Zero Impact: Presidential Politics And Your Finances

What near-term impact will the presidential election results have on our personal finances? None—or almost none.

The impact of one president chosen over another is romanticized by both parties to convince us of the urgency inherent in our choice.  This is especially true in an election cycle that features the economy as its foremost issue at hand.  And while I seek not to minimize the importance of our individual votes for president, a recent and historical view provides us with the evidence necessary to conclude that the impact of our commander in chief on our personal bottom line is nominal, at best.

So if you were personally rooting for Governor Romney and fear that President Obama’s reelection spells doom for your finances in 2012, I’d like to allay those fears.  Furthermore, if you were a supporter of Obama’s and feel a certain level of financial peace post-election, I might suggest it is unfounded.

The reason presidential elections have little impact on our bottom line is two-fold: First, whatever pet projects the top dog manages to push through are typically phased-in over many years.  “Obamacare” is an excellent example of that.  Although President Obama’s legacy project has long been passed, it really won’t begin to impact our wallets (or those of our employers) in a meaningful way until 2014.  Second, it is really Congress—the House and Senate—that makes change happen that impacts our lives (for better and for worse).

Camel-Back-Breaking Straws

So the presidential election results themselves have very little impact on our personal financial plan, but the fact that the election is simply over means a great deal, especially over the next few months.  There are a few camel-back-breaking straws lingering that are expected to develop further now that the world is no longer hypnotized by our presidential election.

Europe can go back to slipping into a continental depression, a slow-bleed that alone could send the remainder of the planet back into a recession.  Many military and geo-political strategists predict a spike in the middle-east conflict du jour (most notably, the Israeli/Iranian struggle, but also further destabilization in Syria).  But the big issue that sits right on our doorstep is the ominous “fiscal cliff.”  This is not an imagined crisis.  NOT arriving at a compromise before we celebrate the end of 2012 will result in a host of personal, corporate and governmental financial time bombs going off while we’re watching football and over-eating on New Year’s Day.  (Yes, it also deserves mention that there are some bright signs peaking through the economic clouds that portend a rosier near future of growth in employment and housing, but the grimmer probability also appears to be the greater.)

What, then, can you do now that your civic duty is done?  More than you would think, especially as the haze of political punditry and spin still clouds our vision, attempting to convince us that our futures are determined by those running, winning and losing.  Yes, political self-interest and acrimony seems to have crippled the leaders we pay to govern, but WE are still—and will always be—the primary determinant of our personal financial success.  And whether you are unemployed or a multi-millionaire, effective cash flow management is still—and will always be—the leading indicator of your future prosperity.  Whether your country, state or municipality is blue or red, your income less your expenses is still your profit, and your assets minus your liabilities is still your net worth.

Now that the election is behind us, let’s control what we can, and disregard what we can’t.

State Of The…

President-Barack-Obama-State-Of-The-Union-Address-PHOTOS Did you watch President Obama’s recent State of the Union address?  What did you think?    I’m not asking whether you liked the color of his tie or enjoyed seeing Vice President Biden and newly elected Speaker of the House John Boehner try to suppress their disdain for each other on camera.  I’m curious what you thought about the speech’s content and substance.  Mine is not a political question—asking if you agreed with the President’s stances on this-or-that—but a probe to determine if you feel the topics in the speech were meaningful.    He touched on:

  • High unemployment
  • The depressed housing market
  • The sluggish economy
  • Two wars
  • The national debt
  • The sovereign debt crisis in Europe
  • North Korea’s nuclear ambitions

Few of us would argue that these are not vitally important issues, but which do you think has a bigger impact on your life—The State of THE Union or the State of YOUR Union?

Whether you acknowledge it or not, you’re an entity.  You and your spouse (if you you’re married) and your children (if you’re a parent) are certainly beholden to other entities, like cities, states and countries, but you also enjoy a great deal of sovereignty.  You decide where to live, what to eat, whom to befriend and marry, how to derive an income and how to spend it.  But interestingly, we tend to spend more time bemoaning the action and inaction of those with less of a direct influence in our lives—bosses, legislators and Presidents—than those who most directly impact our lives…US.

I seek not to minimize the importance of the State of the Union address (even though it seems more like political gymnastics these days, regardless of the party affiliation of the deliverer) and certainly not the actual state of our great country, but to elevate and affirm the most powerful leaders in our respective realms—YOU and ME.  Your entity needs you to be actively involved in the process of gauging its state, crafting its vision for the future and moving in the direction of that vision.

The first step in effectively leading the “Democratic Republic of You” is to simply be honest with yourself.  This, of course, is where we must deviate from the political analogy, because we do ourselves no good whatsoever to spin our current reality into something shapelier than it is.  Each of us is uniquely made, and we only distance ourselves further from fulfillment when we attempt to prove otherwise.

The most common way I see this play out is in the educational paths we take and the career choices we make (topics I’ll be discussing in the next couple of weeks), but I’d like to ask you to take 5 minutes to complete an exercise right now.  It’s very simple and it works wonders to help us analyze our current state.  You need only one piece of paper with a line down the middle (see the sample below).  On the left hand side, you write LIFE TAKING and on the right side you write LIFE GIVING. Those things that fill the Life Taking column are the roles (or tasks within roles) that drain you.  They’re a chore, not a labor of love.  On the Life Giving side, list the opposite—those things you can do for eight or ten hours in a day and wonder where the time has gone.  You might be tired after a long day of Life Giving activities, but you don’t feel weariness; instead, a great deal of satisfaction.

Looking over this list, you’ll be able to honestly answer whether the state of you or your family is good, or not.  The optimal end result is not to eliminate all of the things that drain you and replace them with the stuff you love, but if the majority of your roles and the duties you’ve accepted as yours are Life Taking, I encourage you to consider making some difficult decisions in an effort to improve that ratio.  That may mean saying yes to something, but it almost certainly means saying no.  Next week, I’ll share how this type of analysis can be used to give us much needed direction in our educational and vocational pursuits.

If you want to get started on listing these out for yourself, I have provided a downloadable version of exercise right here:  Download Life Taking, Life Giving – BLANK.

And if you need a little levity to warm up to this exercise, take a look at Saturday Night Live’s take on the 2010 State of the Union address.