by Katie Brewer, CFP®
If you’re still managing bills and other financial matters the old-fashioned way, you could be missing an important opportunity to invest in the future of the planet. A thoughtful review of your financial life is likely to yield a wealth of strategies for nurturing a cleaner, healthier environment.
Green finances are good for the soul
Even with the best intentions, most people tend to put off changing the way they do things until tomorrow. But consider the environmental impact of continuing business as usual. The amount of wasted paper generated by bills and bank statements alone is staggering. A recent Javelin Strategy and Research report described the financial paper chain from U.S. households as being long enough to stretch around the globe more than 200 times.
Consider the potential benefit of all those households opting for electronic bill paying and banking. According to a study by Javelin Strategy & Research, “2007 Online Banking and Bill Payment,” all-green financial transactions could:
• Reduce greenhouse gases as much as the removal of 355,000 cars from the road
• Save enough energy to supply electricity to all residences in San Francisco for one year
• Eliminate enough solid waste to fill 56,000 garbage trucks
Being green is easier than you think
Given the urgent need for waste reduction, switching to paperless transactions is a pretty simple way to do a lot of good. In most cases, green financial practices provide practical benefits, too. Online financial management not only minimizes desktop clutter but also provides access to tools that promote efficient, organized money management.
• Online banking— Using electronic statements and debit cards can conserve tons of paper, and can save you loads of time and trouble. You can track your balances in real time on your bank’s website and transfer funds from your desktop. If a debit card is not your style, order checks made from recycled paper. Direct deposit not only saves paper but also cuts down on trips to the bank. It’s easy to set up with your employer, and paychecks generally clear faster.
• Electronic bill payment — You can arrange online payments with your bank or through various service providers. Bills from public utilities and mortgage and credit card companies often note the availability of this option. With bank bill pay, you enter the amounts you owe each month on your financial institution’s website. The bank then transfers funds from your account to your designated payees. The alternative setup works pretty much the same way, except you’ll make payments from the providers’ websites. Many providers also offer automated bill payment. By enabling you to schedule regular monthly payments, this option not only saves time but also helps to ensure against late fees and damaged credit ratings.
• Playing it safe — Tales of phishing scams and internet security breaches make us all concerned about the safety of online banking and bill payment. However, according to the aforementioned Javelin Strategy & Research report, most people overestimate the risk of online fraud. For instance, about 90 percent of cases of identity theft begin offline—with acquaintances or family members who steal victims’ bank statements or passwords. Nevertheless, the public’s perception of increased risk has not gone unnoticed by the financial industry. As a result, most banks and other financial institutions have installed the highest level of data protection allowed by law.
Even when the odds are in your favor, it’s important to avoid unnecessary risks. Report any unexpected changes in your account immediately. Above all, read your online financial communications carefully. Never respond to e-mails requesting your credit card numbers, computer password, or other sensitive information—regardless of how official the message may look.
Smart green investments might also benefit your financial health
The potential of environmentally responsible policies is to build shareholder confidence, reduce energy and liability costs, and capitalize on new markets continues to fuel a greener corporate world. As a result, the number of options for supporting green business practices has grown steadily. Before modifying your investment strategy, make sure you’ve done your homework.
Start by meeting with your financial advisor. Explain your primary environmental concerns as well as your financial goals. Then, discuss how to achieve the right balance between the two. By bringing together industry knowledge and an understanding of your priorities, an experienced advisor can help ensure that the investments you choose are consistent with all your objectives.
Your advisor can tell you about various investment vehicles designed to exclude companies that harm the environment and help you screen your existing investments. As you evaluate your portfolio, consider the following questions:
• Which companies are making the biggest contribution to the environment? Firms can show their commitment to the environment in a variety of ways:
o Manufacturing eco-friendly products
o Developing alternative energy sources and environmentally sound technologies
o Donating to major environmental initiatives
o Instituting energy conservation, waste reduction, and other green practices in the workplace
• Who needs to clean up their act? Identify major culprits. Send a message with your wallet to businesses that dump toxic chemicals in our waterways, poison the air with carbon emissions, and churn out solid waste like there’s no tomorrow.
• Where can I have the most influence? There may be some companies that could benefit from a little friendly persuasion. By investing in companies that don’t live up to your standards, you gain a say in their policies. You can organize with like-minded shareholders, express your views at annual meetings, and vote in proxies. Or you can choose a socially responsible investment vehicle to perform these functions for you.
Every little bit helps
A little foresight and awareness can go a long way in saving the planet. The following list highlights some additional ways to make your financial life a little bit greener:
• Go digital. Send electronic invoices, customer service inquiries, and other financial communications whenever possible. Saving financial information to PDF files to help eliminate hard copies is another great way to prevent waste.
• Think before you print. If printing a hard copy is absolutely necessary, save it and use the other side for another document.
• Keep it clean and safe. Avoid toxic waste and encourage paper mills to develop more eco-friendly practices by buying chlorine-free paper. Changing from petroleum-based inks to products with a soybean or linseed base decreases pollution.
• Stop the rising tide of credit offers and other throwaways. Opt out of credit offers online at www.optoutprescreen.com or call 888.5.OPTOUT (567.8688). Say no to junk mail at www.dmachoice.org.
Going green is a process that deserves careful and thoughtful consideration in light of your own personal objectives, and not all of the options outlined here will work for everyone. Be sure to consult your financial advisor—and your own conscience—to decide what makes the most sense for you.
Katie Brewer is a CERTIFIED FINANCIAL PLANNER TM practicing at 18170 Dallas Parkway, Ste 103, Dallas, TX 75287. She offers securities and advisory services as an investment adviser representative of Commonwealth Financial Network®, a member firm of FINRA/SIPC and a Registered Investment Adviser. Katie can be reached at 214-335-9378 or at Katie@gwadvisors.net.
© 2009 Commonwealth Financial Network®