A government shutdown can disrupt finances, delay federal benefits, and shake up the stock market. Whether you’re a federal employee, contractor, or investor, taking proactive steps can safeguard your financial stability and even position you to take advantage of market opportunities. Here’s your ultimate checklist to prepare and stay ahead during uncertain times.

1. Build a Resilient Emergency Fund

• Save for 6 months of essentials. Cover rent/mortgage, groceries, utilities, insurance, and debt payments.
• Start small but start now. Automate savings to build your safety net in the event of uncertainty.

2. Create a Lean, Shutdown-Proof Budget

• Prioritize essentials. Focus on housing, food, transportation, and healthcare.
• Cut back temporarily. Eliminate non-essentials like dining out, entertainment, and subscriptions.

3. Know Your Employment Status

• Federal employees: Determine if you’re “essential” or at risk of furlough.
• Contractors and small business owners: Anticipate payment delays or reduced federal spending.

4. Proactively Manage Debt and Payments

• Contact lenders. Many offer hardship programs or deferred payment options.
• Avoid penalties while maintaining liquidity. Make your debt payments on time, but if you can't pay more than the minimum, continue to pay minimums to preserve cash for emergencies.

5. Prepare for Delays in Benefits

• Social Security, SNAP, and housing assistance: Understand that payments may be delayed.
• Plan ahead. Stock up on essentials like non-perishable food and medications.

6. Stay Informed About Resources

• Community support: Research local food banks and utility assistance programs.
• Employer programs: Check for financial counseling or emergency funds.

Government Shutdowns and the Stock Market: What to Expect

A government shutdown creates uncertainty, which can trigger market volatility, especially as we transition to a new administration in 2025. However, historical data shows that the stock market often rebounds after a shutdown ends.

Here’s what to know:

• Short-term volatility: Stocks may dip due to political uncertainty, but losses are usually temporary. Historically, the year following an election is a positive one when it comes to stock market returns.
• Sector-specific impacts: Industries like defense and healthcare may experience sharper swings.
• Delayed economic data: Key reports from federal agencies (e.g., jobs data) may be postponed, impacting investor sentiment.

Here are the impacts some of the most notable U.S. government shutdowns on the stock market in recent years:

1995–1996 Shutdowns

Market Performance: The S&P 500 showed resilience during these shutdowns, continuing its bullish trend with minimal negative impact. (Forbes)

2013 Shutdown

Market Performance: The S&P 500 experienced minimal impact during this 16-day shutdown, with the index rising approximately 3% over the period. (Forbes)

2018–2019 Shutdown

Market Performance: Despite being the longest shutdown in U.S. history, the S&P 500 gained 10.27% during this 35-day period. (JPMorgan Chase)

Overall, historical data suggests that while government shutdowns can introduce short-term volatility, the U.S. stock market has often demonstrated resilience, frequently posting gains during these periods.

MarketWatch "A government shutdown looms. Here's how U.S. stocks performed during past closures"

How to Protect Your Portfolio During a Shutdown

• Stay calm and avoid panic-selling. Historical trends suggest shutdown-related dips are short-lived. Don't let short-term market volatility from a government shutdown  change your long-term investing plan.
• Diversify your investments. Spread risk across asset classes to weather volatility.
• Maintain liquid reserves. Keep at least 3-6 months of your expenses in a money market account for immediate liquidity needs (if you're working) and 1-2 years if you're already retired. This way you can easily cover emergencies, any unplanned major purchases during a market downturn, or have the financial flexibility and freedom to seize buying opportunities.

By following these steps, you’ll be financially prepared to handle any potential government shutdowns with confidence—and even turn market uncertainty into a strategic advantage.

Want to review your financial plan? Reach out.

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.