A wake is what’s left behind. Boats leave a wake in the water. People leave emotional wakes behind them. The choices we make with our money also leaves a wake.
Think about it like this: You’re going out for dinner tonight and you’ve narrowed your choices down to a local mom and pop, or a large national chain. Should you opt for the chain, and do so repeatedly, your financial wake could eventually put the mom and pop out of business.
Every time we allocate our money, we’re casting a vote for one thing over another. There’s a big opportunity to be more thoughtful with our money, and to align our use of it with what’s most important to us.
I’ve been thinking about money and personal finance daily for 20+ years as a financial advisor. More recently, I’ve come to understand the value of local businesses and the impact each of us can have on them. It’s a privilege to be able to think about and make the decision to shop local whenever possible, and one I proudly make as often as I can.
My goal here is to share some thoughts and ideas on how you can be more thoughtful with your money. The reality is, you’re having a meaningful impact- let’s make sure it’s the impact you want to have.
Here’s what we’ll cover:
- Your current defaults
- What’s possible
- Your desired impact
- Making incremental changes
Let’s get started.
Your current defaults
Anytime you’re thinking about making a change, you need to start with knowing where you’re currently at. We all have patterns and habits we follow. You’ve probably got favorites in almost every aspect of life. Maybe you’re in the habit of stopping for a coffee in the morning, or going to the same pizzeria every Saturday. Whatever aspect of life we’re talking about, you have preferences.
Some preferences we’re keenly aware of. Others, we’re simply on auto-pilot.
To know how you’re allocating your dollars, you’ll need to audit your cash flow. Open every account you use to spend and invest money, and track each transaction. This will tell you where and to whom your money is going.
But what’s possible?
What’s possible? What impact can you really have? In many ways, this is one the most important questions you can ask yourself.
When we watch the news, or go online, we’re inundated with the world’s problems. We see minor injustices and existential problems alike. It’s never ending. A compassionate person looks at a problem and wonders how they can help to solve it. But for many big problems, our contribution feels insignificant.
But here’s the thing: all we can do is exercise control over what we can control. As Jack Kornfield eloquently said, “Tend to the part of the garden you can touch.”
Recycling your dollars
When you allocate your dollars in places aligned with your values, you’re recycling instead of spending. This is a powerful way for you to make an impact. As Gandhi said, “Be the change you want to see in the world.” This is a simple way for you to make that happen.
I’m going to highlight three common areas you can make changes.
To be more thoughtful with your lifestyle spending, think about spending locally instead of nationally. If you’re living in a city, you’ve got a ton of choices for eating out, entertainment, and personal care. Is it possible for you to do business with local businesses?
Doing so can be better for the environment by lowering the carbon footprint. You’ll be investing in your community. There’s also a greater potential for sustainably sourced local materials. And at the end of the day, if you want local businesses to stay open, you’ll need to invest in them.
To be more thoughtful with your savings, become a customer of a local bank. There are a lot of benefits to banking locally. According to research, you’ll pay lower fees, get more personalized attention, enjoy higher quality service and higher ethical standards. Changing banks is a short-term hassle, but it will pay long-term dividends.
While imperfect, ESG investing is a step in the right direction if being more thoughtful with your money is desirable. Companies like Morningstar have developed screeners that can help you select for certain priorities within a mutual fund, ETF or stock.
Worried about toxins and pollution, stop investing in companies harming the environment. Wish you could help improve education, start investing in like-minded companies. Like changing banks, this will take some up-front work, but will have a lasting impact.
Your desired impact
The more clarity we can get around what’s important to us, the better. I don’t think there’s ever been a more important time to think about what you stand for, and what you stand against. This is also a time that demands critical thinking and independent thought.
Values become the lenses through which we see the world. They help inform how we allocate our most valuable resources of time, attention, and money. A conversation about being thoughtful with money demands thinking about values.
I was raised with traditional values, as I am sure you were as well. But when was the last time you thought about your personal values? For me, it took until my mid 30s.
If you’re like me, you may benefit from a framework for thinking about your values and priorities. In service of that, you can access our Values course for free.
Making incremental changes
Like any meaningful change, it will take time. The trick is to shift your habits and patterns. If it’s your goal to lose weight, you make changes to your nutrition and fitness. This requires overall lifestyle changes.
Becoming more thoughtful with money is the same. You figure out what changes you want to make, look at where you’re at, and put plans in place for making it happen.
When anyone endeavors to become more thoughtful, I’m grateful. So, thank you for wanting to become more thoughtful about your money. I hope I’ve provided some value and motivated some new behaviors.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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