6 Reasons It’s Important To Save Money Ahead of the Election Regardless of Whether Trump or Harris Wins
Written by
G. Brian Davis
Edited by
Gary Dudak
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With the latest polls showing the two presidential candidates — Donald Trump and Kamala Harris — within a couple points of each other, the election could easily swing either way in November.
Yes, you should exercise your right to vote, and yes, feel free to enjoy some thoughtful and friendly debating with your friends and family who feel differently about politics. But don’t forget to prepare financially for an unpredictable future.
In other words, start saving now, because nobody knows exactly what’s coming down the pike. Here are six reasons to save money ahead of the election — regardless of who you think is going to win.
Buffer Against Uncertainty
“Economic uncertainty often follows elections,” said Doug Carey, CFA, founder of WealthTrace. “By building your savings now, you create a financial buffer, no matter how the next president’s policies affect the economy or financial markets.”
While you can’t count on favorable policies or a strong economy, you can put yourself in a strong position to weather any storm that comes your way.
Budget for Higher Tax Rates
Attorney Amy Loftsgordon, who serves as an editor at Nolo, noted that major tax changes are scheduled for the end of next year.
“Many provisions of the Tax Cuts and Jobs Act of 2017, such as an increase in the standard deduction and the lowering of income tax brackets, are scheduled to expire at the end of 2025,” she said. “While that might sound like a long way off, now is a good time to start preparing for potential changes to tax laws by increasing your savings in case you need to pay more in taxes.”
No matter which candidate wins, Congress would need to take action to change the sunsetting tax rules. Some rules may expire either way, other popular changes may get extended either way, and some new rules will likely enter the mix. Prepare now for changing tax rules.
Sustained High Inflation
The U.S. economy isn’t out of the inflation woods yet. In fact, some experts argue that it will take years to recover from inflation if Trump wins, while just as many see prolonged inflation under a Harris administration.
“While inflation is no longer at a 40-year high, the cost of almost everything from groceries to borrowing money remains elevated,” said Loftsgordon.
If you pick a policy proposal from either candidate, from tariffs or greater government spending to more subsidies and tax credits, you can argue that they’re all potentially inflationary.
“When inflation and rates are high, it makes sense to put money in savings, as well as pay down your existing debts, rather than spend your available money,” she added.
Prepare for Slimmer Social Security Benefits
The math just isn’t pretty on Social Security spending. Fixing it would require large benefit cuts or tax hikes — both of which are unpopular to put it mildly. That’s why neither party seems able to tackle the problem, and the House Budget Committee forecasts that Social Security will be insolvent by 2033 without any fixes.
Therefore, you just can’t count on the same Social Security benefit levels that past retirees have enjoyed. Prepare to pay for your own retirement, so you don’t find yourself broke in your golden years.
You Control Your Finances — Not the President
People love to blame presidents and other politicians for every single woe in their lives. But you are ultimately responsible for your personal finances, not whoever sits in the Oval Office.
You control your career choices, your savings rate and your investment decisions. Focus your energy on what you can control. Your future self will thank you for having more options available, because you saved and invested more money now.
The Power of Compound Interest
In general, saving and investing earlier yields exponentially greater wealth. Imagine you wait until your 50s, and you want to save up $1 million in the next 10 years for retirement. At a (generous) 10% return, you’d have to invest nearly $5,000 each month.
If you started just five years earlier, and have 15 years for your investments to compound, you can invest less than half as much each month (under $2,500) to hit that $1 million goal. And if you give yourself 20 years, you can reach $1 million by investing around $1,330 monthly — all thanks to the power of compound interest.
So start now, and by the time the next president leaves office, you’ll find yourself in a far greater position financially.
Editor’s note on election 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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