Four Expense Categories


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Holistic financial planning takes a slightly different approach to several things, especially in how it allocates expenses.
 
The process begins by determining the total income that is expected to flow into the economic whole during the planning period.  Then expenses are allocated according to four categories, as described below.

Income
Begin by selecting the enterprises - existing ones you retain and new ones you add.  Calculate the total value of the sales from each enterprise, and add them all together.

It is quite likely you will have some other income as well - for instance it may be the sale of machinery that is no longer required.  Add this and all of the enterprise revenue together, and calculate your Expected Total Turnover.   Think of it as a column of money!




HINT: Many farms receive much of their income in a short burst - harvest time or wool sale time, for example.  If you are in this situation you have an ideal opportunity to really make holistic financial planning work for you, right from the start.
If you have just received much of your annual income, use the known income (what would conventionally be seen as ‘last years income’, and use that as the basis of all further calculations.  

Expenses
Planning your expenses is an important part of holistic wealth generation.  It is done somewhat differently to conventional ways, for very sound reasons.  Expenses are broken down into four main categories.

  1. Profit is the first expense.  Learn more here
  2. Wealth generation comes next. Learn more here
  3. Inescapable expenses follow on. Learn more here
  4. Maintenance expense are the last expenses allocated.  Learn more here
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