Donald Trump is set to assume the role of U.S. president on January 20, 2025. His return could bring significant economic changes, including tax cuts, inflation concerns, and increased tariffs.
While his plans lack specific details and require congressional approval, the potential impact has many Americans feeling uncertain about their financial futures.
The good news? You can take steps today to protect your finances and thrive during these uncertain times. By focusing on strategic money moves, you can prepare for the unexpected and safeguard your financial well-being.
Here are three financial strategies to consider before Trump takes office.
1. Boost Your Emergency Fund
Trump’s proposed tariffs, including a 25% tariff on Mexico and Canada and up to 60% on China, could lead to rising prices. Economists widely agree that tariffs function as a tax on consumers, increasing the cost of goods.
Retaliation from trading partners could further hurt American exports, leaving consumers with higher prices and fewer financial buffers.
To prepare for potential inflation, prioritize building your emergency fund. Aim to save at least three to six months of living expenses in a high-yield savings account. This approach ensures your money is not only accessible but also earning interest to counteract inflation.
As Greg McBride, CFA and chief financial analyst at Bankrate, puts it, “Nothing helps you sleep better at night than having money tucked away for emergencies or other unplanned expenses.”
2. Maximize Your Retirement Savings
The end of the year is the perfect time to focus on retirement planning. Fund your IRA for 2024, plan contributions for 2025, and make the most of your employer-sponsored 401(k). These steps will help you build a secure financial future, especially with uncertainties surrounding Social Security.
Social Security faces a fiscal shortfall in the coming years, and without intervention, benefits may be reduced by 25% by 2033. While Trump has expressed a desire to protect Social Security, he has also supported measures that could jeopardize its stability, such as eliminating taxes on Social Security payments.
Start planning now to offset any potential reductions in benefits. With nearly half of workers uncertain about saving enough for retirement, taking control of your financial future has never been more important.
3. Shield Your Investments from Inflation
Tariffs and proposed tax cuts could lead to increased government debt and inflation. Higher inflation often results in rising interest rates, which can affect your investments.
Investing in stocks, particularly through a low-cost, broad-based index fund like the S&P 500, remains a strong strategy for long-term financial growth. Stocks allow you to maintain and grow your purchasing power over time, even during inflationary periods.
“Stocks give you the best chance of not only maintaining your buying power but growing it over time,” says McBride.
By investing in companies that can adapt to inflation and grow their profits, you’ll position your portfolio for success. Even if inflation doesn’t materialize as expected, stocks are likely to remain a solid investment choice.
Bottom Line
No matter what changes Trump’s presidency brings, preparation is key. By building an emergency fund, maximizing retirement savings, and investing wisely, you can protect your financial future. Even if the worst-case scenarios don’t occur, you’ll be better equipped to handle any challenges that arise.
Note: Every piece of content is rigorously reviewed by our team of experienced writers and editors to ensure its accuracy. Our writers use credible sources and adhere to strict fact-checking protocols to verify all claims and data before publication. If an error is identified, we promptly correct it and strive for transparency in all updates.
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.