And don't forget about why you set up that rainy day fund; 'nobody's panicked yet.'
On the second day of the federal government shutdown, financial advisers with clients who have been furloughed are trying to ease their concerns about cash and reminding them of their rainy-day funds.
“Nobody's panicked yet,” said Jessica Ness, a client adviser and director of financial planning at Glassman Wealth Services. “But they are irritated and confused about why [Congress] can't reach a resolution.”
She and other advisers have been trying to soothe anxiety over the last couple of days. Federal employees and contractors make up about 30% of the McLean, Va.-based firm's client base.
One worry for clients is how much access they have to cash, as they face going without a paycheck. Ms. Ness reassures them on that point.
“The big conversation is revolving around the basics: 'This is what your rainy-day fund is for,'” Ms. Ness said. “It's what we do — hand-hold during these short-term bumps and jumps, and return their perspective to the long-term view.”
John Olson, an Annapolis, Md. financial adviser with First Command Financial Services Inc., said he hasn't heard from any clients yet, but he expects to if the furlough lasts more than a week. About 10% of his clients are federal employees and 70% are military families.
“I try to build a financial plan so that if this does happen, they can weather it for a time,” Mr. Olson said. “That includes building an emergency fund with three to six months of expenses.”
If the furloughs last two or three weeks, he will talk with those clients about where to trim spending and where they can reduce funding investments in college savings accounts, general investment accounts and then retirement accounts, in that order, he said.
First Command has pledged to continue giving direct-deposit pay loans to its military and federal employee banking clients who have been furloughed. The firm essentially would give them a zero-interest payroll advance loan that would be equal to the client's expected direct deposit.
“We are committed to doing all we can to ensure that our clients are not financially harmed by government actions — or inactions — that are beyond their control,” said Scott Spiker, chief executive of First Command.
Over the summer, First Command offered help to its federal clients who experienced Defense Department furlough days by offering loans, penalty-free early withdrawals of certificates of deposit, and secured lines of credit.
About 800,000 federal workers have been furloughed and won't be paid by the government for this missed time unless Congress agrees to make them whole, which it has done for those furloughed in the past. U.S. government employees considered “essential” are working, but they won't be issued payments for that work until after the shutdown is over.
Those in the military on active duty will continue to be paid.
