Furloughs for Redstone Arsenal Employees, among others, make personal finances particularly important right now.
Until the members of Congress can get some sort of plan out the door, you’re going to have to plan your funds cautiously.
Raymond James Financial Services Branch Manager Shari Burnum looks over finances day in and day out.
She says furloughed employees should not reach straight for emergency funds, “We really don’t mind people at all touching other investments other than your emergency fund.”
Let’s say this situation in Washington DC gets more serious. You may look toward invested funds to get you out of trouble.
Burnum advises, “It’s a good time to take profits and perhaps position yourself a little bit better, if you’re looking at a longer term income draw situation, versus just a few weeks.”
In the face of chaos, the most important thing for you is not to lose your cool and ruin your long-term plans.
Burnum notes, “If you are contributing to a 401k in those times where you are working and you’re getting a match, don’t give that up. However, maybe you were putting 15-percent in the plan, your match is only 5-percent, you could take that excess 10-percent and put it in a more liquid, touchable, conservative investment that might could be a fallback account in the event this is a recurring problem.”
If you can, try to get by without blowing your emergency funds, which should be saved for circumstances where there’s no other way, like unemployment.
Of course, ideally, you could plan ahead with this kind of instability, and with government cuts and shutdowns becoming more common, that might be a sound strategy.
Here’s some wisdom to keep your funds flexible, when the government’s are not.
Burnum says, “Accumulating your emergency funds should be your first priority in savings, period, because you always want to protect before you grow.”
Basically, do the opposite of the government, put money aside for savings first.
Burnum elaborates, “Most of your financial planning books would talk to you about three to six months worth of expenses, if you’re on the conservative side, usually a year’s worth.”
But when planning your budget, you’ve got one problem that they never worry about in Washington.
According to Burnum, “When you’re really looking at protection strategies, you want to make sure that you’ve got an adequate emergency reserves. Once you get over about three to six months worth of expenses, particularly today with banks not paying a whole lot, accumulating money in a more medium term account is usually a wise thing to do.”
So when it comes to planning your finances for troubled times, blaze your own path, and ignore bad examples.