4 Personal Finance Lessons We Can Learn from the Government Shutdown


The recent government shutdown this October has lessons to teach, if you can dig in deeper for the fundamental answers.

Underneath the surface, regardless of your position, some of the main issues can affect small households as easily as an entire government.

Here are 4 lessons that the government shutdown can teach about managing finances on a much smaller scale – yours:

Don’t Fall into a Paycheck-to-Paycheck Existence

Living paycheck-to-paycheck means you don’t have anything to fall back on. This is very similar to the threatening situation the U.S. faced during the most recent government shutdown.

When you have debt, you need the resources to keep up with payments, even if something catastrophic were to happen.

[Read: 7 Signs You are Living Beyond Your Means]

If you can’t, or if it’s taking everything you’ve got, it might be time to think about focusing on debt reduction and setting something aside for the future.

Debt reduction requires concerted effort. It also usually means cutting back in areas where you’re used to spending more.

The discipline it takes to direct money to where it will serve you best has a return on investment that’s worth its weight in gold bullion.

It’s hard to put a value on peace of mind. But start reducing debt and spending less than you earn, and that stress should start melting away.

Learn to Cooperate When Sharing Money-Management Responsibility

Know what happens when two sides of the same debate can’t agree? An impasse, that’s what.

Take a cue from the government shutdown, and learn to cooperate with your spouse or anyone else with whom you share financial management duties.

CNN’s Holly Yan explains that the government shutdown happened because a budget wasn’t agreed upon, so don’t let that happen in your home.

Sure, cooperation means you’ll have to concede at least once in a while.

[Read: Yours, Mine, and Ours: Money Management Advice for Couples]

If you want a new TV, your spouse wants a new computer, but the house needs a new roof, cooperation means money will be directed in most sensible way.

You’re both on the same team, so it only makes sense to kick the ball toward the same goal.

Insurance is Important, Regardless of Where it Comes From

Avoiding the healthcare debate as much as possible, it’s still smart to have insurance. Even the healthiest people get sick now and then, and nobody can predict a broken bone or other injury.

The government shutdown proves what a hot item insurance is, so it should be at least as important for you and your family.

[Read: What NOT to Do When Choosing a Health Insurance Plan]

If your job provides health insurance, you’re ahead of the game. If not, you’ve got some planning to do.

With the Affordable Care Act, most Americans who don’t have insurance will be required to purchase a plan. That means health care costs might be a new budget item in your household.

As for other insurance, it’s rarely a bad idea to purchase life and long-term disability insurance policies. That’s just smart financial planning.

Pay Attention to the Bigger Picture

Tunnel vision can cause an accident. The same applies with your personal finances.

The government shutdown had far-reaching effects, and not paying attention to the big picture can affect your finances in a negative way.

Focus is good. It keeps you on track. But don’t forget to step back and analyze how your decisions affect your life and future.

When you pay your bills on time but overlook everyday discretionary spending, you could be missing out on building wealth.

If you only pay the minimum payment on credit cards each month, you’re paying potentially thousands more than you should over the long haul.

[Read: 27 Money Rules to Live By]

Yan also relates the debt ceiling issue to maxing out credit cards. Stop and think before you buy, and avoid excessive debt.

Mint.com might not be able to prevent another government shutdown, but it can help you avoid a personal financial crisis.

Sign up for a free account today and learn all of the ways Mint’s software can keep your budget in the black.

Mary Hiers is a personal finance writer who helps people earn more and spend less.



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