Financial planning is something that an increasing number of people are beginning to take seriously at younger and younger ages. You don’t need to wait until retirement is around the corner to start making better financial decisions.
Also on the rise is the number of people interested in the ethical component of financial planning and decision-making. You can be a more ethical investor, saver, and spender in many ways. With that in mind, below are 3 ways to undertake ethical financial planning today.
Invest for Impact
Personal finance and financial planning go hand in hand. Financial planning usually means ironing out an investment strategy that will help you achieve financial stability over the long run. There are many ways to go about this, but if you are trying to make ethical decision-making part of your investment strategy, then considering the social and environmental impact of your investing strategy is important.
There are impact-oriented investment advisors you can speak to, as well as impact-oriented mutual funds and even individual companies whose business model is either partially or wholly dedicated to having a positive environmental and social impact across as many stakeholder groups as possible.
Invest for Energy Efficiency
Financial planning also involves auditing your life for ways to cut costs and make better spending decisions. Analyzing your expenses and spending with ethicality in mind allows you to find ways to make improvements to your money management that have positive environmental impacts as well.
An effective way to incorporate ethical financial planning into your everyday cost management is to refit your home or business space with energy-efficient lighting, windows, toilets, washing machine, and dishwashers. The upfront costs involved in making these improvements pay for themselves over time, and some of these changes, such as lighting and windows, often provide you with tax incentives in the form of rebates and writeoffs.
Bank Ethically
Financial planning also includes considering the financial institutions, including banks, you do business with. When it comes to banking ethically for retail bankers, what this typically involves is performing more due diligence when choosing your bank. For instance, some banks are increasing the rate at which they are divesting from fossil fuels, while others are doing little or increasing the rate at which they invest. Banking ethically might also include opting for credit cards that have partnered with organizations like the WWF and others, for which a percentage of each dollar you spend on the card is donated to things like conservation.
Conclusion
Ethical financial planning does not have to mean sacrificing financial prudence or your financial well-being in order to control and hopefully improve your impact on the world around you. There are things you can do in your personal life with respect to your costs, and particularly your energy use, as well as decisions you can make when building your investment portfolio and where to keep your money. Keep the above considerations and recommendations in mind and make ethical decision-making part of your financial planning.
