Urgent Steps to Prepare for Next Government Shutdown Now
URGENT UPDATE: As the threat of another government shutdown looms, experts urge Americans to prepare NOW. Following the recent shutdown that lasted a staggering 43 days, a significant 41% of American adults reported making financial adjustments, including cutting spending and dipping into savings, according to a recent poll by GoDaddy and HarrisX.
With the next funding vote scheduled for January 30, financial planners are emphasizing the importance of readiness. “This shutdown was a critical reminder that they can extend longer than anticipated,” warns Melissa Caro, a certified financial planner and founder of My Retirement Network.
If you were affected by the last shutdown, now is the time to implement practical strategies for future financial security. Even if you weren’t impacted directly, these financial habits are crucial for everyone. Experts recommend maintaining a savings cushion to handle unexpected costs, especially if your income could be affected by a government shutdown.
Jay Spector, a certified financial planner at EverVest Financial, advises clients to have at least six to nine months of cash readily available. “Make emergency savings a crucial line item in your budget,” Spector emphasizes, suggesting automatic transfers from paychecks to bolster your savings.
For federal employees or contractors, Caro suggests establishing a separate fund specifically for shutdowns. “This is part of your reality now,” she states. If you haven’t built a sufficient emergency fund yet, consider applying for a home equity line of credit as a backup. “It operates like a credit card, with minimal costs if unused,” notes Byrke Sestok, a financial planner from Moneco Advisors.
However, using your home as collateral comes with risks. “If you borrow against your equity, ensure you have a repayment plan,” Sestok advises. It’s also wise to keep a backup credit card for emergencies, but use it cautiously, as the interest rates can be steep.
The last shutdown taught many the importance of immediate budget adjustments. In the onset of a shutdown, many people delay changing their spending habits, thinking it will be brief. “This shutdown was an important lesson because it lasted longer than expected,” Caro reflects.
Going forward, if your income is dependent on government functions, treat any potential shutdown as a signal to cut back on non-essential expenses. “Consider suspending subscriptions, delaying debt payments, and reducing discretionary spending,” Spector recommends. This holiday season, prioritize mindful spending. “More than ever, I urge people to stick to a budget,” Caro adds.
As you prepare for potential government disruptions, ensure all necessary paperwork for services like Social Security or Medicare is submitted in advance. “Don’t wait for things to happen,” Spector warns, highlighting that processing for new applications slows during shutdowns.
Being prepared for a government shutdown is akin to preparing for any financial crisis: maintain a cash cushion, consider emergency credit options, limit unnecessary expenses, and stay on top of essential paperwork. Early preparation can make a significant difference if a shutdown extends.
As we approach the next vote on government funding, experts stress that being proactive can prevent financial strain. “If the shutdown ends quickly, you might not need your contingency plans,” Caro concludes. “But if it doesn’t, you’ll be ahead of the curve.”
Stay informed and prepared—your financial health could depend on it.
