Get An Emergency Fund
I’m sure you know how important it is to save for a rainy day. And I’m also sure that you probably haven’t. In fact, 75% of Americans don’t have enough socked away in savings to ride out a financial hit like a smaller paycheck due to a shutdown. Yeah, me neither. I’m working on it though. How do you grow that emergency fund when it seems like you spend all you have? Budget it in. Make savings a line item on your budget and find ways to cut extraneous costs then add that amount to the savings line item. Also, add any extra or “found” money to your savings account. That means tax refunds, gifts, extra paychecks (if you budget two paychecks per month you will have a couple extra if you get paid bi-weekly), money from side hustle jobs, etc. Ideally, you should have a cushion of 3-6 months of expenses saved so that if the unthinkable happens (car wreck, major illness or injury, job loss, government shutdown and lost wages) then you can pull from the emergency fund to cover those costs. Just remember: don’t touch it if it’s not an emergency and replenish whatever you take out of it.
Don’t Spend All You Make
This goes hand in hand with budgeting and having money for your emergency savings, but just because you make it doesn’t mean you have to spend it all right now. Seriously. Think about how many expenses you have to pay throughout the year, or want to pay for (like a vacation), that are not regular monthly budget line items. Having a little extra left over helps cushion your budget and covers those necessary costs (like doctor appointments and medical bills) and fun costs (like vacation and Christmas gifts). Even if you allocate all your monthly funds and have a large “Miscellaneous” line item, don’t feel like you have to spend it just because it’s there.
Live Frugally, Regardless of Your Income
Frugal living does not mean cheap, sub-standard living. On the contrary, it is making wise use of your funds regardless of how much you make. You can make $200k a year and still live frugally (ask my folks). Thinking about how you intend to make your money meet your goals and spending intentionally (ie. thoughtfully) can help you meet those goals. Wasteful, impulsive spending may feel good now but all that crap from Target that you bought over the years on a whim, then threw out or gave away, is not going to put your kids through college or allow you to travel to Italy to cross it off your bucket list.
This government shutdown is a personal financial crisis for many of us. But let’s use this as an opportunity for change rather than a cause for panic.
How are you affected by the shutdown and what are you doing to mitigate your impact?