It’s been a roller coaster ride, but America finally made its decision on Tuesday, electing Donald Trump as president in a nail-biting contest that will go down as one of the most shocking election seasons in recent history. Now half the country is reeling and the other half is celebrating—but no matter who you voted for, many of us are probably thinking, “Now what?”
Well, for starters, it’s obviously too soon to know which of Trump’s policies will shake out, but here’s a reminder of what he stumped for during the campaign trail on issues that could potentially affect your money:
Taxes: Trump has said he wants to simplify the math and cut taxes across the board by streamlining the number of personal income tax brackets from the current seven to just three. For married couples filing jointly, the brackets would be: 12% for those earning less than $75,000; 25% for those earning more than $75,000 but less than $225,000; and 33% for those earning more than $225,000. (The income thresholds for single filers would be half of these amounts.)
Jobs and wages: He has moved the goal post on minimum wage, at times saying he believes states should set it, at other times saying it should be raised to $10 an hour. Trump has tried to keep the focus on tax cuts for spurring job creation and higher wages and he wants to negotiate tougher trade deals with foreign partners and impose punitive tariffs as a way to create or retain jobs for U.S. workers. He has yet to announce details on how or whether he would narrow the gender wage gap.
Healthcare: Trump has pushed for an immediate repeal of the Affordable Care Act (ACA), to be replaced with health savings accounts and free-market-based options that allow insurers to sell policies across state lines. He wants to let individuals deduct health insurance premium payments from their tax returns.
Student loans: He has said before that the government shouldn’t profit off the student loan business, but he has been short on details for his own plan. Instead, Trump says he’ll work with Congress on reforms to ensure universities are making a “good faith” effort to reduce the cost of college and student debt in exchange for federal tax breaks and tax dollars. He does not endorse any form of free tuition.
Child and dependent care: Trump has said he’ll push for six weeks paid maternity leave for new mothers via unemployment insurance (which is usually a fraction of regular wages). He wants to give individuals or families the option to open tax-advantaged dependent care savings accounts to help cover the expenses of caring for a child or adult; contributions would be capped at $2,000 a year per account. Trump has also proposed a tax deduction that would let families write off the average cost of childcare in their state for up to four children; individuals earning more than $250,000 and couples earning more than $500,000 would not be eligible. The Trump plan would allow caregivers a tax deduction of up to $5,000 per year to cover care costs for an elderly dependent and expand the Earned Income Tax Credit with a tax rebate of up to $1,200 for lower-income families, with a matching $500 contribution into a dependent care savings account.
Why It’s So Important to Be Financially Prepared
Aside from waking up to the news of a Trump presidency, you may have also awoken to headlines about the volatility that took place in the markets, even as the election results were coming in. And that might have had you panicking a bit about the state of your finances.
Yes, we know that watching all that can be unnerving. But during times of uncertainty, it’s important to “have a solid financial foundation in place so that you have the ability to weather any financial storm, political changes or changes in the economy,” says Christopher Pimpo, CFP®, a financial planner with LearnVest Planning Services. “We can’t control many outcomes in life, but we can be prepared for any outcome—and that should be the focus.”
With that in mind, here are a few key things to remember about your finances, in hopes that you can start building your foundation.
You can’t time the market.
Some people’s knee-jerk reactions to market turmoil may be to sell off in a panic; others may see it as an opportunity to go on a stock-buying spree. But while your balances may be impacted now, the goals that you’re investing for, such as retirement, are likely to be far off. “It’s crucial to not let a euphoric market lead to poor buying decisions, or a down market lead to poor selling decisions,” says Matt Shapiro, CFP®, a financial planner with LearnVest Planning Services. “Don’t let short-term market swings influence your long-term plan.”
So rather than focus on today’s volatility, consider making your decisions based on your objectives, your desired timeline and your comfort level with risk. Then periodically take a look at your asset allocation (such as once a year or whenever a major life event occurs) to make sure it still reflects your financial goals.
An emergency fund is there to be your safety net.
Emergency savings are there to cover, well, emergencies. So no matter how the market performs, if you keep a rainy day fund in a traditional savings account you’ll know you have cash on hand to help prevent you from blowing your budget in a bind. At the very least, you should aim to have one month of your take-home pay stashed away, then build to about six months. Unsure of how much is right for your situation? Read some emergency-fund guidelines here.
Your finances should be examined holistically.
A financial plan isn’t just about what’s in your checking account or “how my stocks are doing.” It’s a holistic strategy that includes things like retirement contributions, having a plan for paying down debt, building that emergency fund and knowing what types of insurance and estate planning are needed to help protect your family. And even if you have a plan in place that incorporates these things, it’s important to revisit it periodically so you can adjust for any changes that come your way, whether they are related to changes in your goals, life stage—or government policy.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.