building a cash reserve as a young farmer.

jersey101

Was talking to mates about this last night, one of them owns 40 heifer calves and is in college doing the dairy herd management course and the other is only back from NZ and going to canada now in july to milk there.
What did ye do as young farmers to build up your savings??

Im only young and fully qualified farmer and am fully committed at home, ive done a little bit of traveling and my father is winding down a bit so i cant work for any one else due to work at home.

What would ye recommend i do??

Timmaay

Your farm should be well able to keep itself earning a nice day bit of money, so just keep plugging away, and aim to keep costs low and output up, examine every element of the business and make it as profitable as possible, this does often involve a change of thought totally, I use to view the farm as just a farm before, noe I see it purely as a business, things like profit monitors, grass measuring, cashflow planners etc are as important as feeding /milking the cows! Also don't spread yourself too thin, by trying to earn money with other ventures etc, dairying has decent potential so do your best to get as many cows/heifers into the parlour and knocking out milk.

simx

How young are you jersey? Couldn't imagine any young farmers around me are worried about having much of a reserve, couple of lads I know are only worried about having a reserve for beer the coming weekend ha, am young enough myself(22) and do try be saving a bit here and there for unexpected rainy days, because there is loads of them

Miname

Personally i have never had a sizeable cash reserve for farming. there are always way too many projects or pits that seem to soak it up. Farming has a brilliant way of just making money disappear.

tommylimerick

for the next ten years live a very quiet life , milk as many cows as you can
then you will inherite cows at 1000 euro a pop
and every acre 10k
it is very hard to save money and built a cash reserve
if the heavens open up you might be on the ball

jersey101

simx wrote: »

How young are you jersey? Couldn't imagine any young farmers around me are worried about having much of a reserve, couple of lads I know are only worried about having a reserve for beer the coming weekend ha, am young enough myself(22) and do try be saving a bit here and there for unexpected rainy days, because there is loads of them

Im at the lower scale of the twentys. Lots of jobs to be done here soon and and its going to swallow up alot of money so id like to be able to look after meslf wothout dragging too much money out of the milk check for a year or two. Maybe your right, just keep plugging away but ye can get awful depressed if ye havent got money to go off places and miss out on things

dzer2

I know this is unbelievable but you need to pay yourself a wage and then set up a saving fund from your wage. If you dont do this you will only end up with only day to day expenses always fire fighting and end up begrudging the farm your time.

This will give you 2 things

A value for your time
and a few pound.

If you cant do this or there is not enough money for you and your dad then one of you need another job.

Viewtodiefor

jersey101 wrote: »

Im at the lower scale of the twentys. Lots of jobs to be done here soon and and its going to swallow up alot of money so id like to be able to look after meslf wothout dragging too much money out of the milk check for a year or two. Maybe your right, just keep plugging away but ye can get awful depressed if ye havent got money to go off places and miss out on things

Well Jersey how's things. Just going to throw my thoughts at ya. I'm about ten yrs older than you and grew up on farm but left in my late teens for college job etc. now back home. In early 20's I did lots of drinking etc out every night of the weekend often so money Made never stayed around too long. As got from d mid twenties on I copped on a bit and concentrated more on work and hobbies than d drink! I did lots of travelling over that time often six months at a time, I was lucky as the job I had and the economy at the time made it easy. I would not change that for anything, and there is no way I could have done from being on d farm. Some guys want to travel others call travelling two weeks in Spain so everyone different.
From a farming point of view I think you need an outlet at least once every week so of course you need money for that. Some parents encourage this others are indifferent. I would suggest you definitely need a set amount put away weekly into a savings account just to give you some self worth and belief if nothing else. I would suggest at least 75 a week , whether this comes from your wages or not is up to u. But you need to pay yourself and also save a bit if ya can. Don't miss out on life just because you are farming there is more to life you know! But unfortunately you need the money so you can enjoy it. Even if its just a few pints wit the lads. You only get one chance at it and most successful people have a good work/life balance

Mulumpy

Your probably as well off not having a reserve anyway cos as soon as the wife and small people come along they'll drain ya anyway

Viewtodiefor

Mulumpy wrote: »

Your probably as well off not having a reserve anyway cos as soon as the wife and small people come along they'll drain ya anyway

This is def true! . :-)

Farrell

Mulumpy wrote: »

Your probably as well off not having a reserve anyway cos as soon as the wife and small people come along they'll drain ya anyway

Agree with viewtodiefor
But its no harm having provisions in place, or setting rules in place, as when they come you'll be needing your own reserves without anyone questioning.

