15 Big Ways the Election Could Affect Your Finances

On Tuesday, Nov. 3, Americans decide who will be in charge in Washington, D.C., for the next four years. The country will not only decide if President Donald Trump serves another term but also which party controls the U.S. Senate and House of Representatives.

Since federal policymakers make all sorts of decisions that could affect your finances, it's important to understand some of the possible impacts the vote results could have on your money. Here are 15 different ways the election could potentially alter your financial situation.

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The Federal Reserve sets the federal funds rate, which is the interest rate at which banks can borrow from each other overnight. When the Fed sets rates low, lenders often pass the savings onto consumers.

The president doesn't control the Fed, but the central bank often makes changes in response to the president's policies. For example, if the Fed believes the president's policies are likely to lead to lots of growth, it might set rates higher to limit inflation.

The Fed has indicated it will keep its benchmark rate close to the foreseeable future, but it's possible the outcome of the election could change that and interest rates could rise. If you're planning to take a big loan out soon, you may want to act rather than waiting to see if that happens.

Raising the federal minimum wage to as much as $15 has long been a priority for the left. If former Vice President Joe Biden takes the highest office and the Democrats win a majority in the House and Senate, it's very likely that the minimum wage could rise.

If you're one of the millions of workers earning the minimum, this could mean more money in your pocket.

Biden has indicated he'll raise the corporate income tax rate if elected.

If he follows through with this promise, companies may pass these added taxes on to consumers. This means you could pay slightly more for many consumer goods. If prices go up, it may be more important than ever to have a good rewards card that pays you back for the type of spending you do the most.

Biden's campaign plan includes providing a "public option," which would allow more Americans to buy into government-provided health insurance like Medicare. If he's able to put this plan into fruition, you may have a new choice of insurance coverage.

Trump has also indicated he'd like to offer new healthcare options as a replacement to the Affordable Care Act. If the Republican incumbent retains the highest office, and his party keeps control of the Senate and takes the House of Representatives, it's possible your current insurance options could also change.

Both Biden and Trump have pledged to take steps to try to reduce insurance premiums for Americans.

Biden, for example, would increase the tax credits currently available under the Affordable Care Act and provide new credits to ensure no family buying insurance on the individual marketplace pays more than 8.5% of its income.

Again, any changes in this area would require action from Congress.

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Lowering prescription drug prices is also a goal for both Trump and Biden. Since there's bipartisan support for reducing the costs of prescriptions, you may very well see your drug costs go down regardless of who wins.

You may also be able to buy prescription drugs from other countries to help keep costs down, which is currently not permitted.

Biden's plan for housing includes making homeownership easier by offering advance tax credits to assist some consumers in making a down payment for a home.

With support from Congress, a President Biden could thus make it possible for more would-be homeowners to have a place of their own.

ALSO READ: First-Time Home Buyers Guide

Trump has long been in favor of providing more tax cuts to hardworking Americans. His reelection could make that happen if there is a Republican majority in Congress.

Biden has pledged not to raise taxes on Americans with incomes under $400,000, but high earners could very well owe more money to the IRS if the Democrats take the executive branch along with both chambers of Congress.

Trump recently signed an executive order deferring Social Security payroll tax collection, and he's indicated he'd like to permanently end the collection of these taxes. If he gets the support of Congress for this proposal and that happens, you could see your paychecks get 6.2% higher (or 12.4% higher if you're self-employed).

Payroll taxes are the primary source of funding for Social Security. If Trump is successful at ending payroll tax collection, Social Security could run out of money soon and benefit cuts could be on the table.

The president has indicated he'd use revenue from an alternate source to fund Social Security, but depriving the retirement benefit program of its dedicated funding stream could still make it more vulnerable to cuts.

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As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

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Data from both Movato and the California Association of Realtors revealed that home prices typically trend lower during a presidential election year, while other studies have suggested that uncertainty is the cause.

If the election is contested or if there's a change in power and Americans are uncertain what the new president's policies will be, it's possible that home prices won't continue their recent dramatic rise.

ALSO READ: Why Are Home Prices Skyrocketing?

Biden wants to transform the current unemployment insurance program into an Employment Insurance program. This would allow distressed businesses to keep workers on the payroll with help from the government.

With millions still unemployed due to the COVID-19 pandemic, added benefits for the jobless could provide much-needed financial relief if Biden takes office and Congress takes action.

Lawmakers have been fighting for months over the size of another coronavirus stimulus bill, as well as the type of relief that should be provided.

The Democrats have largely been in support of providing more stimulus money than Republicans are willing to grant. If Democrats take the presidency and get a majority in both chambers of Congress, Americans could get more financial relief.

Biden plans to change the current rules for 401(k) deductions, which allow Americans regardless of income level to deduct the contributions they make up to annual limits.

Biden would instead provide a 25% flat rate tax credit across the board. This would result in some taxpayers getting more money for contributions and others receiving less depending on their tax bracket.

In the long run, there's very little difference in how the stock market performs under presidents of either party.

However, in the short term, investors might respond to the outcome of the election, potentially causing stocks to rise or fall depending on who wins and how investors perceive their victory could affect the business climate.

Because short-term volatility is more likely in the aftermath of the election, it's more important than ever to make sure you don't have money invested you could need in the near future.

ALSO READ: What to Do With Your Savings During COVID-19

Regardless of who wins the election, you can protect your financial situation by making smart financial choices.

This means having a hefty emergency fund, shopping carefully for loans if you're considering borrowing, working on debt pay down, and living on a budget.

If you do these things, the outcome of the election shouldn't have much of an impact on your financial security at all.

Our credit card expert uses this card, and it could earn you $1,148 (seriously)
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.