While many Americans are speculating how a new president might influence national economic policies, the reality is that the president can only do so much to directly impact the U.S. economy or your personal finances.
Although market movers respond to uncertainty and many people make decisions based on what they think will happen as a result of a presidential election, many of the policies a president would like to implement can’t be put into place without action taken by Congress.
Your day-to-day finances are more likely to be influenced by local factors, such as your state’s minimum wage law or the sales tax your city or county levies.
You should also pay attention to the way Congress handles things like tax law and the effects the Federal Reserve’s monetary policies have on the national economy.
The good news is that there are a few things you can do to protect your finances no matter who’s in charge.
1. Reduce your debt
One of the best things you can do to protect your finances no matter what is to reduce the amount of money you owe to other people. When you have fewer financial obligations to others, you are far more likely to weather unexpected storms.
If Congress does enact presidential policies that impact your personal finances negatively, you have one less thing to worry about if you don’t have debt.
Remember that when you pay interest on debt, that’s money going into someone else’s pocket. So once you get rid of that debt, you can invest your money in assets that pay you interest, rather than the other way around.
Consider paying off high-interest credit card debt first and then work your way toward paying off other types of debt later.
2. Increase your savings
No matter how much you’re saving, it’s probably not enough. Think about increasing the amount you set aside so that you have something to fall back on no matter who wins the presidential election.
Build your emergency fund a bit at a time. Aim to save between six and nine months’ worth of living expenses. That way, you don’t have to turn to debt if some national economic policies result in a job loss, or if life throws you a curveball.
Don’t forget about saving for retirement as well. As your financial situation improves, make sure to increase the amount of money that goes toward your retirement account.
Costs of living are only going to get higher over time. So if you want a comfortable retirement in the future, you need to do what you can to invest in it today.
3. Manage your health
Taking care of your health is one of the best ways to protect your finances. That’s because healthcare has a huge impact on finances.
For instance, Fidelity recently released an analysis indicating that couples retiring in 2016 will need about $260,000 to cover their healthcare costs during retirement.
When you engage in unhealthy habits and develop health conditions like heart disease or Type II diabetes, you set yourself up for big costs down the road.
According to the CDC, the total of direct medical costs and indirect costs for people with diagnosed diabetes in the U.S. in 2012 was approximately $245 billion.
Poor health choices can lead to missed work (and pay), as well as costs related to seeing health care providers and increased insurance costs.
Although there’s no way to completely protect yourself against injury or cancer, you can reduce the chances that medical costs will devastate your budget if you invest in your health today.
4. Build a support system
One of the best things you can do is invest in a support system willing to help you when times get tight.
I moved to Idaho after my divorce because I knew that my parents would be a good support system for my son and me. What’s more, I had a strong network of friends and business associates who offered to help with my move and throw more work or projects my way if needed.
Invest in the people you know. This investment can pay off if you lose your job and need an introduction elsewhere.
In a lot of cases, getting a job is more about who you know than anything else. You can get the inside track on who’s hiring, and what they are looking for if you have a good network.
Your support system can also help you with things like child care, provide temporary housing or personal loans when you’re in a tight spot.
When times get tough, the people you surround yourself with can be a great help. Build a support system, and you’ll have a place to turn if your personal finances are impacted by public policy.
5. Keep learning
An investment in yourself is one of the best ways to protect your finances no matter what happens. Keep learning new skills and invest in your education and your career.
You don’t necessarily need to get another degree. But, you should stay on top of current trends in your field and even be flexible enough to develop skills outside your field. You can even develop the knowledge and skills you need to start a side hustle or your own full-blown business.
Controlling your income and creating income diversity allows you the versatility you need to adapt to most situations and protect your finances, no matter who’s our next U.S. president.
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