This builds on the question I asked awhile back, re: how far in advance folks budget their money. Our existing method was proving to be woefully inadequate so I went back to the drawing board and came up with a new system. Starting in February, we’re budgeting with a hybrid system where we use the DR zero-based spreadsheet as our starting point, but then we’ve started to integrate our previous workhorse – the weekly cash flow budget – into the DR budget. The spreadsheet got to be pretty big and involved at that point, but now we can not only set up the columns for the monthly spending allocations, we can also assign how much of those allocations to each week. That way we can ensure everything gets paid, but spread out the pain a bit so no one week gets too bogged down with too many costs.
And while I was at it, I started to really look at how to manage the farm budget over the course of a year, along the same lines as the household budget described above. It might sound stupid but we’ve not done that previously. Farm income was so sporadic and unpredictable that it was hard to work out any sort of predictable cash flow. Part of that was us learning how to pace our production for more regular income; we’re still working on that part. But now that we’ve got some experience with the bigger “batch sales” like market hogs and hay, we can start to predict this stuff. So this weekend I started to work out “ok, if we know X amount is coming in during X week, and we’ve got related expenses for A, B, C and D weeks down the road, how do we make sure those future costs are covered?” As a previous email indicated, we’re still figuring out the “best” way to do that and it might just be to try different things and see which approach works best. But this new attempt at zero-based budget for the farm is a whole lot better than what we had before, namely NOTHING. Whenever money came in during 2011, we used it to put out whatever budget fire was burning at the time. Now, we can start to really have the farm pay for the farm. That’s a nice improvement.
So, the budgeting work continues, but we’re making progress. Jan – sorry to hear you got the bug. And I’m looking forward to the email from you that the comptroller has been let go. Sounds like she should be renamed Cleopatra – Queen of Denial.