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Last weekend, my family and I took the trip back home to northwest Iowa to help my family with harvest. Dad let me run the combine for two days, and he hauled the corn into town and put it away in the bins for the winter. As I rode up and down the corn rows it gives you a lot of time to think. To think about how life is going. Where your life is headed. And also to marvel at how God provided the sun, rain, and rich black soil.
As I had time to think in the combine, I looked a lot at the field with 160 acres of corn. It is truly amazing to see (at 200 bushel/acre) 32,000 bushels come out of this single field. It makes me think about my finances and how my management of my finances is very similar. Here are a few ways that harvest teaches me about finances:
- Make the initial investment – buying land in our neck of the woods is uber expensive. To the tune of about $9000-$12,000/acre! So a normal 160 acre plot now costs about $1.4-1.9 million! Not chump change to throw at an initial investment. It really takes some deep pockets to make that initial investment, and it even harder to not make that investment without leveraging a large portion. Regardless of the debt, purchasing land is a great investment, because it is one of those rare investments that continually produces something physical again at the end of every year. This is another great reason to save up a large cash sum, so that you can make that initial investment and see residual returns each year.
- Planting seed, when it’s time time to plant – typically for farmers around our area you never plant before Earth Day, and ideally, around Cinco De Mayo is the ideal time to start. Then if you plant after June 15th, then you are at risk of not having a long enough growing season. For farmers, this means that timing is everything. In terms of finances, you need to take the time to plant your investment seeds. People often think that there shouldn’t be any initial work. Look at farmers! Planting the seed is their first step in watching their investment or year’s income grow! Every good investment is going to take some initial work!
- Marketing during peak selling times – typically in the spring there are a number of peak sell (hot peaks), then it’s important to dollar cost sell during these small periods of time. The same is true in investing that you need to dollar cost average during the buy and sell. This is true, because we can never predict what the high or lows are going to be in stocks or bonds. We can’t only look at when the market becomes over heated (either way) to give us an indication. This dollar cost averaging helps us take the emotion out of investing, and having any regrets of, “I should have sold more” (during the high) or, “I should have bought more” (during the low).
- Controlling weeds is like controlling expenses – after planting, weeds are one of your biggest threats against your crops in diminishing your return on your initial investment. There is so much money put into controlling weeds, using herbicides and pesticides. What are you doing to control the weeds in your finances? What is pulling down your financial outlook? Is it a hefty mortgage or a lot of credit card debt? Start by dividing your fixed expenses and variable expenses into separate checking accounts. Its important to get a start, regardless of what debt is weighing you down, just like the farmer commits to controlling weeds every year.
- Harvest is like retirement – almost every farmer loves harvest time, because that is when all of his money comes in. In looking at a field, it looks like those corn stalks are stalks of gold in that it’ll provide his family money for the entire year (hopefully). In terms of your finances, harvest to the common suburbanite is cashing in on your pensions, 401k, 403b, rental properties, or social security. All of those accounts were planted with multiple years of little seeds throughout your career to harvest a bountiful retirement income! :) Do the due diligence to plant your seeds early, and you might just have a bumper retirement crop.
So as you can see investing in a field to produce a crop every year is very similar to finances. The key is to make sure you invest early and often, and keep your expenses low!