| Updated December, 2000 |  |
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File C1-20 |
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Farm Family Living Expenditures
Darnell Smith, extension associate, 515-294-8122, darnell@iastate.edu
The information in this report came from family living expenditure records kept by farm families throughout Iowa. It is intended for use by farm families and those who work with them for planning and/or analysis purposes. The data were collected by Iowa Farm Business Association consultants. The families included in this summary are not necessarily representative of all Iowa farm families.
The information summarizes cash expenditures made for family living purposes. Farm-related expenditures are not included. Cash expenses for household operations and repairs are included, but no expense for house rental or interest on mortgage payments is included because the housing investment is generally considered to be an integral part of the farm business (see Figure 1).
Investments for living include expenditures for items expected to provide use over a period of more than one year. This includes purchases of home improvements, home furnishings, and automobiles. Farm produce or livestock grown on the farm and consumed by the farm family is valued at its market price. This represents a reduction in cash income rather than a cash expenditure.
Net farm income is calculated on the accrual or inventory basis. The difference between net farm income and nonfarm income, and the total used for family living, represents the amount available to the family for payment of income taxes, savings, investment in the farm business, or debt retirement.
Figure 1. Percentage distribution of family expenditures, 202 farm families.
Total living expenditures for the Iowa farm families included in this report averaged $30,539 in 1999. Table 1 shows expenditure patterns of families surveyed from 1995 to 1999. Total cash living expenditures increased modestly last year, rising approximately 5 percent from 1998 to 1999.
Except for education, recreation, and the repairs, minor furnishings categories, expenditures generally increased from 1998. These increases coincide with significant increases in net farm income and total incomes of farm families.
| Table 1. Comparison of Farm Family Living Expenditures, 1995 - 1999. | |||||
| Cash Expenses for Living | 1999 |
1998 |
1997 |
1996 |
1995 |
| Food purchases* | $4,708 |
$4,459 |
$4,858 |
$4,462 |
$4,853 |
| Clothing and personal items | 5,265 |
5,150 |
5,880 |
5,501 |
5,222 |
| Household operations | 1,717 |
1,562 |
1,923 |
1,716 |
1,965 |
| Repairs, minor furnishings | 542 |
547 |
636 |
522 |
593 |
| Health | 4,508 |
4,118 |
4,751 |
3,959 |
5,003 |
| Recreation, vacation | 1,716 |
1,810 |
1,887 |
1,531 |
1,693 |
| Education | 1,146 |
1,267 |
1,049 |
927 |
1,103 |
| Gifts, contributions | 3,458 |
3,340 |
3,025 |
3,203 |
2,958 |
| Auto operating expenses | 1,800 |
1,450 |
1,635 |
1,896 |
1,867 |
| Life, home insurance | 2,191 |
2,143 |
2,152 |
2,115 |
2,004 |
| Miscellaneous, child care | 633 |
523 |
431 |
312 |
279 |
| Total Cash Living Expense | $27,686 |
$26,369 |
$28,228 |
$26,143 |
$27,539 |
| Investments for Living | |||||
| Home improvement | $1,064 |
$978 |
$741 |
$1,336 |
$757 |
| Home furnishing, equipment | 780 |
660 |
1,052 |
920 |
910 |
| Vehicle purchase | 1,009 |
1,255 |
1,351 |
1,238 |
1,481 |
| Total Investment for Living | $2,853 |
$2,893 |
$3,144 |
$3,494 |
$3,148 |
| Total Living Expenditures | $30,539 |
$29,261 |
$31,373 |
$29,637 |
$30,687 |
| Net farm income (accrual basis) | $43,994 |
$10,182 |
$48,374 |
$65,399 |
$46,556 |
| Non-farm income | 14,008 |
13,049 |
13,954 |
14,051 |
11,976 |
| Total Family Income | $58,002 |
$22,936 |
$62,328 |
$79,450 |
$58,532 |
| Income taxes paid | $5,696 |
$4,779 |
$5,953 |
$6,185 |
$4,051 |
| Available for investment and | |||||
| debt retirement | $21,767 |
($11,104) |
$25,002 |
$43,628 |
$23,794 |
| Average age of operator | 49 |
49 |
49 |
46 |
47 |
| Average size of household | 3.4 |
3.3 |
3.4 |
3.4 |
3.5 |
| Number of families | 202 |
221 |
191 |
249 |
168 |
*Includes farm produce used.
The effect of family size (number living in the household) on living expenditures is shown in Table 2.
