Homestead Financial Planning for the New Year

Homesteading offers a more free way to live. You are more self-sufficient and less dependent.

But, if you don’t do any homestead financial planning, you may not feel as free as you’d like.

If you aren’t careful, your homesteading dreams could lead you into debt instead of freedom.

The best way to avoid debt and to better your situation is to do a little homestead financial planning at the start of the new year.

Homestead financial planning includes the following steps.

Review and Reflect

Before you start making any plans for how to save or spend money in the new year, take some time to pause and reflect.

Think about this past year on the homestead.

• What worked well? 
• What failed? 
• What would you like to do differently? 
• What was too much work for too little reward? 
• What could you improve?

Your reflection should drive your goals for the new year.

Release the Joneses

Many homesteaders started homesteading because they wanted to live differently from their peers. They wanted to be more self-sufficient and less attached to modern conveniences.

However, even in the homesteading world, there is a heavy dose of “keeping up with the Joneses.”

If you find yourself comparing your homestead to someone else’s, ask yourself why.

While there are certainly times when it’s smart to gather ideas from other homesteaders, if you are simply dreaming of bigger and better because of someone else, you’ve missed the mark.

Accept your homestead for what it is.

Stay humble. Live within your means. Buy what you can afford. Save up. 

Set Goals

Now that you’ve reflected on the past year and know where you are financially, it’s time to set some goals.

Think about what you’d like to do on the homestead this year. 

• Do you need to pay down debt?
• Is there a project on your to-do list that is financially possible soon?
• Will you add more animals?
• Can you plant more or try something different in the garden? 

Create a Basic Budget

Once you have some basic goals in mind, it’s time to create a budget. This is a critical step in homestead financial planning that you cannot afford to overlook.

Start with making note of what comes in each month. This is your monthly income.

Then, make a note of what goes out. This includes your necessary expenses, such as utilities.

Homesteaders tend to have a few additional necessary expenses, such as heating and cooling for the spaces where they keep their animals.

Start with these:

• Household expenses
• Groceries
• Gardening supplies
• Feed for animals
• Heating and cooling
• Water
• Livestock

Make a list of all your necessary expenses and estimate the average cost per month. Your monthly income should be more than your monthly expenses.

Make Space for Savings

As long as you are bringing in more than what you are spending, there should be some money you can save each month.

Saving money is important. Prioritize saving for emergencies. They happen—especially on the homestead.

Set aside some money each month until you have a decent emergency fund.

Prioritize and Plan for Homesteading Projects

Consider your goals for the new year. You likely have projects you hope to complete. And most projects cost money.

Make a general list, like this one:

• Repairing structures (i.e., mending fences)
• Improving structures (i.e., adding an automated chicken feeder)
• Building new structures (i.e., building a barn)

Figure out the estimated cost for each project. Then, prioritize the list according to your homestead financial plan and needs.

Everyone’s list will look different, and depending on their homestead financial plan, they will decide how to prioritize the projects efficiently.

Do what makes the most financial sense for you. 

Set Aside Funds for an Annual Maintenance Fund

Speaking of prioritizing projects, whether homesteaders are fixing something that is broken or building something new, there is always money being spent on maintenance.

You’ll never meet a homesteader who isn’t working on a project.

Make prioritizing your project list easier in the future by saving money monthly for maintenance. Once you have saved enough for an emergency fund, divert savings into an annual maintenance fund. 

Monitor Spending

Anyone can create a budget, but the hard part is sticking to it.

If you want to meet your goals and build up your savings, you must monitor your spending. This is the best way to make sure you aren’t overspending.

There are many apps available that make it easy to track spending and follow a budget, such as FarmRaise. 

If you discover you are coming close to overspending in certain areas or struggling to save for emergencies and annual maintenance, it’s time to look for ways to reduce costs and increase income.

Identify Additional Income Sources

When you sat down to make your budget for the year, you may have discovered that you are living beyond your means.

This means you are spending more than you are bringing in.

If this is the case, you need to identify additional income sources.

Fortunately, there are many ways you can make extra money on the homestead, such as selling produce from your garden.

See 30 Homestead Side Hustles for more ideas.

Reduce Costs

Unfortunately, sometimes increasing income with a side hustle isn’t enough. It’s also wise to reduce costs.

Heck, it’s always wise to look for ways to cut costs—whether you have plenty or little!

Here are a few ways to cut costs on the homestead:

• Buy used clothing and equipment.
• Embrace DIY. Make your own cleaning products, chicken feed, and do your own repairs.
• Build a bartering system.
• Look for free building materials for projects. 
• Borrow from other homesteaders. For example, ask a friend to borrow tools or equipment.
• Preserve food. Don’t let any food go to waste.
• Save seeds. If you learn how to save seeds, you won’t need to spend money every growing season on new seeds.
• Cut extras. Say “goodbye” to cable or other entertainment services that aren’t necessary.

Review and Adjust the Financial Plan Regularly

Don’t make the mistake of coming up with a homestead financial plan in January and never revisiting it.

Life happens, and things don’t always go as planned. You may need to readjust your budget. 

For example, if you set a grocery budget and costs skyrocket as they have in years’ past, you’ll need to make some adjustments.

Your new income stream may bring in more money than anticipated, which will allow you to save more or start working on a larger homesteading project. 

Most importantly, you want to look back over your budget regularly to make sure you are still on track with meeting your goals.