May 16, 2002

Records Indicate Increase in 2001 N.D. Farm Family Living Expenses

The average living expenditures of 314 farm families enrolled in the North Dakota Farm Business Management Education Program was $38,053 in 2001, an increase of nearly $1,200, or 3.2 percent, compared to 2000 living expenses.

This average does not include income taxes or self-employment taxes, says an agricultural economist at North Dakota State University. On average, there are 3.6 people per household in the group.

"The size of the increase for 2001 was the same as the change in the general level of prices as measured by the U.S. Consumer Price Index (CPI) which rose 3.2 percent for 2001," says Andrew Swenson, farm management specialist with the NDSU Extension Service.

The largest increase in expenditures for 2001 was for medical care and health insurance, which went from $5,360 to $6,026. Spending on household operation, supplies and upkeep was essentially unchanged in 2001. Spending on personal purchases and recreation increased about $475. Medical care and health insurance, household operation, supplies and upkeep, and personal purchases and recreation are the three largest categories of spending, each representing about 16 percent of total family living expenditures, excluding taxes.

Total food and dining-out expenditures increased 2 percent to $5,809. However, vehicle purchases and operation declined in 2001 to $4,300 after a large increase in 2000.

All other expenditure categories increased in 2001 except contributions and gifts, which was essentially unchanged at $2,073, and life insurance, which declined $110 to $1,354 in 2001.

Family living expenses are a function of inflation and, obviously, household income is an important determinant of the amount and quality of items purchased, Swenson notes.

"From 1994 through 1998, annual increases in North Dakota farm family living expenses averaged only 1.4 percent probably because of some belt-tightening in response to low net farm income," he says. "However in 1999 and 2000, farm family living expenses increased at a rate much greater than the CPI, as net farm income improved and families saw a 22 percent increase in non-farm wages. The changes in farm income over those two years may have released pent-up consumer demand of farm households."

Farm families interested in information about planning and budgeting for their living expenses can request the following publication from county offices of the NDSU Extension Service: "Farm Family Living Trends in North Dakota" (HE453), "Taking Charge of Family Finances: How Much Should We Spend" (HE440) and "Taking Charge of Family Finances: Managing Farm Family Finances" (FE452).

###

Source: Andrew Swenson, (701) 231-7379, aswenson@ndsuext.nodak.edu
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu

Click here for a printable PDF version of this graphic. (3KB b&w graph)
Click here for a printable EPS version of this graphic. (77KB b&w graph)

Graphic:

Breakdown of 2001 average family living expenses for
North Dakota farms enrolled in the North Dakota Farm
Business Management Education Program
------------------------------------------------------------
                                               Percent of
Family Living Expenses                       Total Expenses
------------------------------------------------------------
  Food                               $5,809        15
  Shelter, supplies, furnishings     $6,020        16
  Clothing                           $2,053         5
  Medical care and health insurance  $6,026        16
  Vehicle operation and purchase     $4,300        11
  Utilities                          $1,868         5
  Education                          $1,100         3
  Contributions and gifts            $2,073         5
  Personal purchase and recreation   $6,024        16
  Life insurance                     $1,354         4
  Other                              $1,426         4
------------------------------------------------------------
Total Family Living Expenses        $38,053      %100
------------------------------------------------------------
------------------------------------------------------------