As incredible as it seems, the automatic budget cuts did indeed go through on March 1st, leaving the government with a lot of work to do as far as reining in its spending goes. While there are many of us without government jobs going about our daily lives, assuming that we won’t be hit too hard by the changes that will be continually rolling out over the next several months, the effects of the budget cuts promise to be surprisingly far-reaching. Not only will there be government layoffs to help cover the new budgets, as well as a potential exodus of skilled government employees searching for more profitable work due to furloughs, there will also be a reduction of consumer spending as those furloughs and layoffs take full effect. This promises to affect your portfolio, particularly if you’re invested in commodities and equities. It will also affect both your taxes and, for families, the educational future of your children through college.
The IRS has stated that individuals filing won’t see any extra time tacked onto their expected date of receiving a refund, but for anyone with additional gripes or issues with taxes after tax season is over may find themselves having to wait a good deal longer than normal, as the IRS’ furloughs will begin to take effect once the big crunch is done with (http://hrld.us/14Aqrf2). If you’re anticipating any taxation troubles in your future, now is the best time to get in touch with a financial professional to have your appeals or adjustments moving through the IRS as quickly as possible. While the slowdown shouldn’t be too dramatic, it will still be significant, and if time is of the essence for your returns then don’t wait until those furloughs take effect.
For families with children, the cuts to education promise to be remarkable. Students will be finding themselves in more crowded classrooms as teachers will be cut from the government payroll en-masse, and education stipends for college students will be cut across the board, generally leading to a more expensive college education and less personalized K-12 for students at all levels. If you were banking on your child to take on a work-study program or something similar, you may have to reassess the likelihood of it, as they’ll be needing more money and have fewer opportunities to get it during their college years.
Most importantly in all of this, it’s necessary to keep an eye on what sort of trends may be shifting as a result of the government spending cuts. Alongside the slowdown of post-tax season assistance and student aid, there will be a lot of people leaving the workforce, having their wages cut, and even those on unemployment will find themselves with less financial agency than before. Get in touch with an advisor to help navigate the undoubtedly tricky waters ahead to help make sure that you and your family manage to stay afloat—even if you don’t expect yourself to be affected by the cuts, looking for ways that you may be is the most important thing you can do to ensure the viability of your finances and portfolios well into the future.