8 ethical money moves to make at any age
Think you need stacks of cash to make the world a better place? Think again.
Also amid global pandemics and a ‘code red’ warning from climate change experts, the need to take care of people and the planet has never been more necessary.
Taking individual actions with our money to support our community and protect our environment, can help to reduce our own anxiety. And when we tell others, it can also have a ripple effect.
From our retirement savings to our home loans and even where we buy our latest threads, each of us has the opportunity to make ethical money moves (no matter what life stage we’re at).
Most excitingly, making ethical money moves doesn’t necessarily have to cost you more. The 2021 Responsible Investment Benchmark Report reveals that ethical funds have outperformed their mainstream competitors across the multi-sector growth and international share strategies, in 2020; over one, three years, and five-year investment horizons.
So, if you feel ready to make 2022 the year you put your money where your values are, keep reading to discover eight practical, ethical money moves you can make at any age.
1. Check where your super is invested
Before we dive in, it’s important to remember that super is a form of investing. This means the super fund you choose (and the companies your money is supporting) can be aligned with your values in life at large.
First up, check where your super is invested (including whether you have multiple super accounts).
Next, take a look at what kind of portfolio you’re investing in and the industries you’re supporting with your money. A practical way to check this is to download your super fund’s Product Disclosure Statement (PDS) or contact your fund directly.
Tip: be careful of inaccurate marketing and “greenwashing” tactics that some super companies use to claim their funds as “ethical”, “green” or “sustainable”. It’s important to do your own research and find out exactly what companies and industries you’re investing in.
Here at Verve, we offer ethical investing with a gender lens. This means we actively avoid investing in harmful industries (such as fossil fuels, gambling, tobacco, live animal exports, and other nasties). Instead, we use positive screens to seek out companies that take action on gender diversity and inclusion. This includes having at least one woman on the board, as well as things like renewable energy, healthy food production and companies who provide small loans for women-run businesses.
Research also shows that ethical investments actually outperform traditional super funds over both the short and long term. Meaning your money can do double the good – building a better future for you as well as the planet.
2. Switch to a renewable energy provider
Did you know that electricity accounts for nearly a third of all greenhouse gas emissions in Australia? No matter whether you’re renting or own your own place, we all have the opportunity to switch to renewable energy in our home.
In a nutshell, renewable energy providers use wind, solar, hydro, and other clean energy sources to power our homes.
Plus, it’s easier to switch to a renewable provider than you might think. Simply jump on the Green Electricity Guide (an independent comparison of green power providers in Australia) to see how your provider stacks up and how to switch in just a few minutes.
3. Review who you bank with
The money that you have stashed in the bank can actually be used by the bank to fund other businesses and industries. Just like with a super fund, these companies might not align with your values or ethics.
Take this stat: research by Market Forces found that Australia’s big four banks have loaned a whopping $35.5 billion to the fossil fuel industry since 2016 (even after the Paris Climate Agreement came into force).
Whether you’ve got $5 or $500,000 in the bank, now is a great time to check if your bank’s approach aligns with your values. This also applies to any loans you’re taking out from banks or lenders to fund things like a property purchase or car loan.
You can use online resources to compare your options, such as Market Forces (which checks which banks are invested in fossil fuels) and Responsible Returns (which allows you to check whether your bank aligns with issues that are important to you).
If you do decide to switch banks, it’s important to contact your old provider and tell them why you’re moving away. No bank wants to lose your business and showing that ethics are important to you can help to spark positive change.
4. Check where your money is invested
Investing (outside of your super and savings) can be a smart way to grow your wealth and set yourself up for a secure financial future. But, you probably don’t want to be funding harmful industries along the way, right?
That’s why it’s so important to check exactly what companies and businesses you’re supporting when you’re investing. Again, look at the PDS of any investment products you’re using (whether that’s a micro-investing app, a managed fund, or individual stocks purchased through a broker).
If you’re not comfortable with the companies you’re investing in, it can be helpful to chat with a financial adviser to find out the best course of action for your situation. From there, consider ways you can put your money behind companies and industries you support instead.
5. Shop from ethical and sustainable clothing brands
Buying clothes is something we do throughout our entire lives and the brands we choose to buy from can have a big impact on the world around us.
While fast-fashion outlets generally offer cheap, on-trend pieces, they come at a hidden cost. These include things like depleting the world’s natural resources to emitting huge amounts of greenhouse gases and violating workers’ basic rights. None of which you likely want to be a part of.
Instead, it’s important to do your research and figure out what ethical clothing brands you can support within your budget. Platforms such as Good On You release annual reviews of the most and least ethical fashion brands across Australia and New Zealand. This can help you make informed choices about what retailers you support. We always recommend doing your own research and if you’re unsure about a brand’s production line, it’s worth contacting them directly. Similar to the bank scenario, telling a brand why you’re not shopping with them could spark fundamental change.
6. Ditch Buy Now, Pay Later services
Do you find yourself choosing to pay with Buy Now, Pay Later (BNPL) services at the digital or real-life checkout? If so, it could be worth considering the long-term impacts of your money moves.
A recent survey by Financial Counselling Australia found that 61% of people with BNPL debt struggle to pay for essential living expenses. The big problem with these products is that they’re unregulated and can send us into a bad debt spiral (especially if we have multiple accounts open at once).
These BNPL accounts can also impact your chances of being approved for other types of loans (such as securing a mortgage to purchase your first home). Some lenders see these accounts as ‘lines of credit’ that can lower how much you’ll be approved for by these lenders.
7. Use your money to support organisations working for good
Do you have some extra income to spare? No matter how much or little you can afford, giving back to charities and organisations doing good is a powerful money move to make in 2022.
Start by thinking about what kind of causes or organisations align with your values and decide how much you can afford to contribute (whether it’s a one-off donation or a regular contribution).
Tip: It can also be worth checking if the organisation is a registered charity as you may be able to claim these donations as tax deductions on your next tax return.
8. Start shopping locally
We’ve saved one of our favourite ethical money moves for last: shopping local. From doing our groceries at the local farmers’ market to purchasing locally-made homewares, it’s great to give back to our local community where we can, especially in instances where we’d otherwise be buying the same goods from a major retailer.
Shopping locally not only reduces the distance our food and products need to travel to reach us but you know your money is directly supporting a local, small business owner.
And that’s a wrap! When it comes to using our money ethically, all of us have the opportunity to make a difference (no matter what life stage we’re at). All it takes is a bit of research and a few proactive choices to ensure every dollar we spend is aligned with our ethics and values.
This blog is published by Verve Superannuation Pty Ltd (ABN 65 628 675 169, AFS Representative No. 001268903), which is a Corporate Authorised Representative of True Oak Investments Ltd (ABN 81 002 558 956, AFSL 238184), as the Sub-Promoter of Verve Super.
Verve Superannuation Pty Ltd and True Oak Investments Ltd are not licensed to provide personal financial advice. The information contained in this blog, including any financial guidance, is general in nature. You should consider seeking independent legal, financial, taxation or other advice to ensure that your financial decisions are suited to your unique circumstances.
You should read the Product Disclosure Statement, Additional Information Booklet, Insurance Guide, Target Market Determination and Financial Services Guide before making a decision to acquire, hold or continue to hold an interest in Verve Super. When considering financial returns, past performance is not indicative of future performance.