With the New Year in sight, many of us start looking ahead to 2015, setting our priorities, goals, and intentions. But maybe this year, instead of making some of the same old promises to yourself (this writer confesses to ritually vowing to be more organized with paperwork, bills, and properly archiving the hundreds of pages of kid artwork that come into our home), you can set your sights on some vital and easy-to-take steps to clean up and green-up your finances.
Make 2015 the year that you make important (and easy!) changes that will move your money into alignment with your values, and you can go through the year knowing that your New Year’s resolution isn’t just good for you, but for the whole world. Here are four ideas to get you started in 2015.
WHAT? Make your New Year’s resolution to improve the health of your finances.
WHY? The new year is an ideal time to take stock of your financial health—and make improvements to ensure you save as much as possible for your future..
WOW! It’s also a great time to ensure your money is working for you and for a better world.
1. Save More for Your Future
Start paying yourself first, if you haven’t yet taken this step, by regularly setting aside as much as you can for retirement.
“One smart and concrete resolution is to commit to putting a certain amount of your paycheck into retirement every month,” says Bob Dreizler, a Chartered Financial Consultant® in Sacramento.
If you are putting even a little away each month, that savings will build over time and help create a more secure future for you and your family.
It’s always a good idea to contribute the maximum amount you can to your retirement accounts. If your workplace offers free matching funds if you contribute to an employer-sponsored retirement account, make sure you meet the requirements to take advantage of it—it’s free money!
The New Year is also a time to make sure that the women in your family, in particular, are saving appropriately. Cindy Hounsell of the Women’s Institute for A Secure Retirement (WISER) points out that women tend to under-save for their retirement.
“Because women tend to live longer, they need to have more retirement savings,” says Hounsell. “This is compounded by the fact that women often make less than men, so they have to save more while making less.”
If you’re a woman, don’t delay in securing your future. And remember, as Hounsell points out, “One of the gifts you can give your family is to take care of yourself through savings and retirement.”
In addition, January is a perfect month to consider moving more of your money into green retirement accounts.
“For people who want to become more involved in mission-aligned green investing, the best place to start is often to find out what kinds of investments are inside the mutual funds in the retirement plans they participate in,” says Dreizler.
He recommends visiting the websites of your retirement accounts—your employer-sponsored 401(k) or 403(b), as well as your IRAs and other individual retirement accounts. Dig down to find out the top ten stock holdings in the mutual funds that make up those accounts—and then go online to research if the companies mesh with your values.
Keeping your retirement savings in a socially responsible retirement vehicles is a great way to build your savings while putting your investments dollars towards a better world. Many socially responsible investment companies, like Calvert Investments, Portfolio 21, Green Century Funds, and others, have both Roth and traditional IRA funds available.
Advanced step: If you have a 401(k) or 403(b) through your employer, ask your benefits manager about socially responsible options. If one isn’t currently available, distribute a copy of Green America’s free guide, “Planning For a Better Future,” which helps employers discover how to offer socially and environmentally friendly retirement options through work plans.
2. Break Up With Your Mega-Bank
You’ve heard us say it before, but if you haven’t already, it really is time to break up with your mega-bank and switch to a community development bank or credit union that will keep your money in your community and funding projects you can be proud of. Need a reminder of why breaking away from your mega-bank should be a priority for 2015?
- Mega-banks JP Morgan Chase, Citi, and Bank of America have led the way for banks financing climate-changing coal since 2005, according to BankTrack.org, which tracks the operations and investments of commercial banks.
- A 2012 report from the Centre for Research on Globalization found that banks Goldman Sachs, JP Morgan Chase, Citigroup, UBS, Deutsche Bank, HSBC Bank, and others are making heavy investments to buy up access to water worldwide, including purchasing thousands of acres of land with aquifers, lakes, water rights, water utilities, and shares in water engineering and technology companies all over the world.
- Despite continued evidence that small businesses are essential drivers of the American economy, the New Rules Project reported in 2010 that the 20 biggest banks “devote only 18 percent of their commercial loan portfolios to small business.”
The list goes on, and you can read more reasons a break-up is necessary at Green America’s breakupwithyour megabank.org. By following a few steps to switch your accounts to a community development bank or credit union, you can put your money to work funding affordable housing, small businesses, and projects that build up communities rather than break them down. Our free guide (see the resource box) can help you find a community development bank or credit union in your city. If a local bank isn’t an option, many banks make it easy to do all of your banking from a distance.
Advanced step: Don’t forget that most credit cards are also backed by a mega-bank. For help finding responsible credit cards that aren’t connected to mega-banks, see the resource box, and see p. 19 for more on the Green America Visa, offered through Beneficial State Bank.
Green America’s Investment Resources
For a list of credit cards backed by credit unions and community development banks, visit Green America’s Take Charge of Your Card campaign website. Consider the Green America Visa, which supports community development banking and Green America’s programs
Our Break Up With Your Mega-Bank campaign makes the case for breaking up with that mega-bank for good, and connects you with resources to switch to a community development bank or credit union.
