Ekua Makes a Budget

Woman farmer, friendly and confident

-What does financial planning mean to you? In today’s program, a young woman farmer shares her personal experience on how to increase financial security by making a budget. With a budget, farmers can make money. Without one, they could be headed for financial disaster. Listen to hear why.

-Many years ago, my husband and I almost lost our land… our crops… our livelihood. It sounds very serious, and it was. But it’s the kind of thing that can happen to any farmer. For that reason I’m here today – I am going to talk about how it is possible to prevent these problems.

When my husband and I married we received a plot of land from my father-in-law. The soil was very fertile. The first few years we had large harvests and made a good living. We were free of problems. Or at least, that’s what I thought.
Then one day, when we were planning a trip to the city to buy seed for the next crop, we realized we didn’t have enough money for seed. There was not even enough money for transport to town!

Well, we didn’t know what to do. Where was our money? What did we spend it on? We didn’t know. We had never kept records of the money we earned or spent. If we couldn’t buy seed, how could we make enough money to buy food for our young children? We were very worried. We thought we might have to sell our land, just to buy food to eat.

Luckily, I had a friend at the bank. Actually, she was a woman my own age – we played together as children. She had done well. I asked for her help. She arranged a small loan to cover our expenses. But she taught us something else – something much more important than how to get a loan. She taught us how to keep records and to make a budget. And making a budget saved our farm business. Now I do a budget every season. In my opinion, it’s the most important part of a successful farm.

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-Every year, many farmers face financial loss. Many of these farmers could make a profit if they kept good records and used them to plan ahead. Listen as Ekua tells us how she makes a budget.

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-You know, making a budget is really simple. You have to balance what goes out – your costs – with what comes in – your income. If your income will be greater than your expenses, you will make a profit. If your costs are greater than your income, you know you will lose money.

Here’s how I make my budget. Several months before the beginning of every growing season I make two lists. The first list includes everything I will spend money on to produce my crop. In other words, it includes all my costs, all the ways that money will go out.

– On this year’s list I included:

Things I will buy: seeds, fertilizer, livestock feed,

Things to repair: bicycle tire,

Loans I will pay: fertilizer loan,

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– That’s a long list of costs. But yours might be longer. What would you include? Can you think of expenses that Ekua didn’t mention?

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-After I finish my list, I estimate how much money I will spend on each item. First, I look at my accounts from the last year. I have a big black book where I keep a record of everything I’ve bought, and everything I’ve sold.

If I’m planting just the same amount and mixture of crops, then I assume my costs will be the same as last year. So I record what I spent last year for that item. But if I’m going to change things on the farm, I adjust my budget. Also, sometimes the cost of fuel goes up. (Laughing) It almost never goes down! When prices go up or down, I have to adjust my budget to account for the rising or falling prices.

– So, Ekua has completed her first list. The first step was to make a list of all the things she would spend money on. Then she estimated how much she would spend on each item. You might remember that she mentioned a second list. We’ll hear about that now.

-When I am finished my list of costs, I make my second list – a list of all the things that will bring money into the farm and household. This list includes every farm product we sell, as well as money we borrow. I try to remember everything. This year, I included:

Things I will sell: maize, goat milk, groundnuts, fruit jams and sauces. Money I will borrow: a loan from my uncle, and one from my sister-in-law.

– Is your list this long? Take a moment to think about the things you would include. Some farmers sell many things from a small farm; others sell only a few items from a large farm. Each farm is different.

-Next I have to estimate how much money I will receive for each item on the list. I look at my records and see how much money I made last year from selling my products. If I am growing the same amount of maize or other crop, I assume that I will make the same amount of money or receive the same amount of goods. But if I’ve changed how much I grow, or how many cows or goats I have, I adjust my budget. And if selling prices are higher or lower for certain items, I adjust for that too.

– Ekua has completed the second list. Her budget is almost complete. Now she must add the two lists and compare the totals.

-The last step in making my budget is to add up each list – and compare them. If my costs are greater than my income, then I’m in trouble! I have to change something! You see, you have to balance what goes out – your costs – with what comes in – your income. If your income is greater than your expenses, you’ve made a profit. If your income is less than your expenses, you’ve recorded a loss. And remember! You need to make a big enough profit for you and your family to have food, clothing, and the other necessities of life. Budgeting helps me do this right!

– Take some time to think about your business. Do you make a budget? If not, how would you start to make one? Do you need help? Who could help you? Remember … making a budget really can save you money. As Ekua discovered, it can save you a lot of worry!