After I pointed out that this election would likely affect personal finances, and announced that I would be looking at the economic plans offered by the presidential candidates, I received this comment in an e-mail from a reader:
With all due respect, my personal finances are not affected by what happens in Washington, but what happens in my house. My wife and I live on a budget, live below our means, are paying off all debt, are building a 6 month emergency fund, are investing in 401k. We will be financially independent regardless of who the president is. The problem and answer are not in D.C.,but in the mirror.
He makes an excellent point. We should not be relying on politicians to fix our personal finances. Indeed, if you want to find true success with your personal finances, you do need to look in the mirror and follow the basic rules of wealth building. The reader succinctly lists these items:
- Plan out your finances.
- Spend less than you earn.
- Pay off debt as fast as possible.
- Build an emergency fund.
- Save for retirement (through investing in a tax advantaged retirement fund).
These basics will help you establish financial freedom, for the most part, no matter what the government does. But that’s not to say that the government can’t affect your personal finances. Government policies do affect how much you keep of your money (taxes), as well as how much you need in terms of living in retirement (supplemented by social security).
What the government decides to do about health care can have a large impact on your personal finances. I would have nearly $5,000 extra a year if I wasn’t paying insurance premiums. Even if my taxes went up to help pay for universal health care, I would still most likely have between $1,500 and $3,000 (or more) extra per year. Leveraged in the right investments, that money could result in a rather substantial difference to my personal finances.
Energy policy can help dictate what you pay for gas, and for alternatives. This can affect your family budgetary needs, changing what you do with your personal finances as energy costs rise or fall. The list goes on.
So, no, don’t rely on the government to fix your personal finances. You should definitely look in the mirror and take responsibility for your financial independence. But it is also important to recognize that government policies do impact your personal finances, and how you vote can make a difference in how much money you have to manage.