5 Ways a Farmer Can Manage Financial Stress

Farming is an industry highly dependent on unpredictable factors such as weather, market fluctuations, and other external pressures. These uncertainties can create financial stress for farmers, which leads to significant mental and emotional strain. Farming is among the most stressful occupations in the country, and the suicide rate is 6x higher in farmers than the average population. Stress among farmers is not uncommon, so it is crucial for farmers to have a plan in place to manage financial stress when it arises. 

1. Diversify Income Streams

   Having more than one source of income is a great way to manage financial stress. Farmers can diversify their income streams by growing different crops, raising livestock, or renting out land. Diversifying income streams helps reduce risk and creates a cushion when one commodity is underperforming.

2. Maintain Adequate Liquidity 

   Liquidity or working capital is the first line of defense when a farm starts to feel the first strains of financial stress.  Financial liquidity is the ability of a business to turn current assets into cash without disrupting normal operations. Adequate working capital can cover operating costs in the case of poor yield or low prices, it can repair equipment or replace assets without requiring a farm to pull too hard on an operating line. 

3. Have a Budget and Reconcile Regularly 

   One of the most essential steps in managing financial stress is having a monthly cash flow budget. Having a budget provides clarity on where money is being spent and helps farmers make informed decisions about their finances. Sticking to a budget and reconciling it monthly ensures that a farmer is not overspending and maintains an adequate working capital position. 

4. Seek Professional Help

   Farmers who are experiencing financial stress should not hesitate to seek professional help. A financial advisor or accountant can help farmers develop a plan to manage their finances, provide valuable insights on how to reduce costs and create a strategy to improve profitability. Professional help can also mean seeking a counselor or therapist to help manage your stress, talk through your emotions, and help you find positive coping skills.  

5. Practice Self-Care for your Mental Health

   Managing financial stress can take a toll on a farmer's mental and emotional well-being. Practicing self-care is essential for managing stress. Farmers can practice self-care by engaging in physical activity, eating a healthy diet, getting enough sleep, and spending time with loved ones. Taking care of oneself helps reduce stress and promotes a positive outlook.