3 the square

jersey101 wrote: »

Im at the lower scale of the twentys. Lots of jobs to be done here soon and and its going to swallow up alot of money so id like to be able to look after meslf wothout dragging too much money out of the milk check for a year or two. Maybe your right, just keep plugging away but ye can get awful depressed if ye havent got money to go off places and miss out on things

most important thing is not to borrow too much money together any thing can happen tb bad weather bad heath etc just remember borrow 450k and ul pay back 7737745.60 k or3223.94 k a month for 20 years :eek: and that at 6 per cent interest which wil rise:(

jersey101

3 the square wrote: »

most important thing is not to borrow too much money together any thing can happen tb bad weather bad heath etc just remember borrow 450k and ul pay back 7737745.60 k or3223.94 k a month for 20 years :eek: and that at 6 per cent interest which wil rise:(

ha i dont think you want to know what were paying a month already so :D:-D

Dont be daft

dzer2 wrote: »

you need to pay yourself a wage and then set up a saving fund from your wage.

If he does that will he not be paying income tax on a cash reserve which will be used on the farm?
Fair enough if he wants to set aside money for maybe a holiday or a deposit for a house or something.
But my thinking has always been, once money comes out of the system through wages, its out for good and to put it back in is a complete waste.

Even if you pull money out to build up a living expense reserve, your pulling the money out at 40% tax rate and in all likelihood you'll be drawing on it at a time when you would have been paying 20% tax. If you know what mean.

Maybe I have all arseways but thats always how I viewed it.



As for building cash reserves, cut drinking down to a once every few months event and you'll be tripping over cash

Timmaay

Dont be daft wrote: »

As for building cash reserves, cut drinking down to a once every few months event and you'll be tripping over cash

Sneaky nagins, sorted!

Conor556

Im 19 now and I started in 2nd class after my communion,, with the money from that I bought 2 charolais heifers and just kept building it up from there, I know have 7 sucklers and sell the weanlings, and give my father a few pound when they go and also pay for some of the meal silage fert and put some of my own € into a shed we built last year since I own almost half the stock,, I also arse around working with other farmers during the year and get a few weeks with a builder doing shuttering and things,, Ive work placement for collage now aswell in spring so that will also help things, so i have a nice reserve built up over the years but that will take a hit soon no as im buying a car! Thats what I tell all my friends if they get a few pound buy stock!!,, they might not make much off them but I find it a great way of keeping money together!

freedominacup

jersey101 wrote: »

Was talking to mates about this last night, one of them owns 40 heifer calves and is in college doing the dairy herd management course and the other is only back from NZ and going to canada now in july to milk there.
What did ye do as young farmers to build up your savings??

Im only young and fully qualified farmer and am fully committed at home, ive done a little bit of traveling and my father is winding down a bit so i cant work for any one else due to work at home.

What would ye recommend i do??

Draw a wage, a reasonable one. You say your father is winding down, if he is and you weren't there he'd have to pay someone. You're living at home so your wage should reflect that. As someone else posted you'll start to resent the farm if you haven't cash of your own out of it and a bit of time off to spend it. I dunno about a cash reserve, most guys your age can't wait for thursday why should you be any different for a couple of years? Buy a car, book your holidays, mid-June is always good IMO. Bulling is more or less finished, 1st cut is in and fert/slurry out for second cut, calves are reared, nothing will die if there's no fert out for 10 days. You'll be dead long enough and there's no point in all the tearing and dragging if all you're getting/giving yourself is the promise that it'll be better.

jersey101

Should have mentioned that im gettin a wage its not as much as it would be if i was working for someone else but im happy with it. I work alot harder and get up earlier because of it because i know that there our stock and if i look after them better it works well in my favour.

I guess what im asking is would i be aswell try to save some of this or should i use it and enjoy it now?

Timmaay

jersey101 wrote: »

Should have mentioned that im gettin a wage its not as much as it would be if i was working for someone else but im happy with it. I work alot harder and get up earlier because of it because i know that there our stock and if i look after them better it works well in my favour.

I guess what im asking is would i be aswell try to save some of this or should i use it and enjoy it now?

Bit of both, no point spending money for the sake of it unless it makes ya happy! Having afew quid built up on the side is always good, and the earlier in life you can learn how to do this the better! Personally I'd advice you go travelling as much has ya can, while in your 20s and not tied down with family, and having afew quid built up every few yrs makes that much easier.

