6 Ways the 2024 Election Could Impact Your Wallet

“It’s the economy, stupid.” That famous line from political strategist James Carville, spoken during the 1992 presidential election, holds true today. Despite strong economic indicators—unemployment near historic lows, inflation falling from a pandemic high of 9% to 2.5%, and stock market highs—many Americans feel a growing financial strain. Recent polls show that the state of the economy remains a top concern for voters, with many households struggling with higher prices for everyday essentials like groceries and insurance.

With the 2024 election fast approaching, the economic policies proposed by the candidates—former President Donald Trump and Vice President Kamala Harris—could have a direct impact on your wallet. Here are six real ways the outcome of this election could affect your personal finances.

1. The Economy and Markets

Both Trump and Harris have different strategies for economic growth. Trump advocates for low taxes and reduced regulation, alongside the use of tariffs to protect American businesses. In contrast, Harris emphasizes relief for small businesses and middle-income earners, while proposing higher taxes on corporations and the wealthiest Americans.

While the election may cause some short-term market volatility, experts caution against making drastic investment moves based on political sentiment. Historically, the stock market has grown under both Democratic and Republican administrations, and neither candidate’s promises are guaranteed to become policy—especially with a divided Congress. Portfolio manager Naveen Malwal notes that the economy’s long-term trajectory is driven more by broader business cycles than by who occupies the White House.

Nevertheless, it’s important to stay informed about policy changes that could impact market sectors you’re invested in. Consider diversifying your portfolio and keeping a long-term perspective rather than reacting to political events.

2. Taxes

Nothing affects your income more directly than tax policy, and both candidates have differing views on this crucial issue. Trump aims to extend the 2017 Tax Cuts and Jobs Act, which is set to expire in 2025. This would keep income tax rates low, maintain the 20% top capital gains tax rate, and expand deductions for mortgage interest and state and local taxes. Trump also favors eliminating taxes on Social Security benefits.

Harris, on the other hand, has proposed tax relief for those earning under $400,000, while allowing the top income tax rate to revert to 39.6% for higher earners. She supports a wealth tax, targeting individuals with assets of over $100 million, and would raise capital gains taxes for those making more than $1 million annually. Harris also proposes eliminating the “step-up in basis” on inheritances, which could lead to higher taxes on inherited assets.

If you’re expecting changes in tax brackets or policies, now might be a good time to consult a tax professional. Strategies like Roth conversions, charitable donations, or gifting assets can help mitigate the impact of higher taxes under a Harris administration, while continuing to invest tax-efficiently could benefit you if Trump’s tax cuts remain in place.

3. Consumer Prices

While inflation has cooled significantly from its post-pandemic highs, prices for essentials like groceries and gas remain elevated. Food inflation, for example, has dropped to 1.2% annually but is still 27% higher than pre-pandemic levels. Consumers are feeling the pinch at the grocery store and at the gas pump, and the 2024 election could influence whether these prices stabilize or climb further.

Trump’s trade policies, which include tariffs on foreign goods, could drive up costs for consumers. His proposed 10% tariffs on all imports and up to 60% on Chinese goods could result in higher prices for everyday items. Harris, meanwhile, has promised to combat price gouging by penalizing corporations that overcharge consumers. However, such measures may be difficult to enforce in practice.

While neither candidate can single-handedly control global supply chains or energy markets, their policies could have ripple effects on inflation and consumer prices. Pay attention to how their trade and regulatory stances might affect your cost of living in the years ahead.

4. Housing

The housing market is another area where policy decisions can directly affect your finances. Home prices and rents have surged over the past few years, outpacing wage growth. The average price of a home in the U.S. hit $440,000 in 2024, and rents increased by 30% between 2019 and 2023.

Both Trump and Harris have outlined housing plans to address affordability, but their approaches differ. Harris has proposed a $25,000 tax credit for first-time homebuyers and aims to build 3 million new affordable housing units. This could provide a boost to young families looking to enter the housing market. However, the increased demand fueled by such a credit could drive home prices even higher, limiting the effectiveness of this policy.

Trump, on the other hand, advocates reducing regulatory costs for homebuilders and opening federal land for housing construction. While this could help increase housing supply, his immigration policies could create labor shortages in the construction industry, potentially pushing costs up.

One thing is certain: Lower interest rates, which are trending downward after peaking in 2023, will play a major role in determining housing affordability, regardless of which candidate wins.

5. Health Care

Health care costs are a perennial concern for Americans, with premiums and drug prices rising rapidly. Per-person health care spending is expected to nearly double in the next few years, further straining household budgets.

Harris has proposed expanding subsidies for state-run health care exchanges and reducing prescription drug costs for seniors through Medicare reforms. Her policies could help alleviate some of the pressure on families struggling with rising medical expenses.

Trump, on the other hand, has called for repealing the Affordable Care Act and replacing it with lower-cost catastrophic plans, which offer less comprehensive coverage. His focus is on reducing overall costs by increasing price transparency from providers and negotiating lower drug prices.

If health care is a major expense for you or your family, it’s worth paying close attention to how the candidates’ policies could influence premiums, drug prices, and coverage options.

6. Energy Costs

Energy prices remain a critical factor in household budgets, even as gasoline prices have come down from their highs during the Russia-Ukraine conflict. Trump has promised to further reduce energy costs by expanding fossil fuel production, including more drilling, fracking, and pipeline construction.

Harris, meanwhile, is focused on renewable energy, offering subsidies for electric vehicles and clean energy alternatives. She has softened her stance on fracking recently, suggesting that it could be a short-term solution to lowering energy prices.

Ultimately, energy policy under either candidate will likely be shaped by global factors, such as OPEC’s production decisions and geopolitical tensions in the Middle East. However, their stances on energy production and green technology could have long-term implications for your utility bills and transportation costs.

Final Thoughts: Prepare for Election Uncertainty

While the 2024 election could bring changes that directly impact your financial situation, it’s important to remember that elections don’t necessarily create immediate or sweeping shifts in the economy. Many factors, from Congress to global markets, will influence how policies are enacted and what effect they will have on your wallet.

Rather than reacting to campaign rhetoric, focus on building a long-term financial plan that accounts for various economic scenarios. Consult with a financial advisor to stay prepared, regardless of the election outcome, and make informed decisions that align with your financial goals.