How to Get Through And Recover From The Financial Impact of a Government Shutdown

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Financial impact of a government shutdown

A government shutdown can have a devastating impact on your finances, especially if you are not prepared. That being said, there are ways to weather the storm, get past this difficult period and get back on your feet. One thing to keep in mind though, is that a government shutdown is not the only time your finances can be impacted.

You can feel some serious squeeze on your finances during a recession, a job loss or even as a result of a serious illness. These tips will help you recover from and stay prepared for whatever financial storm life might bring.

Recovering from a government shutdown, recession or job loss

If you’ve found yourself in a difficult situation as a result of the government shutdown, here are a few things you can do to help you get through it:

1. Contact your creditors and service providers to request a grace period

Having to call creditors and service providers is no fun at all. However, it’s important that you communicate your current financial situation with them as soon as possible. Specifically with a government shutdown, many creditors and service providers are offering concessions and support to their customers. The big caveat here is that you have to reach out to them first to let them know. Not communicating your situation can make your current financial situation worse if you start getting charged late fees, additional interest, and other fees and penalties.

2. Dip into your savings

Got savings that you’ve put aside? Now is the time to dip into those bank accounts before you start looking at other options. But if it’s at all possible, avoid dipping into your retirement savings accounts. You’ll be charged income tax and an early withdrawal penalty. Considering a loan from your retirement plan? Yes, you’ll be paying yourself back, but there’s also the lost opportunity cost to consider—specifically lost compound interest and investment growth. Be sure to exhaust all other possible options before you consider tapping into your retirement savings accounts.

3. No savings? Leverage debt…strategically

If you have no savings or you have depleted your savings, taking on debt might be your only option. However, just because you are taking on debt to support yourself temporarily does not mean that your finances are a lost cause. One important thing to keep in mind is that you don’t want to take on more debt than you actually need. This means you’ll want to map out exactly how much you need to get by over the short-term, focusing strictly on your needs, not your wants or “nice to haves.” Knowing what this baseline amount is will help you minimize the amount of debt you take on.

Next, you’ll want to start documenting exactly what debt you are taking on, from whom and at what interest rate. Create a priority list and debt repayment plan of what to pay back first, structuring your plan in such a way that you pay back everything you borrow during this time as quickly as possible once your income starts to come in again. Here are some debt pay off tips when that time comes.

4. Look for part-time work or a new full-time job

Being in a difficult financial situation is not the time to sit around feeling sorry for yourself or complaining about things you can’t control. Start looking for alternative income sources in the form of a part-time job. Even if it means working at a job where you are over-qualified, some income is better than no income.

If you’ve been considering changing careers or switching jobs, now is a great time to update your resume and cover letter and start applying. Set a goal every day to research and apply to as many jobs as possible.

Tip: If you get a part-time job, it’s a good idea to keep it even after you go back to your full time job. The extra income can help speed up how soon you are able catch up if you’ve fallen behind financially.

5. Make some extra cash from the things you own

Got things in your home you don’t need? Consider selling those things to bring in some extra cash to help you pay your bills. For instance, gently used or new clothing, appliances, electronics, etc. Facebook Marketplace, eBay, Poshmark, your local consignment stores, and friends or family are great places to start. Be sure to price your items competitively so you can get them out the door and get cash in the door as quickly as possible.

How to ensure you are not impacted by a future government shutdown, recession or job loss

Once you get back on your feet, it’s important to establish a fall-back plan for yourself. This plan will buffer you in the event of a future government shutdown, a recession or life situation and minimize the negative impact on your finances. Here’s what to do:

1. Start building your emergency savings

You’ve probably heard the rule of thumb for emergency savings is 3 to 6 months of your basic living expenses. However, given your experience with the unpredictability of a situation like a government shutdown, getting your emergency savings up to 12 months of your basic living expenses is a great idea. This will give you a good amount of time to get by, and even find a new job in the event of a financially difficult situation that happens over an extended period of time.

2. Create additional streams of income

When you have multiple streams of income coming in, you are less devasted by the loss of one stream. Depending on the income stream you pursue, it can take some time and effort, to become viable, but it’s 100% worth it if you can make it work. Some ideas to create multiple income streams include some of the things already mentioned above like getting a part-time job and selling things you don’t use. Other streams could include starting a side-hustle, passive income from rental property, portfolio income and more. Here’s a full break down on different ideas to create multiple streams of income.


Situations like government shutdowns can be financially devastating but with a committed plan and strategy, you can get through it, recover and ensure you are well prepared if and when this occurs again in the future.

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