Putting my money where my mouth is

[Read my Privilege Statement]

One of my 2018 goals was to align my finances with my values. The following is less of a how-to and more of a documentation of my thought process, decisions, and experiences.

My relationship with money

During the first half of my childhood, my family did not have a lot of money. We were supported by welfare, and while I don’t remember going hungry, I do remember a lot of stress and fear associated with money.

As I approached financial independence, I promised myself that money would never be a source of stress or concern and that I would channel that energy into being financially responsible. I opened a Mint account, created a budget, and carefully checked and categorized my spending.

In the last 6 years I have been resourceful and conscious — rarely spending money on expensive clothing or items, and instead aggressively paying off my student loans, contributing to my 401k, purchasing long-term disability insurance, and always keeping a healthy amount in my bank account. I left a small discretionary budget for travel, buying healthy and sustainable food (primarily from farmers’ markets), and a modest amount of philanthropy. Two years ago I shunned the fast fashion industry and instead opted for timeless and quality pieces, and have tried to reduce unnecessary travel. I vote with my dollar and support Black & POC-owned businesses.

As a result, I’ve managed to save quite a bit! I’m really proud of that.

The problem

At the beginning of 2018, I realized that there was still quite a bit of misalignment between my money and my values, and it had to do mostly with what I wasn’t spending day-to-day.

First, the majority of my money was sitting in Wells Fargo, one of the banks complicit in the racist predatory lending that led to the financial crisis, and one that was investing my savings in weapons and fossil fuels.

Second, my money was just sitting there, accumulating for big life events further out in the future, but not really helping me or anyone now.

So, I decided to do something about it.

My steps

1. I defined my financial goals. I thought long and hard, and here’s what I came up with:

• Align my savings and investments with my values and mission
• Ensure liquidity for short, medium, and long-term life events (see timeline below)
• Move money out of my savings and into structures with higher interest rates or returns (aka grow my money)
• Experiment with investments like small business loans, certificate of deposits, purchasing shares, socially responsible funds, and less-capitalist structures
• Work with a financial advisor based in Oakland and with a proven record in supporting the local community

2. I created a timeline illustrating when I will need a good chunk of cash in the short, mid, and long-term:

• Next 2–5 years*: wedding, buying a house, birth of child(ren)
• Next 5–20 years*: raising kids, kids’ college, cushion for exploring entrepreneurial endeavors
• Next 40 years*: retirement, health, caring for parents

*Turns out… I’m pretty basic!

3. I found a fee-based financial advisor

Honestly, I found my financial advisor by searching “financial advisor social impact Oakland” on LinkedIn. Turns out those were the perfect search terms to match me with Kristin Hull from Nia Impact Capital. I’d heard her name before because she is one of the founders of Impact Hub Oakland, a co-working space and impact community for which I volunteer. I decided to reach out, and she graciously offered to help me along my journey!

Kristin led me through a few exercises to understand what is most important to me — both on an emotional and practical level. In less than a couple of hours, she helped me draft a plan for the next few months. I added the due dates, and she offered to check in to keep me accountable.

Her advice / my actions

1. Move money out of Wells Fargo and into a credit union or community bank.

• I changed my credit cards accounts, direct deposits, etc… to link to my credit union account, which I had opened through a previous employer but was underutilizing.
• I closed my Wells Fargo account and deposited the balance into my credit union account.

2. Calculate monthly and annual spend. If you feel relatively secure, you should have at least 3 months of expenses on hand. Another approach is to calculate annual spend and plan to have that + $10k liquid in the bank. With what is leftover, go to steps 3–5

• Although I am income-secure, I chose the latter — having more cash on hand. I am financially independent and don’t really have anyone to fall back on, so it is important to me to be prepared for worst case scenarios.

3. Short term investment: Move a generous amount of money into a cash alternative with a 90-day term. You are guaranteed to earn more than you do with your bank’s savings account interest rate (usually around 0.5%), and you can withdraw it after 90 days.

• I opened an account with CNote — they fund small business entrepreneurs and have a 2.75% interest rate.
• I opened an account with RSF — they provide social investment fund notes that support social enterprises. Investors (like me!) and borrowers work together to determine interest rates every quarter. The current interest rate is 1.25%.

4. Mid-term investment: Invest in socially responsible portfolios of publicly traded companies. The risk is spread across many companies, and evidence shows that these portfolios perform as well or better than standard index funds.

• I invested in the Nia portfolio. Nia not only selects socially responsible companies with diverse leadership, but they also serve as activists on behalf of shareholders to keep the companies accountable.
• A while ago I had opened a life insurance policy with Northwest Mutual. It will take about 10 years for my investment to break even (meaning you can take out as much as you put in). There is no tax on the gain. I don’t think this is the most “socially responsible” policy, but there’s a sunk cost element here.

5. Long-term investment: Get risky! Invest directly in local small businesses or startups using crowd-funding platforms. Fund what you want to see in your community, or test your theses about the future. Kristin recommended platforms like Investibule, which facilitates community-based investment opportunities through a variety of values and themes.

• Note: I have not really done this yet, but it is my next step…

What’s next?

I’m feeling pretty good about what I’ve done to better align my money with my values. I’m voting with my dollar!

Next, I plan to experiment with more speculative investments, and also have started conversations with coworkers and my employer about offering green or socially responsible 401k options. I also have a bit of work and personal travel coming up, so I will be incorporating some kind of offset structure, just not sure exactly how that will look.

Thanks again to Kristin, Erika, and the Nia team! And to all of my friends and family who have been sounding boards on this journey. Would love to hear your thoughts and ideas for creating better alignment.