People often change their spending habits at key moments, such as near the end of the year and during U.S. presidential election years. With the election only a couple of months away, you may be wondering what kind of an impact it will have on your spending — and not just for this year but beyond.
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While it’s too soon to say for sure what will happen based on the outcome of the election, these are some possible ways your frivolous spending habits could change if Donald Trump is elected president.
Also see why you must speak to a financial advisor to boost your savings this year.
More — or Less — Spending on Luxury Goods
Purchasing luxury goods has often been seen as a frivolous spending habit, admittedly one some people can easily afford. If you’re someone who likes to buy luxury items, it’s a 50/50 split between whether you’ll spend more or less in this area.
“Trump’s policies have often been perceived as favorable to higher-income individuals, which might lead to more spending in affluent circles,” said Dennis Shirshikov, adjunct professor of economics at City University of New York and head of growth at GoSummer.
For high-net-worth individuals, there could be more luxury spending as Trump’s proposed tax policies and regulations could benefit them. On the other hand, those with moderate or lower incomes might cut back on luxury spending.
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Less Big-Ticket Spending
It’s possible for something to be considered expensive without being a luxury item. This includes real estate and certain vehicles. These items aren’t exactly frivolous, excepting in cases where someone opts for extras — like higher-end appliances or add-ons for a car.
As of July 2024, the average cost of a home was $514,800, according to the U.S. Census Bureau. Meanwhile, the average cost of a new car was $48,401 in July, according to Kelley Blue Book.
Shirshikov predicted that consumers will spend less money on big-ticket items like these if Trump is elected — though this could potentially occur regardless of the election’s outcome. His reasons for this are primarily due to uncertainties surrounding potential changes in tax, trade policies and regulations that could impact the economy.
“Someone considering purchasing a new car or home might delay their decision, waiting to see how the market responds to the election results,” Shirshikov said.
Much of the decision to delay also could be due to concerns about general or personal economic instability. Housing interest rates are still high right now, though there’s talk of them taking a dip in the coming months. Anyone who might need to get financing for a home may want to consider waiting regardless of the election results, just in case of these changes.
Rise in Metal Investments
In times of economic uncertainty, some people might view precious metals as a frivolous purchase. Others view them as smart investments. Either way, a Trump presidency could have an impact here as well.
“Historically, during periods of political uncertainty or when investors anticipate inflationary policies, there’s a tendency to move money into tangible assets that are perceived as more stable,” Shirshikov said.
This is largely because these options are considered “safe-haven assets” that can combat inflation. When invested in strategically, they’re also a good way of diversifying an investment portfolio.
Potentially Fewer Elective Services
Another area that could be affected is everyday spending on elective services and goods, particularly in the areas of healthcare, education and energy. Shirshikov pointed out that these types of industries can experience major changes due to new policies, which Trump could recommend or support.
Given this, some people might want to temporarily stop spending in these areas — at least on the nonessentials — until they know how Trump’s presidency will impact them.
As an example, Shirshikov said uncertainty over healthcare policies could cause people to postpone elective medical procedures. As for education, they might switch to cheaper colleges or other alternatives in an effort to be more budget conscious.
On the other hand, those who are interested in purchasing, say, an electric vehicle — considered frivolous by some — might want to do that while there are still tax credits. Right now, there’s an EV tax credit on new and used vehicles of up to $7,500. This credit is in place until Dec. 31, 2032, so there’s still time to take advantage of it if you’re in the market for an EV.
Prioritizing Local and Domestic Goods
Trump has long been an advocate of local and domestic production. In his 2024 presidential campaign, he has proposed a worldwide 10% tariff and a 60% tariff on goods from China. This essentially would hike up the price of imported goods.
If you’re someone who tends to do a lot of online overseas shopping, you may need to cut back on spending if Trump is reelected and these tariff hikes do occur. Or you just might want to be prepared to spend more.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: 5 Ways Your Spending Habits Could Change If Trump Wins the Election
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