What happens in Washington definitely doesn’t stay there. Because lawmakers' decisions (or lack thereof) can impact the economy, both nationally and globally. Think: how the US spends its money (hey, stimulus and infrastructure bills), how it collects it (hello, taxes), and how it gets along with other countries. And that can ultimately affect many facets of your own life, including your wallet.
What you need to know: Political drama is nothing new. But like so much else, it seems to have gotten worse through the pandemic. See: January 6, 2021. And the debates around a government shutdown and the debt ceiling (psst…expect those issues to stir up Congress again this year). And lately, a few (of many) sources of tension: President Joe Biden's languishing Build Back Better spending plan, Russia's threat to invade Ukraine, and trade policies with China.
Your move: Educate yourself on how political conflicts can affect your personal finances to help prepare for whatever comes next. Here’s what recent issues could mean for the way you spend, save, and invest your money.
You could hear a lot about — but never see — some big benefits. Think: paid family leave, free pre-K, and expanded health care coverage. Which are all on the chopping block as Dems have failed to agree on a social spending package. Oh, and icymi student loan forgiveness also hasn't happened. So don't count on any extra help on these fronts (at least, not anytime soon).
Your budget could get tighter. Energy prices are sometimes influenced by countries' relationships. Oil prices in 2022 are expected to be especially sensitive to issues between Russia and Ukraine (which could lead to sanctions and drive up prices), as well as nuclear issues with Iran. Imports could also get pricier with tariffs, aka special taxes on foreign-made goods. So you may need to make more room in your budget for everyday expenses.
Your portfolio could get motion sickness. What happens in Washington also impacts Wall Street. Investors often react to what the president, Federal Reserve, and other government officials have to say. And that can affect the balance of your 401(k) and other investment accounts. Even if you don't do a thing — which is exactly what you might want to do. Because your long-term money goals (not politics) should be what drive your investing strategy.
When political drama happens, be on watch for changes to your money. While you can’t change government policy or world events, you can adjust your budget to stay one step ahead.
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Skimm'd by Liz Knueven, Casey Bond, Kamaron McNair, and Stacy Rapacon,