Millennials: This Is What You Shouldn’t Do With Your Money Before Trump Takes Office
Written by
Choncé Maddox
Edited by
Amber Barkley
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Since President-elect Donald Trump’s reelection to become president of the U.S., the transition to the Trump administration has sparked discussions and debates, especially when it comes to economic policies and the impact on personal finances.
While the political shift may feel like a financial wildcard, especially during these times where the cost of living is high and home interest rates are through the roof, one thing is certain — staying grounded and strategic with your money is critical.
If you’re a millennial navigating this wave of change, here’s what you shouldn’t do with your money during this uncertain period, according to experts.
Want more guidance? Find out which money moves you should be making now.
Ignore Your Overall Financial Plan
Your financial plan serves as your anchor, guiding you through market volatility, economic and political changes, and everything in between. Without a clear roadmap, it’s easy to get swept away by fear or emotionally-based decisions.
“Economic or political uncertainty can cause people to get analysis paralysis, meaning they do nothing,” said Brett Bernstein, CEO and co-founder at XML Financial Group. “But millennials — and all age groups for that matter — should create a holistic financial plan, which helps [them] understand how to save, invest, allocate investments, insurance that may be needed, etc.”
If you don’t already have a plan in place, it’s the perfect time to create one. Break it down into manageable steps by:
- Establishing a budget that aligns with your current income and expenses
- Paying off high-interest debt, such as credit cards
- Setting clear, measurable savings goals, including an emergency fund that can cover at least three to six months of expenses.
Bernstein said that by maintaining or setting up a financial plan, you’ll be able to focus on long-term success, regardless of shifting political and economic circumstances.
Stop Investing
Uncertainty in markets can be intimidating — this is especially true when leadership changes bring the potential for different economic policies. But, Robert Johnson Ph.D., CFA, CAIA, CEO at Economic Index Associates, said millennials should keep investing at a steady pace, no matter what.
“The surest way to build wealth over long time horizons is to invest in a diversified portfolio of common stocks,” Johnson explained. “Someone with a long time horizon should not have exposure to money market instruments, yet many investors do, because they fear the volatility of the stock market.”
Johnson added that millennials with more time in the market should consider a strategy that involves some risk, such as balancing the ratio of stocks vs. bonds they invest in but still staying somewhat diversified.
“There is an old Wall Street adage that states, ‘You can sleep well or eat well,'” he said. “You will sleep well if you commit funds to low-risk investments, like money market funds or Treasury bills, but your investments will not grow substantially and may even have trouble keeping pace with inflation. You will eat well by consistently investing in stocks.”
Consider working with a credentialed financial advisor who is a fiduciary — someone who will prioritize your best interest at all times when making recommendations — to establish an investing plan that works for you.
Give In to Lifestyle Inflation
Whether you’ve recently gotten a raise or bonus or have been participating in emotionally-charged spending habits like doom spending, overspending is rarely ever a good idea. But it’s especially not helpful during shaky economic times. Trump will inherit a mixed U.S. economy where unemployment is hovering around 4.1% and inflation has reached about 2.9% as of December 2024.
National debt and personal student loan balances also continue to rise, though. The inauguration introduces potential changes to federal student loan policies that could impact borrowers’ repayment obligations, such as the reduction of loan forgiveness programs and the restructuring of income-driven repayment plans.
While these changes are not set in stone right now, Johnson recommended keeping your spending well below your means if possible and avoiding unnecessary lifestyle upgrades for the time being, until things pan out and more households understand what their finances will look like.
“You’re unable to improve your financial condition when you spend everything you make,” Johnson said. “Make sure you’re budgeting not simply to budget but to also include savings for flexibility and your future.”
Forget About Values-Based Spending
While spending less than you earn is important, this doesn’t mean you should stop spending on your values. Your money reflects your values — it’s how you support causes, priorities and people that matter to you. However, it’s easy to lose sight of this during economic or political changes. Or perhaps major events are something that help you hone in more closely on your values.
Johnson said when you focus your spending more on your values, it can lead to more happiness and security. Plus, you will tend to spend less in areas you don’t value, which should help balance things out.
Make Drastic Financial Changes (Especially With Investments)
It’s easy to feel uncertain about presidential changes, such as increased volatility in markets or concerns about new policies. But reacting too quickly without careful planning could unravel years of preparation and derail your long-term planning.
“During any transition period, making drastic changes is the worst thing you can do,” Bernstein said. “Specifically to millennials, they should stick with their plan, create one if they haven’t done one yet, and dig deep into trying to accomplish the goals they have set out to accomplish.”
When it comes to investing, Johnson also said millennials should focus on it being a marathon and not a sprint. He cautioned against doing things like trying to time the stock market or selling stocks without solid reasoning.
Of course, making adjustments as your priorities and plans change should be considered, but just keep in mind that worrying or making hasty financial adjustments can cause more harm than good.
It’s always best to take time to review your financial plan, goals, income and values, while also considering speaking to a financial advisor who can help you choose a solid path forward.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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