People are freaking out about a possible trade war between the US and China. But how do the tariffs affect my wallet? That’s the big question on everyone’s mind.
Donald Trump has long accused China of unfair trading practices. Both sides have threatened to take more action with new tariffs and hikes to existing ones. If this happens, effectively all Chinese goods imported to the US will be subject to higher tariffs.
A tariff is a tax that a government places on goods imported from another country. Once the tariffs take effect, you may see prices go up slightly on everyday items. That means you may need to keep an eye on your monthly budget so that you don’t overspend.
If you budget $100 for shopping and new tariffs go into effect you will get about 25% less credit for your dollar. So a $560 television from China could cost you $140 more—making the final price $700.
Companies will pass the price increase on to the consumer. Keeping it honest, If you’re in the market for a big item, you have options like paying more, purchase the item from a company that’s not affected by the tariff, or wait to buy your item when the tariffs lessen again.
What are some of the things that you can do to prepare for a trade war?
Boost Your Savings
Trade wars tend to create economic downturns. When prices rise, employment numbers tend to follow the same trend. Start building your cash reserves that can cover at least 6 months of living expenses. If you lose your job, the money you save now can help cover your expenses as you look for work.
Create a Budget
Finding out exactly how much you’re spending each month and cut out unnecessary items that may cover price hikes. You can do this by reviewing your bank statements, this can help you see exactly where your money is going. Some of us think we spend less than we really do, this can be eye-opening!
Ask yourself “Is it Really Worth It?”
With prices of certain goods on the rise, you should take a step back and ask yourself if the purchase is really worth it. Not sure how to do that? You can start by asking yourself if you need it or just want it.
Need: A need is something that a person must have in order to thrive. Without it, that person will suffer either physically or mentally.
Want: A want is a choice. Life will continue if a person doesn’t get what they want.