Inflation has been a fact of life, particularly since the onset of COVID-19 in 2020. For agricultural producers, this factor consistently ranks among the top three business challenges. However, inflation is equally evident in household budgets for farm and ranch families.
Nebraska Farm Business Inc. maintains one of the nation’s most comprehensive databases on farm family living expenses and publishes an annual summary. What do the numbers in this quarter-century of data reveal about farm and ranch living expenses?
On average in 2025, annual living expenses for a farm family of 3.6 people were slightly more than $117,000. This is up from about $92,000 in 2021. Twenty years ago, the average annual family living costs were about $50,000. For historical perspective, Cornell University farm records indicate that the average family living expenses in 1967 were about $4,000!
Consider the Corvette rule
Because farm and ranch living expenses seem to follow a parallel path, I like to use the price of a new Corvette as a guideline. In 1967, a new Corvette cost between $4,500 and $4,800. Today, depending on the selected options, the price for a new Corvette runs between $120,000 and $150,000. That comparison holds up reasonably well against today’s living expense figures, particularly since multiple generations often draw income from the same farm or ranch operation.
With a Corvette-sized figure now attached to family living expenses, the next question becomes this: Which categories are driving that total?
Where does the money go?
What are the leading categories of family living expenses? The largest category is miscellaneous, or the “catch-all” category, totaling more than $17,000. It is followed by food and meals, medical expenses, and household supplies. Personal interest expense is another category becoming more noticeable as more households rely on credit cards to meet their personal living expenses.
One notable observation is that out-of-pocket medical expenses exceed health insurance premiums, based on the Nebraska data. Medical costs continue to be one of the leading causes of personal bankruptcy in the U.S.
Beyond the budget
Nonfarm capital expenditures and nonfarm real estate purchases were significant in 2025. Both categories reached their highest levels since 2016. Producers who ranked by net income in the top one-third showed nonfarm capital expenditures exceeding $80,000.
Regarding off-farm income, the average was nearly $50,000, with about 40% generated from wages and salaries. An increasing share of off-farm income is generated through other businesses, including rental income and gig work. This shift signals a broader trend taking hold across production agriculture, as farm families increasingly look beyond the farm gate to diversify household income.
Personal interest income, which is separate from the personal interest expense category noted earlier, is also becoming more significant, often reflecting higher balances in bank accounts held by the older generation.
Here are two basic rules for better budgeting:
- Estimate family living costs on a monthly basis rather than an annual basis to help with accuracy.
- Build in an additional 25% for budget busters and unexpected expenses, as unpredictable costs often arise.