My all time topper concerning family living cost occurred this winter. The figure was $80,000. No, not $80,000 annually – but monthly! That amounts to almost $1 million annually! Oh yes, the grain sector is doing well these days, along with visits to the racetrack and the towers of Las Vegas. While that was an astounding example of exuberance, let’s see what is going on concerning personal withdrawals from farm and ranch businesses.
The good people of University of Nebraska Cooperative Extension in cooperation with Nebraska Farm Business, Inc. and Nebraskaland Farm and Ranch Management Education Program have just published their latest detailed data. The average family living cost for a family of 2.9 individuals was $52,692 in 2007, up approximately 7% from the previous year. Since 2003, living costs have shown over a 7% increase annually. When income taxes and social security are included, the total living cost is well over $65,000 annually.
Medical expenses including health insurance premiums are now the number one expense accounting for 16% of the total budget, followed by food at about 13%. Gifts, clothing, and personal interest expenses are becoming larger items on the budget.
Let’s go back to a different time and visit the Farm Crisis in the 1980s. In 1984 to 1985 farm family living cost was about $17,000 and it didn’t exceed $30,000 until 1993. It took only four years, from 2003 to 2006, to race from $40,000 to $50,000.
What is your family living cost? One budgeting suggestion is to estimate it on a monthly basis and add 25%. Do not forget to value the perks or extra benefits you receive from the farm business when comparing your opportunity cost to non-farm employment.