© 2020 Thrive, LLC.
© 2020 Thrive, LLC.
Vote Smart, Save Smart: How the 2024 Presidential Election Could Reshape Millennial and Gen Z Finances
What Should Millennials and Gen Z Employees Consider during the 2024 Presidential Election? While the political and economic landscape may feel overwhelming, there are a few key financial considerations Millennials and Gen Z employees should focus on in an election year: Diversify Your Investments: Election-year volatility is almost a given. Diversifying your portfolio across different asset classes—stocks, bonds, and other investments—can help mitigate risk during periods of political uncertainty. Stay Informed About Policy Changes: Whether it’s tax reforms, changes to healthcare, or student loan relief, understanding the candidates’ economic plans can help you make informed decisions about your financial strategy. Keep an Eye on Long-Term Financial Goals: It’s easy to get caught up in the short-term noise of an election cycle. However, Millennials and Gen Z employees are uniquely positioned for Election-Year to focus on long-term goals like retirement savings, buying a home, or paying off debt. Staying committed to these goals, regardless of who wins the election, is crucial.
As the 2024 Presidential Election approaches, it’s natural for Millennials and Gen Z employees to wonder: How will the election affect my financial health? Historically, election years are known for causing volatility in financial markets. The potential shift in policies can have long-term impacts on individual finances. From market performance trends to contrasting economic plans from candidates, this blog post explores what young professionals should consider as they navigate their financial futures in an election year.
Election years are often unpredictable, and the stock market mirrors this uncertainty. Historically, the S&P 500 has shown mixed results during election years. According to data from U.S. Bank, the S&P 500 has averaged about a 6.3% return in presidential election years since 1932. However, it’s important to note that volatility increases during these year as markets react to potential policy changes and political uncertainty.
For instance, in 2020, the market saw dramatic swings during the election campaign due to uncertainties over pandemic-related economic policies. Yet, by the end of the year, the S&P 500 had gained about 16%. For Millennials and Gen Z employees, prepare for market fluctuations leading up to and following the 2024 presidential election while maintaining a long-term perspective.
Two different economic strategies are at the forefront of the 2024 presidential election. On one side, we have Donald Trump, who is running on promises of tax cuts and deregulation, policies that typically appeal to businesses and investors. His economic agenda includes continuing tax incentives for corporations and focusing on growing the U.S. economy through energy independence and manufacturing jobs.
On the other hand, Kamala Harris promotes a plan focused on income inequality, expanding social services, and boosting investments in education and healthcare. Harris has proposed increasing taxes on the wealthy and implementing a “People’s Plan” that includes student debt relief and tax incentives for lower-income earners.
These diverging plans offer clear contrasts for Millennials and Gen Z, many of whom are saddled with student loans and healthcare costs. While Trump’s policies may potentially boost job creation and stock market growth, Harris’s plan could benefit those needing relief from student debt and healthcare expenses.
While the political and economic landscape may feel overwhelming, there are a few critical financial considerations Millennials and Gen Z employees should focus on in an election year:
Every election year, employees across the country adjust their financial strategies to account for potential changes in policy and market conditions. Here are two stories highlighting how Millennials and Gen Z employees prepare for the 2024 presidential election and beyond.
Sarah, a 30-year-old marketing professional, is particularly interested in Kamala Harris’s proposed student debt relief plan. With over $40,000 in student loans, Sarah has been following Harris’s campaign closely and believes her victory could significantly reduceLong-Term her debt burden. In preparation for the election, Sarah has adjusted her budget to prioritize loan payments while maintaining her 401(k) investments, which has significantly reduced short-term. She also plans to increase her emergency savings to protect against short-term market volatility.
Mike is a 26-year-old software developer who is less concerned about short-term market fluctuations and more focused on the long game. He’s diversified his portfolio to include a mix of index funds, bonds, and cryptocurrency. While Mike recognizes that Donald Trump’s policies could potentially lead to a market standstill, he’s decided to stay neutral by focusing on low-cost index funds and automatic monthly investments. His philosophy? “No matter who wins, I’m playing the long game and keeping my eyes on retirement.”
Many employees ask whether the Federal Reserve will cut interest rates again in 2024. Historically, the Fed has played a significant role in stabilizing the economy during election years. In 2023, the Fed paused its aggressive rate hikes, but speculation remains about whether cuts will follow to stimulate economic growth.
Election outcomes can indirectly influence Federal Reserve decisions, as economic policies implemented by the new administration can create ripple effects in the economy and indirectly influence Federal Reserve decisions. For example, if inflation continues to slow and the labor market remains stable, the Fed might feel pressure to lower rates to encourage more borrowing and investment.
Lower interest rates could directly benefit Millennials and Gen Z employees by reducing the cost of borrowing for student loans, mortgages, and credit cards. However, those with savings accounts or investments tied to interest rates may see lower returns.
The 2024 Presidential Election will likely significantly impact the financial health of Millennials and Gen Z employees, but how much that impact will depend on numerous factors, including market performance, economic policies, and Federal Reserve actions. Whether you’re concerned about student debt, healthcare costs, or investment returns, staying informed and adaptable is critical to navigating election-year uncertainty.
By diversifying investments, understanding the policy differences between candidates, and keeping an eye on long-term financial goals, Millennials and Gen Z employees can make savvy financial decisions regardless of who takes office.
