10,000 in there that's assigned to all sorts of things from this month's car payment to my annual income taxes and my dog's emergency fund. If I were to look at a normal bank account and see that $10,000 number, odds are I'd spend it. I also love that anything that's in long-term savings in Simple earns over 2% interest. That's more (way more) than most banks.
When we first started looking at our money we were taking $500-$1,000 per month from the farm. Why? I have no idea. It seemed like a good number. After working with Simple for a few months and adding expenses as we noticed them, we realized it was actually costing us $1,300 to live each month. Without saving for emergencies. That was a huge wake-up call, and was why my credit card bill was always more than I had on hand. When we thought of all the things we should be saving for we bumped our monthly needs to $1,500. When I re-evaluated that number today, which is two years since we started this process, I really think we should be taking more like $1,800-$2,000. That number has grown from what we need, to what I think we should have right now. It's my dream budget that saves for emergencies, Roth IRAs, and gives us wiggle room to do a few fun and superfluous activities. Like buy pants. Now that I know that number I can put it into our farm budget and build from there. Of course I can whittle it down if I need to, but having that foundation of an ideal budget forces us to see what the farm can do. It grounds us in reality, and it gives us more ownership over our money. This process helps to ask questions about what we spend on and why. It leaves us with a number that feels right and comfortable, and if we reach that number we're proud and content rather than always feeling that pull for more. If a non-farmer saw our budget they'd probably be appalled at how little we take home. It really isn't much, but it (mostly) pays for the lifestyle we live.
Disclaimer: we have set up our living situation so that our farm pays for most of our mortgage, electricity, internet, etc. Our monthly expenses are things like health insurance (our biggest expense), car payment, car insurance, groceries, eating out/fun money, and subscriptions like Audible and Netflix. Your budget will obviously look different, but feel free to use this template for inspiration. Some of our numbers are in there to get you started, so please adjust as needed and make it your own.
Now go make that dream budget, and stay tuned for Step 4 of Hippo Camp: Annual Budget.
PS. That friend of mine? She's still a wizard with the spreadsheets, and has created a cash flow spreadsheet for our farm that brings me to tears it's so gorgeous and helpful. If that's something you're interested in, let me know and I'll set you up with her.
Taylor Mendell. I grow things for people to eat.