Well, they’re speculating another government shutdown may happen. If the government can’t agree on the budget before the current budget is up then a shutdown will occur. The budget must pass by September 30th since the new fiscal year for the federal government starts October 1st. If a new budget isn’t passed and the government shuts down, then this can royally screw with your budget. It can affect your money even if you’re not a federal employee.
The last few years we have seen several government shutdowns. In 2013, we had a non-functioning government for 16 days. This year in 2018, we’ve already had TWO government shutdowns. So, if they say one is coming, then a shutdown may very well be on the way. Hopefully, if there is another shutdown, it will be short like the previous two this year. However, you should prep your money just in case.
First, how does a government shutdown affect you? Well, you could be affected in a few ways.
1) No passports.
Your passport has to be issued by the federal government. If the government is shutdown, then of course that means that the department which would issue passports is closed. If you have a vacation planned, then get your passport ASAP so that your plans aren’t completely disrupted and the money spent on everything else for the trip isn’t wasted.
If you’re an entrepreneur and have an international business event or speaking engagement, then you want to make sure to get your passport early too.
2) No paycheck.
If you’re a federal employee then you will be furloughed and are likely very familiar with how that works by now. For others, furloughed means that while each employee still has a job they cannot go to work and cannot get paid. The budget is not done so they cannot pay out salaries either. Only essential employees continue to go to work.
3) No loan disbursements.
Federal loans will be paused. If you have loans from the federal government such as student loans or perhaps a business loan, then be prepared to have a delay on pending disbursements. Remember federal money cannot be disbursed. Also, if you were waiting on a loan approval or really anything else dealing with a federal loan, then expect a delay.
4) No payments.
Sales and paid invoices are the life of blood for businesses and freelancers. If you are a contractor or a business with a federal contract, then be prepared to have a delay in the payment of your invoices. Usually, the employees that would process payment are also furloughed. You’ll need to have a contingency plan as to how to continue operations when there may be an ongoing delay in payment.
Alright, so what can you do? How can you be financially prepared for a government shutdown? Here are a few ideas.
1) Postpone large purchases.
If you’re a federal employee, you may want to hold off on purchasing any large ticket items that aren’t a necessity. Your pay may be disrupted for an unspecified amount of time. You’ll want that cash available to continue operating your household.
2) Increase saving.
While you have a paycheck or two to get ahead of a government shutdown, increase the amount of money you are putting in saving. Set more money aside so you can still handle all your household bills while furloughed.
3) Determine your survival number.
Your survival number is the absolute minimum amount of money that you need in order to run your household and survive. You can get this number from a bare bones budget. There are two great budget templates in the Money Management Toolkit.
Streamline your budget even more so you can put more towards number two above aka saving. Go over every line item in your budget. Cut back as much as you can. Once the federal budget is established then you can revise your budget again.
4) Beef up your side hustle.
Once you’ve streamlined your expenses as much as possible, then focus on how to increase your income. I strongly believe everyone should have a side hustle. You can exercise entrepreneurial traits without becoming an entrepreneur.
Take the time now to focus on what you need to change or enhance in your side hustle to increase the amount of income now. Even if the government shutdown doesn’t happen, you’ll have more money for financial goals and end of the year activities.
5) Entrepreneurs get answers now.
If you’re a business owner or contractor with federal contracts, then inquire about what happens during a shutdown. Is your work considered essential and will continue? Ask about the payment of invoices. More information will help with your contingency plan if the payments of invoices will be delayed.
Here are a few things to include in your contingency plan.
- Prep other revenue streams to take up the slack now.
- Trim expenses from the business budget.
- Hold off on non-essential purchases.
Make the most of the paychecks that will be coming prior to a shutdown and the time to a shutdown so you can keep operating as close to normal as possible.