Elections Periods and Their Impact on Financial Pressure (and Strategies to Address It)

Navigating the Financial Rollercoaster of Election Seasons

Election periods might be a high-stress time for your wallet. The prospect of a new administration and policy shifts can spark a whirlwind of speculation, leading to market instability that leaves seasoned investors on edge. Understanding the dynamics at play and devising strategies to weather this tumultuous phase is vital for safeguarding financial stability and making informed investment decisions.

Why Elections Stress Your Finances

Elections generally signify two things: the anticipation of change and the trepidation about that change. Each candidate or party proposes distinct economic policies, tax plans, and regulatory measures, prompting anxiety until clarification is provided. "The blend of the prospect of change and the uncertainty of its impact creates a blueprint for anxiety," asserts Jessica Park, Director of Financial Health at SomeCoin Bank. When it comes to foreseeing or influencing financial results for various candidates, Park suggests, "during such uncertainties, you may wonder if the shifts will negatively affect progress towards your financial goals, such as the performance of retirement savings in the markets or the value of your property or investment holdings."

Elections Affect Your Wallet How?

Elections have far-reaching effects on markets and personal finances. Park breaks down the details below:

• Retirement savings: Volatility in the stock market can influence 401(k)s and other retirement savings, causing anxiety about long-term financial security.
• Job security: Economic uncertainty can trigger hiring freezes or layoffs in certain sectors.
• Consumer confidence: Uncertainty about the future can affect spending habits and significant financial decisions, such as purchasing a home or starting a business.
• Investment decisions: The urge to make emotional investment choices based on short-term market movements or election outcomes can be compelling.

It's essential to remember that elections are regular occurrences, and markets often rise over time, regardless of the political landscape. Let's explore strategies to maintain a long-term perspective.

Strategies for Managing Election Stress

To stay centered and avoid misguided investment decisions, Park suggests these three key tactics: adhere to your strategy, diversify your portfolio, and create an emergency fund.

1. Stick to your investment strategy: A well-thought-out investment strategy serves as a guide for your financial future, aligning with your long-term objectives, risk tolerance, and overall financial situation.
2. Diversify your portfolio: Diversification, the key to smart investing, might help mitigate the impact of any single underperforming asset, spreading your investments across various asset classes, industries, and geographic regions.
3. Establish an emergency fund: This financial safety net can help you avoid liquidating your investments during a market downturn to meet unforeseen expenses.

The Takeaway

While election seasons can induce higher financial anxiety, it's crucial to remember that this is routine within the economic and political cycle. By maintaining a long-term perspective, staying diversified, and focusing on individual financial goals, investors can tackle these periods of uncertainty with greater confidence.

Avoid succumbing to impulsive investment decisions stemming from short-term market fluctuations. While it's essential to stay informed, constant exposure to election news and financial commentary can elevate anxiety levels. Set boundaries for your media consumption.

Instead, use this time as an opportunity to examine and reinforce your financial strategy, ensuring it aligns with your long-term objectives—regardless of the election outcome. And for now, focus on things you can control, such as confirming your voter registration.

Bonus Insights

• 44% of Americans report that election results have influenced their news consumption, while 38% say it has affected their purchasing decisions, and 32% report it has impacted their investments or savings[1].
• The overall economic climate, such as GDP growth, is essential for determining the stock market's direction during elections[2].
• Presidential elections can impact interest rates and inflation due to the policies and decisions made by the new administration, with the Federal Reserve playing a crucial role in setting interest rates[4].
• Markets can be volatile during election periods, leading to heightened investor apprehension and lower market activity. Both immediate market reactions following an election and sector-specific responses can impact portfolio performance[5].

[1] Xavier, M., & Kapoor, P. (2016). The Economic Impact of U.S. Presidential Elections [online]. Retrieved [date] from

[2] Deutsche Bank research. Retrieved [date] from

[4] Federal Reserve Bank of St. Louis. Retrieved [date] from

[5] MarketWatch. Retrieved [date] from