Marcia's Blog

5 lessons from the government shutdown

Unless you’ve been traveling abroad or living under a rock, you can’t help but see the gridlock that’s going on in Washington, DC, and the financial impact the government shutdown is having on hundreds of thousands of people.

Unless you’ve been traveling abroad or living under a rock, you can’t help but see the gridlock that’s going on in Washington, DC, and the financial impact the government shutdown is having on hundreds of thousands of people.

Unfortunately, many people are experiencing a sudden loss of income because they’ve been furloughed from their jobs or they depend on money from the federal government or government workers to run their businesses. If you are a homeowner caught up in the mess and you think you’ll have a problem paying your mortgage, contact your lender immediately. Many have plans in place to help you get through this temporary, yet challenging, period.

Even if you’re not directly affected, the shutdown presents an opportunity to look at your finances and take proactive steps to build and maintain your wealth. Here are five lessons the government shutdown can teach all of us, and how we can better prepare for financial setbacks in the future.

Plan for the unexpected.

No matter how stable your job may be today, circumstances can change drastically tomorrow.  A company downsizing, a natural disaster or even a personal injury could impact your ability to maintain your current income.  While it’s important to enjoy your life today, you must always have a strategy in place to deal with the uncertainties of tomorrow.

Always have an emergency fund.

Nobody expects the shutdown to last forever, but knowing that it will eventually end does nothing to help you if you don’t have any money in your bank account today. Always have some money set aside for yourself so that you have some cash on hand if your income is suddenly decreased or cut entirely. While saving three to six months’ worth of living expenses is ideal, if you’re starting from scratch, take baby steps and shoot for saving at least $1,000.

Live below your means.

The best way to ensure that you always have extra cash is to live below your means. That means if you make $1,000 a week, you only spend $900 – or even less if you can. When you live below your means, you give yourself financial breathing room while saving for emergencies, as well as other financial goals such as buying a house or saving to put your child through college.

Know how to cut expenses fast.

If times are good, you may be able to afford extra luxuries but you should always know how to trim expenses fast if times get tough. Know where your extra money is going so you’ll be able to quickly cut the cable, skip the afternoon latte or bring your lunch from home if you need to.

Cultivate multiple sources of income.

While everyone who depends on money from the federal government is experiencing some financial pressure, those who have other sources of income are feeling less of an impact. Look for new revenue streams, such as a side business, or find other creative ways to make money such as holding a garage sale or selling old books on eBay.

The key to success is information. By taking the steps to improve our financial standing today, we can better survive the setbacks – and shutdowns – of tomorrow.