Total expenditures were highest in households with 5 or more people. This group spent $37,599, compared to $26,507 for households of 1 or 2 persons, the group with the lowest average total living cost. Household size influenced some expenditures more than others. Total food cost, including both purchased and farm-raised food, varied from $3,946 for the smallest households to $5,905 for the largest. Expenditures for clothing and personal items and auto operating were also closely related to household size.
| Table 2. Family Living Expenditures by Size of Household | |||||||
| Total Number in Household | |||||||
| Cash Expenses for Living | 1 or 2 |
3 or 4 |
5 or more |
||||
| Food purchases* | $3,946 |
$4,714 |
$5,905 |
||||
| Clothing and personal items | 3,609 |
5,498 |
7,566 |
||||
| Household operations | 1,681 |
1,723 |
1,773 |
||||
| Repairs, minor furnishings | 664 |
451 |
457 |
||||
| Health | 4,486 |
4,021 |
5,120 |
||||
| Recreation, vacation | 1,535 |
1,894 |
1,767 |
||||
| Education | 303 |
1,258 |
2,237 |
||||
| Gifts, contributions | 4,192 |
2,956 |
2,972 |
||||
| Auto operating expenses | 1,075 |
1,759 |
2,998 |
||||
| Life, home insurance | 1,807 |
2,121 |
2,881 |
||||
| Miscellaneous, child care | 276 |
721 |
1,088 |
||||
| Total Cash Living Expense | $23,574 |
$27,116 |
$34,764 |
||||
| Investments for Living | |||||||
| Home improvement | $1,034 |
$1,159 |
$998 |
||||
| Home furnishing, equipment | 885 |
635 |
808 |
||||
| Automobile purchase | 1,015 |
987 |
1,028 |
||||
| Total Investment for Living | $2,933 |
$2,781 |
$2,835 |
||||
| Total Living Expenditures | $26,507 |
$29,896 |
$37,599 |
||||
| Net farm income (accrual basis) | $50,852 |
$29,263 |
$52,444 |
||||
| Non-farm income | 15,150 |
15,688 |
10,098 |
||||
| Total Family Income | $66,002 |
$44,951 |
$62,542 |
||||
| Income taxes paid | $6,209 |
$4,559 |
$5,367 |
||||
| Available for investment and | |||||||
| debt retirement | $33,286 |
$10,495 |
$19,576 |
||||
| Average age of operator | 56 |
46 |
44 |
||||
| Average size of household | 1.9 |
3.7 |
5.5 |
||||
| Number of families | 82 |
68 |
52 |
||||
*Includes farm produce used.
The table below summarizes living expenses for families with different levels of total family income.Total family income is defined as net farm income plus off-farm income. Total living expensesincreased as income increased. However, total incomes fluctuate widely from year to year. Mostfamilies do not adjust living expenditures due to short-run income changes. Many expenditures arerelatively fixed and cannot be adjusted easily. Families with low or negative family income have tofinance living expenditures from reduction of inventories, sales of farm assets, or borrowing.
| Table 3. Family Living Expenditures by Total Family Income | |||||
Total Family Income Level |
|||||
$10,000 |
$10,000 |
$30,000 |
$60,000 |
||
| Cash Expenses for Living | and less |
to $30,000 |
to $60,000 |
or more |
|
| Food purchases* | $4,697 |
$3,545 |
$4,707 |
$5,319 |
|
| Clothing and personal items | 5,607 |
3,333 |
5,381 |
6,025 |
|
| Household operations | 1,739 |
1,466 |
1,626 |
1,907 |
|
| Repairs, minor furnishings | 309 |
516 |
570 |
648 |
|
| Health | 3,244 |
3,368 |
4,456 |
5,715 |
|
| Recreation, vacation | 1,517 |
1,649 |
1,668 |
1,885 |
|
| Education | 524 |
505 |
997 |
1,920 |
|
| Gifts, contributions | 2,086 |
3,217 |
2,898 |
4,655 |
|
| Auto operating expenses | 1,659 |
1,195 |
2,105 |
1,944 |
|
| Life, home insurance | 1,427 |
2,041 |
1,899 |
2,848 |
|
| Miscellaneous, child care | 1,569 |
544 |
225 |
563 |
|
| Total Cash Living Expense | $24,376 |
$21,379 |
$26,532 |
$33,429 |
|
| Investments for Living | |||||
| Home improvement | $932 |
$612 |
$990 |
$1,428 |
|
| Home furnishing, equipment | 782 |
658 |
644 |
948 |
|
| Automobile purchase | 850 |
606 |
1,029 |
1,276 |
|
| Total Investment for Living | $2,564 |
$1,876 |
$2,663 |
$3,653 |
|
| Total Living Expenditures | $26,939 |
$23,255 |
$29,195 |
$37,082 |
|
| Net farm income (accrual basis) | ($16,564) |
$13,641 |
$23,478 |
$104,017 |
|
| Non-farm income | 1,659 |
7,496 |
19,438 |
19,466 |
|
| Total Family Income | ($14,904) |
$21,137 |
$42,916 |
$123,483 |
|
| Income taxes paid | $2,227 |
$2,942 |
$4,714 |
$7,885 |
|
| Available for investment and | |||||
| debt retirement | ($44,071) |
($5,060) |
$9,007 |
$78,516 |
|
| Average age of operator | 47 |
50 |
49 |
50 |
|
| Average size of household | 3.4 |
3.0 |
3.4 |
3.7 |
|
| Number of families | 34 |
38 |
57 |
73 |
|
*Includes farm produce used.
Revised from Family Living Expenditures, Fm-1790.