Saturday, September 24, 2016

Tracking Farm Expenses

Some of us probably do NOT want to know how much money we spend on our farms and horses each month, but unfortunately budgeting is a necessary evil. This post discusses an easy method for tracking farm expenses. Please excuse my nerdiness.

1. Log consumables in a calendar

I hang a calendar in the tack room next to the feed board, and keep track of hay and bedding usage on it. I mark a "1P" or "1F" every time I open a bag of bedding (pellets or flakes, respectively). ("1" because it could also be "2F" or "3F" if I use two or three bags of bedding in one day.) When I open a bale of hay, I knot the twine in a loop and save it on a hook until Sunday, when I remove all the loops of twine and count them. Then I mark, for example, "5H" at the end of that week's row. At the end of the month, I can add up all of the H's, P's, and F's and input them into the spreadsheet.

2. Use a spreadsheet to total monthly expenses

I have an Excel spreadsheet with rows for each month and columns for each category of operating cost: Feed, Hay, Bedding, Parasites, Flies, Waste, Ring Fees, Land, Labor, and Other.

At the end of the month, I use the calendar to input all my H's, P's, and F's into the spreadsheet at their cost times the number I used that month. For example, the bedding cell would look like this: =1.06*(5*6.29+2*5.99). The "1.06" accounts for the 6% sales tax, mini-flakes cost $6.29, and pellets cost $5.99.

For costs that don't show up on the calendar, I input them more or less as they arise or save the receipts for a couple weeks then enter them. I like to add comments on cells for the less-regular costs, so I will know what they represent (for example, "Lime" or "Mineral block"). I also add comments with the dates of manure dumpster pickup, and the dates I paid barn help, etc. to make sure I account for everything correctly.

There is a column at the end for that month's total, and underneath the monthly log I have a running average cost per horse (way lower than boarding, but of course this isn't factoring in my labor or the start-up costs, explained below).

I also keep a running total of hay bales used so that I know how much to order next time.

I like to use Excel but if you're not computer-savvy you could do this by hand instead!

3. Track start-up costs in spreadsheet

Sorry, but no one needs to know how much money I spent on this place.
Most of the time even I don't want to know!
This may be something you really, really don't want to know, but I was curious. I track the costs of all of my major start-up investments, breaking them down into major categories (Barn, Arena, Equipment, and Land). I also added a catch-all category (Other) that displays a running total from a separate spreadsheet where I log smaller miscellaneous costs that are capital expenses vs. operating costs (e.g., a set of cross-ties, chew strips, etc) because this was easier than trying to include all these smaller items in a category.

I also have a formula set up to calculate the monthly cost difference between boarding my two horses in appropriate nearby facilities and keeping them at home. Dividing the total start-up cost by that monthly cost saving, I can see how long it will take for my barn to pay for itself (financially anyway). Unfortunately that figure goes up every time I invest in an improvement.

On budgeting: The start-up cost has added up to almost twice what I naively predicted, even though I increased all my estimates by 20% to be safe. But I will say that about 90% of the start-up costs were expended in the first year, and now that that year is over I find myself buying fewer and fewer things for the farm, other than feed, hay, bedding, etc. It's a great feeling!

Okay, nerd out!

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