Quesions to Ask Yourself Before Purchasing New Farm Equipment
Last week we looked at things to factor in before purchasing new equipment including the lifetime cost of owning a piece of farm equipment. This week we will dive deeper into questions to ask yourself to assess if this is the right purchase for you.
Question Your Motives
- Is the purchase feasible? If you don’t have cash to finance the purchase up front, you need to have income in place to repay a loan on the piece of equipment.
- Is buying new necessary? Doing a search for your tool or part on tractor-part.com can save you a lot upfront by providing many pricing options from suppliers across the country. Renting the machinery or hiring someone who already owns it are two additional options.
- What is my opportunity cost? Think about what purchases you won’t be able to make if you buy this tool. You might have other, better ways to spend your money, either on the farm or homestead.
- How will the tool help me meet farm goals? “How does it fit with my business plan, if I have one? What am I trying to accomplish by acquiring the equipment? Is the equipment acquisition really a need in terms of being critically important to the success of my farming activities, or is it merely a want?”
These questions can take the wind out of many equipment-dream sails, but they’re critical to making a smart purchase. Plus, after going through these you may feel more confident that you are making the right choice with your purchase.
When it comes to smart money management, there’s always a lot of talk about raising your “financial IQ” and that’s an important component. But your money consciousness is equally important and you don’t need any special courses to increase that – you just need to commit to thinking about your money more often. Think about where it goes and what you want it to do and you’ll find – simply through increased awareness – that you’re making smarter, better choices with your money.