In a few days, the United States will have a new president.
And like all former presidents, this one will significantly influence our lives and the lives of other both now and in the future.
This influence extends to your wallet. A president’s policies can affect your finances.
Let’s look at seven ways a president can impact your wallet:
1. Personal income taxes. A president’s tax policy can cause your taxes to either go up or down, leaving you with more or less net (after-tax) income to put in your bank account. These increases or decreases in personal taxes often coincide with increases or decreases in government expenditures.
2. Corporate taxes. Like personal taxes, a president’s tax policy can cause business taxes to either go up or down. Business taxes also cover government expenditures. Those for lowering business taxes argue that doing so may increase economic growth, salaries, and hiring.
3. Foreign trade. We buy from other countries all the time. And they buy from us. The president’s goal is to create trade policies that reinforce its economic interests. These policies can not only affect the rise and fall of business activity, but also the rise and fall in the prices of products you purchase.
4. Interest rates. Well, kind of. A president cannot increase or decrease interest rates. But the president does elect the person who can, the Chair of the Fed. They serve four-year terms. Most know that a change in interest rates by the Federal Reserve can impact mortgage rates and CD (certificate of deposit) rates. But the economic consequences go far beyond that.
5. Healthcare. Healthcare is costly. And all presidents want to see the cost of healthcare decreased. However, the way in which they believe this can be accomplished differs.
6. Minimum wage. This is the lowest, hourly amount you can pay a person for their work. Some presidents have raised the minimum wage in hopes bettering the life of lower income earners. Some presidents don’t raise the minimum wage out of the concern for the financial pressure it puts on businesses that must make hiring and pricing decisions based on the minimum wage. Economists often argue that increasing the minimum wage increases cost of living and doesn’t positively impact low income families as much as hoped.
7. Social Security. There are a lot of questions surrounding the future of Social Security. Right now, it affects you in one of two ways—you are either paying into it or receiving it. Recently, presidents have taken either one of two stances—keep the benefit as is or reduce it for future recipients.
Steward your money well by learning about how a president’s policies can create needed adjustments in your budget.
And, of course, let’s hope that the impact on our wallet and the wallet of others is for the better and not the worse.