It’s that time again…campaign season. We’ve already seen a few GOP and Democrat debates and we’ll only hear more about the 2016 Presidential election as we move into the new year.
I’m not a political analyst and I don’t side entirely with one political party over another, so this post isn’t about politics.
Each party wants you to believe that their economic policies will help you and that’s why you should vote for them. A lot of people are still recovering from the recent recession so they’re placing a lot of hope in what these politicians are saying. Too much hope, in my opinion.
You should remember this instead: In the words of Ultimate Cheapskate Jeff Yeager, the most important economy is the one you create.
Yes, government policies can be felt at the individual level, but you can create your own economy to help shield you from any negative effects. Think taxes are too high or that they’ll only go up? Use tax deferred accounts to your benefit (e.g. 401(k) or HSA). Learn more about the tax code, particularly how capital gains are taxed vs. ordinary income. Learn about tax-loss harvesting and move taxable accounts to a company like Betterment, who takes care of that for you. Worried that new policies might cause another recession? Make sure you have an adequate emergency savings account in the event that you get laid off.
Although we vote for public office, it’s hard to feel that you really make a difference by choosing one politician over another. Instead, focus on how you can make a direct difference in your own life. You have a great amount of power over your finances, even though it may not always feel like it.
Remember, no one cares more about your finances than you. Make it a priority to create the best economy you can.