The other thing I'd do is be very slow about putting the money back into the farm, bar the likes of a short term loan, its your money and as everyone else said you'll only end up resenting the farm if it managed to suck you dry of money, I guess this is what cashflow planners are for!

kevthegaff

i have 200 euros savings in my credit union, every penny i make goes into sheds/loan repayments upgrading of facilities

J DEERE

Thats what I tell all my friends if they get a few pound buy stock!!,, they might not make much off them but I find it a great way of keeping money together![/QUOTE]

Careful now, a lad could lose his head around here with a statement like that. Its all about profit!!!!

Farmer Pudsey

Jersey the first thing is to understand the tax system. No point in not using tax allowances and now and ending up paying tax at 50% in ten years time.

Hard to give advice without detail but I will try a handy too is an income tax calculator to understand what it will cost to pay an income. Below is a link to a income tax calculator to see gross and net income.

http://www.deloitte.ie/tc/Default.aspx


If you are paid 8K/year out of farm accounts you pay 500 PRSI you use up full tax credit netting 7500

16K means you pay tax 1550, USC 640 PRSI 439 netting 13371 after tax

32K means you pay tax 4759 PRSI 1280 USC 1559 netting 27811.


Important thing is to look long term and use tax allowances now I am not sure if you can throw all this into a bank account and not use some for day to day expenses. However you have to remember that you may have access to a farm van or jeep that is written off on the farm account along with tax, diesel, insurance and other running costs.

One lad here posted that present interest rates for a large loan are 6% anybody paying that is off there head, large loans mortgaged to farm should be less than 4% and maybe around 3%.

The most important thing is understand the tax system

DMAXMAN

just said I would throw in my tuppence worth. came home at eighteen, could not wait longer. when I was applying for college my father started paying me a wage ~(50£) was tax efficient for him and left me with pocket money. after I finished paying college loan he invited out an insurance salesman to sell me a savings policy with a bit of life insurance built in. I paid in 50 per quarter into it. so far that policy has paid for my wedding and built a big garage at the back of the house. it also has 11k left in it for a rainy day. never missed the money, had lots for drinking etc. also had a bit of stock when working here. boss made over the farm to me when I was 26, fairly well set up.never underestimate the power of compound interest!

Farrell

Fair play, looks like a good option.
I've 2 queries,
1. We currently rent but would like to buy, currently reinvest in the farm, are we best to put some aside for deposit instead?
2. We've a young child & I was thinking of investing in government bonds to provide for college, is the insurance savings a better option?

milkprofit

jersey101 wrote: »

Was talking to mates about this last night, one of them owns 40 heifer calves and is in college doing the dairy herd management course and the other is only back from NZ and going to canada now in july to milk there.
What did ye do as young farmers to build up your savings??

Im only young and fully qualified farmer and am fully committed at home, ive done a little bit of traveling and my father is winding down a bit so i cant work for any one else due to work at home.

What would ye recommend i do??

Your first investment should be 6 - 12 months in nz
Build some life experience
draw wage aprox 20 -30000 which would be tax efficient u can live or spend all or half this rest save for house family etc
make a written agreement with parents which cover an inheritance plan
Livestock is the most efficient way to build assets if u are going to stay dairying
I always kept more stock then sorted accommodation etc
u could winter extra stock on kale
keep learning

jfh

jersey101 wrote: »

Was talking to mates about this last night, one of them owns 40 heifer calves and is in college doing the dairy herd management course and the other is only back from NZ and going to canada now in july to milk there.
What did ye do as young farmers to build up your savings??

Im only young and fully qualified farmer and am fully committed at home, ive done a little bit of traveling and my father is winding down a bit so i cant work for any one else due to work at home.

What would ye recommend i do??

Could you spare an acre of wet land & plant tree's, that could be harvested in 35 years? might be a nice little retirement nest egg?

jersey101

jfh wrote: »

Could you spare an acre of wet land & plant tree's, that could be harvested in 35 years? might be a nice little retirement nest egg?

Nope. Were busy cutting them acres of trees in corners of fields here the last 10yr

Farmer Pudsey

DMAXMAN wrote: »

just said I would throw in my tuppence worth. came home at eighteen, could not wait longer. when I was applying for college my father started paying me a wage ~(50£) was tax efficient for him and left me with pocket money. after I finished paying college loan he invited out an insurance salesman to sell me a savings policy with a bit of life insurance built in. I paid in 50 per quarter into it. so far that policy has paid for my wedding and built a big garage at the back of the house. it also has 11k left in it for a rainy day. never missed the money, had lots for drinking etc. also had a bit of stock when working here. boss made over the farm to me when I was 26, fairly well set up.never underestimate the power of compound interest!

If I was looking at long term investment I would consider forestry however if you are investing in dairying so as to expand o/p I farget about insurance/investment policy's