How Political Perspectives Change Your Money Choices

Is the United States headed in the right direction? Is it headed in as poor of a direction as many prognosticators like to say that it is?

You’re going to get as many answers to that question as there are grains of sand on a typical beach. Some people will agree completely with a certain prognosticator. Others will shout “DOOM!” from the rooftops. Still others will say, “Bah, it’s not so bad” (I tend to be in this latter group, mostly because I think fear itself reinforces and blows problems out of proportion).

Who’s right? Who knows? No one is psychic. No one can tell us what the future will bring with absolute certainty. However, we all have our opinions and we all have our own sense of where the nation is headed.

This perspective guides us in a lot of ways. It can guide us to where we get our information. It can guide us to the social groups we participate in.

Yes, it can also guide us with regards to what we do with our money.

Money Choices If You’re Negative
Here are some of the financial decisions you might make if you believe the economy is headed in a terrible direction.

Make minimum debt payments on all fixed rate debts. If you believe the dollar is going to enter a period of rapid inflation or devaluation, then you should want to delay your payments for as long as possible so you’re making your later payments with dollars that aren’t worth very much. Instead, channel those dollars into the things below.

Invest in tangible goods. Items that you can hold in your hands are always good investments during a downturn. Invest in land and in housing. Have plenty of food on hand. Improve your residence so that you’re less reliant on external services through things such as solar power, wind power, heating created by fuel you produce yourself, and so on.

Invest in international stocks and currencies. If you believe the U.S. is headed for disaster, it’s not a bad idea to buy the currencies of nations you believe will ride out this situation as well as the stocks of companies that will survive it.

Money Choices If You’re Positive
On the other hand, if you believe the economy is on solid footing, you might want to consider these things.

Pay off your debts as quickly as possible. Debts are simply money leaks. As the economy rebounds, you want to be on the firmest financial footing you can be so that you can take advantage of the abundance of work and entrepreneurial opportunities that a rebounding economy provides. The stronger your personal cash flow, the better.

Invest in yourself. Hand in hand with paying off your debts is making sure that you have all the skills you need to succeed in this growing economy. More education might be on the table, for one. Attending conferences (and actually using them) is another route to success.

Invest in domestic stocks. If the economy is heading towards a healthy rebound, stocks have nowhere to go but up. A bet on the rebound of America is a bet on the workers and the companies of America.

My Solution? Diversify!
Although some of the moves listed above are better in certain economic situations, none of them are ever a bad idea (assuming, of course, you’re not channeling your money into frivolous spending). Being self-sustaining is always good, as is having a good skill set for the marketplace. A diversity of investments is always a good idea, so consider a balance of international and domestic stocks in your retirement accounts.

You can, of course, use your political beliefs to narrow down what you do with your money, but diversification means that you’re not exposed to total failure no matter what happens.

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