The Government Shutdown and Personal Finance
While political differences in our nation’s capital caused the longest government shutdown in history, it unearthed a problem that unfortunately is all too common: a lack of financial literacy. You see, when the government shutdown began it meant that government employees would be furloughed until an agreement was reached. As individuals were furloughed so was their income.
You can picture this with the analogy of people being exposed once the high tide recedes, and the exposure is the lack of financial wellbeing. Now I certainly understand there are circumstances that result in financial distress and I’m not ignoring that, but the truth is many individuals are unprepared for any sort of financial emergency.
Certainly, the perfect solution is to begin teaching personal finance at an early age and show people the truths behind debt, saving, retirement, and budgeting. However, we live in a world where banks and firms want people less educated because those shortfalls are exploited for profit.
That being said, this article will give you a few actionable ideas as you continue and hopefully better your financial well being.
The first actionable tip is ensuring you have an emergency fund in place. This should cover at the bare minimum a month worth of expenses. In the event an emergency occurs or you’re laid off from your job, you have enough time to execute your backup plan and get back on your feet.
With the latest government shutdown, it was clearly evident that many were without an emergency fund, resulting in financial distress.
Next is to begin eliminating your debt as quickly as possible. Imagine instead of paying $250 a month towards debt, you save and invest that money. You’ll quickly realize that debt is a cash flow killer and will hinder your financial growth.
Start with utilizing the debt snowball or debt avalanche, focusing on one debt at a time. As you begin eliminating debt, you’ll feel the stresses lifting off your mind.
Finally, ensure you have a proper budget in place. Having a budget in place not only gives your money a purpose but also gives you permission to spend. It’s easy to fall into the trap of going through a drive-through or purchasing a soda when really that money should be allocated to more useful ventures.
While these recent events can be stressful for some, ensuring you have the proper contingency plan in place will help you mitigate future risk. Take this recent government shutdown and turn it into an example of how you can better prepare for the future.