Our Guide to Fossil Fuel Divestment and Clean-Energy Reinvestment digs deep into the reasons to divest from fossil fuels, and how you can reinvest your money in an economy that will help people and the planet. Access the guide for free.
Greenpages.org is the free online version of Green America’s National Green Pages®. Consult the “Financial—Advisors & Planners” category to find socially responsible investment companies and financial advisors.
Ask your employer to offer socially responsible retirement options. Green America’s free guide, Plan For a Better Future: How to Add Socially and Environmentally Responsible Retirement Options to an Employer’s Retirement Plan, can help.
3. Conquer Your Fears
If the thought of examining your finances or having conversations about money keeps you up at night, the new year is a good time to face some of your fears and develop a clear understanding of where you stand financially. If you get into the habit of doing it each year, you may be able to cut down on some of that anxiety and find joy in a new relationship with money.
“Engage!” recommends Lousville-based financial advisor Carrie VanWinkle. “Take a step towards engaging with something in your financial life that you’ve been keeping at arm’s length. Maybe it’s that quarterly investment statement that you never open. Commit to opening the envelope, Googling some terms in the statement you don’t yet understand, or asking your financial advisor for more information. By taking those small steps to engage, by the end of the year you will become more confident in that area of your financial life.”
“The new year is the perfect time to improve your overall financial responsibility,” adds Bob Dreizler. Dreizler points out that the beginning of a new year means you’ll be receiving statements from your bank, mutual funds you invest in, student loans, and more, making it a great time to assess where you stand each year.
“Use the information on these statements to do a balance sheet,” he recommends. “Write down where your assets are, the total of all your assets, and also the total of your liabilities—what you owe on your credit card, on your car loan, student loans, etc. At the end of the year, get out your balance sheet and compare it to the year before. Make sure your assets are growing and liabilities decreasing.”
Advanced step: Facing your financial fears this January 1st might also mean looking ahead to the future and making sure you have a will or estate plan in the case of your death.
“At the very least,” says VanWinkle, “Make sure that the beneficiaries on all of your accounts are up to date. This is especially important for LGBT couples in states where they can’t yet marry or for couples who choose not to marry for whatever reason.”
Unmarried couples can face specific hardships in dealing with financial matters upon the death of one partner, points out Emily Bowen, a Michigan-based financial advisor with experience working with LGBT couples.
“What is the state of your will, power of attorney, and medical power of attorney?” she asks. “Will your spouse have to deal with the uphill battle of probate—on top of losing the love of their life—because you didn’t plan well for them?”
4. Divest from Fossil Fuels and Reinvest in Clean Energy
While you’re talking with your financial advisor, ask him or her about fossil-fuel divestment. Divestment emerged as a dynamic activist strategy in the 1980s when investors sold off stocks they held in companies that supported the apartheid regime of South Africa. Today, in a bid to pressure corporate America to take action to mitigate the rapidly worsening climate crisis, socially responsible investors around the world are divesting from companies that hold reserves in fossil fuels. Burning these reserves could result in a catapult past the two-degree rise in world temperatures that scientists say will result in the most catastrophic forms of climate change.
“In the past couple of years we have seen a huge movement to divest from fossil fuels,” says Fran Teplitz, Green America’s social investing director. “University endowments, city government pension funds, religious institutions, foundations, and countless individual investors are pulling their money out of oil and gas companies with fossil fuel reserves and switching to investments in clean energy” (see p. 4).
The South African divestment movement showed the world that the stigma associated with widespread divestment campaigns have motivated companies to change their ways. With our climate getting closer to the tipping point of catastrophic changes, commit to supporting fossil-fuel divestment in 2015 and investing to support clean energy.
- Purge your own portfolio of the worst oil and gas companies. Gofossil
free.org lists the top 200 global companies with the largest fossil fuel reserves.
If, like most people, you don’t manage your own investments, ask your financial advisor to look for fossil-free funds and investments.
- Encourage your institutions to divest. University endowments, pensions funds, charitable foundations, and religious institutions have been leaders in the fossil-fuel divestment movement. Visit gofossilfree.org to find a list of ongoing campaigns pressuring endowments, cities, and other institutions to divest, and add your voice to the chorus of concerned citizens who support a cleaner economy.
To help solidify your resolution to divest and help build the US movement for a clean-energy future, take the Divestment Pledge for Individuals at
Advanced step: Consider re-investing your money in clean, green energy. One of the easiest ways to make sure your investments aren’t going toward the burning of fossil fuels is to invest through trusted socially responsible mutual funds that screen out companies who, among other things, hold fossil fuel reserves. You can also find funds that specialize in supporting green energy like solar and wind. Search greenpages.org for a socially responsible mutual fund, or to find a financial advisor who specializes in matching your investment strategies with your values.
For 2015 and Beyond
Let’s be honest—a lot of our would-be resolutions, whether it be exercising more or staying away from chocolate, don’t last all year. But when you commit to one of the resolutions above, and put time into shifting your investments or establishing a retirement account, your work for the year is done! All you have to do is move your money once, and all year long and beyond it will be at work for communities and clean energy industries who need it the most.