I started the Money Mentor page in 2010. It was a direct result of the difficult year 2009, when commodity process plummeted and many lost their off-farm income. Now 2015 also looks set to be a difficult year for many. A fall in the milk price, changes to direct payments and delayed opening of new environmental schemes will put pressure on people’s farm cashflow. On top of that, inside the house the cost of living keeps increasing.

This page is not about focusing on the negatives. It’s about looking at what you can control. Since 2012, I have run OP€RATION CASHFLOW to help farmers take control of their finances. Each year, five families were selected and I visited them throughout the year.

Below are some comments they made after going through the first few years of the process.

From the readers

  • “We would not be as positive about the future if we had not gone through the process.”
  • “Writing down what you spend really opened our eyes to the cost to live in Ireland.”
  • “It made us aware of what we were spending and how we could control it.”
  • “I now understand the potential of the farm but can also see why my husband works so hard.”
  • “We made a profit from the farm last year something I didn’t think was possible.”
  • “I now have a five year plan in place for the farm and the profit it makes will help pay from our children’s education.”

    • However, I know it can be hard to continue to motivate yourself in the area. In 2014, even I neglected to revisit some of the farmers who were selected in 2014.

    That the year slipped by too quickly is a poor response. So this year I have made the decision to continue to work with families and to revisit some of those that I worked with over the previous two years. We will also launch new initiatives for the household and the farm, not just in Irish Country Living but also in the Irish Framers Journal, to help people manage their finances.

    However, the focus of OP€RATION CASHFLOW will be to revisit the families to see if they have continued to keep control of their finances.

    The process in OP€RATION CASHFLOW is not complicated and by revisiting the families we will show you how to do it.

    Calculating net worth is done for 31 December each year and compared with the one that was done 12 months beforehand. It indicates if you are heading in the right direction, as over time you should increase your net worth. In many cases, the families did not think they made progress. When the figures were done, they showed that for many the net worth increased by €20,000 to €50,000, a major improvement. It amazed them. In all cases we kept the land and house values the same. The gains came from a combination of a reduction in loans and outstanding bills as well as an increase of assets – mainly in higher stock numbers.

    The reason they did not think they had increased was they did not have any more cash in the bank. However, that is just one part of the equation. This shows the importance of taking a snapshot of net worth each year. After we did the exercise most families felt a lot more positive. It gave them a boost to make progress.

    You can also follow these simple steps. Firstly, look at the household and farm cashflow for the previous year to establish if there is more money coming in than going out. It’s the first step in seeing how you can save money.

    Secondly, set out a household and farm cashflow for 2015. A cashflow is the most powerful tool in getting a grip on you farm and personal finances. It will be even more important this year.

    Thirdly, start to develop a five-year farm plan. Those who participated in the first OP€RATION CASHFLOW will be halfway through the initial five-year plan. Has it been changed? If not, it should have been.

    Six steps to achieving financial health

  • 1. Establish your current situation: Monitor your net worth – Are you better off financially in January 2015 compared with January 2014? Identify how 2014 went – Do a farm cashflow and/or an overall one if money is coming in from off the farm.
  • 2. Set your targets/goals: These can be simple milestones you want to hit in 2015. They could be to fill out a cashflow at the end of each month, or keep on top of your current account. They could also be to build an emergency fund or start saving for your children’s education.
  • 3. Identify any financial problems that could stop you achieving your targets.
  • 4. Look at different strategies.
  • 5. Put in place plans to hit targets.
  • 6. Constantly review and react to changes.