Homestead Economics

A discussion about the money.

can I Make a Living Homesteading?

Economically Speaking, Homesteading for profit makes very little sense. Let's discuss our homesteads in terms of small farms. 7 percent of U.S. farms command roughly 70 percent of total farm sales. Those large farms are profitable, but “the other 93 percent of farm households have negative farm operating profits, on average, and draw most of their income from off-farm sources".[1] Fruits, vegetables, meat and dairy are all commodity items. They are produced at scale and in volume in order to be profitable. So if you imagined supporting your family selling tomatoes by the side of the road, think again.

Farming is Incredibly Time and Resource Intensive

Waking up early to feed the animals, tend the garden, till a field, sow seeds, reap hay. By the time these daily activities are over it is probably supper time. So if the output of this labor, which is unpaid, is commodity items with very low profit margin, why would anyone do this?

Stuff Happens

What viewing farming in purely economic terms doesn't take in to account is shocks to the system. While certainly not predictable, every complex system that effects us, and is therefore studied, has published statistics on the frequency of negative events. Whether this is how flood plains are measured in terms of how frequently you can expect it to flood, to how recessions on average happen every 10 years or so. It has been a while, but we can now add pandemic disease to the picture. Certainly there are other concerns in life; wars, economic collapses, large scale natural disasters. But it doesn't make much sense to spend your time or resources planning for something that only happens once every hundred generations or so. However it can be quite useful to plan for the ones we will almost certainly see repeatedly in our lifetimes.

The Anti-fragile Homestead

How can a homestead can insulate us from shocks in the system? From food prices to power outages, the more self sufficient we are, the less we are impacted by the outside world. It is unreasonable to expect to be fully self reliant. While it can be done with a dramatically lower standard of living and expectations, even the Amish have realized the need to form communities. Some division of labor is still practical. So the question becomes one of degree. What things must we be able to produce on a daily basis, vs what things must we be able to produce in an emergency? How long should we be able to go without outside help in each area; food, water, electricity, gasoline, etc.. A reasonable answer to this question provides stability.

Before rebar was added to concrete, masonry homes tended to collapse in earthquakes. This is what you can achieve with a homestead that will not be possible in a quarter acre suburban lot or downtown condo. Can you grow or preserve enough food to last a month? How about six? Can you generate your own electricity with solar to meet some of your needs (such as refrigeration and lights). And unlike the prepper notion of a basement full of food, can you continue to replenish your resources without access to outside inputs? Because ultimately this is what makes a system resiliant.

The Time Value Of Money

People often ask questions looking for a simple answer. But the answer to almost any question about how things should be done is 'it depends'. How can you afford to homestead, and gain the benefits of anti-fragility, but also more control of your own life, more time in nature, etc.? That completely depends on your circumstances. My wife and I put 20+ years each in to the corporate grind living in a city while saving enough money and building equity in a home so that one day we could retire early and build a homestead. That doesn't solve our problems long term, if we only draw down our money we will be on a fixed income and have no ability to deal with shocks. It will be very fragile. So whether you can buy a piece of land outright, or you need to work for decades in something unrelated, or you go inbetween and work on someone elses farm, lease land and eventually buy your own. Your answer will be unique. But remember the principles of anti-fragility and sustainability. Be in a situation where you can ride out shocks. A good counter example of this is taking out loans. If you have a large payment that you barely make each month, it will only take one to two months of loss of income to lose everything you have built. This is the most fragile situation you can find yourself in.

Sources Of Income

Some families will have one member full time on the homestead while their partner holds down a corporate job (which can be a good way to get healthcare as well, speaking of a fragile point in your system). Some people will try to do things that augment or supplement what they were doing. Here are a list of ideas, but it is in no way comprehensive, simply to get the creative juices flowing.

  • Full time job cerainly has lots of downsides if you are trying to maximize your time on the homestead or your independance. But is likely to be substantially more profitable and potentially come with benefits that would otherwise be a large cost.
  • Part time job by halving the hit to your time and freedom you will likely also lose any benefits a full time gig may have provided. This is likely a worse deal in a per unit of time revenue sense.
  • Selling homestead related goods if you have chickens, why not get more and sell some eggs? You probably should, but keep in mind eggs are a commodity and at low volume they may be profitable if you only count the cost of chickens and feed, but are likely a huge loss once you add in your time.
  • Selling homestead related services if you are already sawing logs to build your house, is it worth it to hire yourself out? Potentially, but you need to do some serious number crunching and don't forget time spent marketing, travel, equipment wear and tear and invoicing and collecting.
  • Selling other goods Perhaps you are good at an art or craft. These goods often don't suffer from the commodity nature of homestead related goods. However they do suffer from supply and demand pressures, so be sure to do your research and see if these are worth your time as well. If it takes you 10 hours to knit something and you sell it for $40, you just made $4 an hour, not to mention packaging and shipping costs, marketing costs and time, returns, etc..
  • Selling other services Of course this could be something in person, but to differentiate from selling homestead related services I will focus on online businesses. This is so all over the map its hard to pin down as a good idea or terrible. If you are selling based on time (directly or indirectly) make sure you do the same math as above. I am a programmer, so hiring myself out at an hourly rate is a greatly more efficient way to make money than selling eggs. However any service based business tends to be feast and famine in terms of workload, and I can't ask livestock not to eat or plants not to be harvested for a few weeks while I face a time crunch and an angry client.
  • Scalable goods and services I am creating a separate category for this because I think its worth really hammering home the differences between selling something time based whether that is one egg or one hour of your time, you are limited to how much time you have. As mentioned above, in homesteading there is never enough. This is where the parable of the golden goose comes in to play. In a perfect world you have something that takes a fixed amount of time as an input and an unrelated amount of revenue on the back end. A book is a good example. You might spend a year writing it, but it could spend a year on the best seller list and sell a million copies. Unlikely. In this day and age plenty of YouTubers are documenting their homesteading journey. The more subscribers they have the more ad revenue they make. Though they do have to keep making content for YouTube to keep rewarding them. I personally am a software developer by trade and an entreprenuer, so I have striven to create subscription based businesses that fit this model. That said, I've yet to strike it rich, so execution in this space can be much more of a gamble than previous categories.

Don't give up on the homestead itself as a source of income. It can be beneficial to diversify, but the more you can generate revenue from activities you would be doing anyway, the more you are leveraging your time and energy.

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