Purposeful Money

How can you use your #money to live more purposefully?

Pride month is nearly over. I ran into Target recently to pick something up and couldn’t believe the number of rainbow colored items on the shelves. Why is it that Target and other retailers pack their shelves with rainbows each June? It’s because marketers and advertisers aim to call out to your soul, your why, your #purpose. Advertising companies know that aligning with your #values is profitable. This blog post isn’t about the #integrity of selling rainbow-colored items, or whether what retailers do is right or wrong, but rather about what YOU can do to increase awareness each time you make a big purchase or investment to live your own “why” authentically.

Your definition of purpose is an element of your financial identity™️. Living purposefully improves your sense of #fulfillment in life, and we all already do it naturally to some extent. How can you be more purposeful with your money? First let’s explore what that means. Purposeful money includes impact investing, spending with companies you believe in, not spending or investing in companies that don't align to your values, philanthropy, and any other method of financially evidencing your personal interests and beliefs.

Impact Investing

There is a lot of industry jargon related to #impactinvesting, all of it relates to rating and ranking companies that you (or others) may consider investing in by some set of values. Once they are rated and ranked, we can assess potential investments in relation to our own personal values. Related terms include #ESG (environmental, social, and governance), #SRI (socially responsible investing), #CSR (corporate social responsibility), and to some extent, #directindexing. (Note: A direct index is a customized index of securities aligned to personal portfolio objectives. We won’t go deeper here, but will explore direct indexing in subsequent posts.) Investopedia defines impact investing as a term used to describe investments that are made with the intention of generating positive social or environmental impact, as well as a financial return. My own personal take is that impact investing is any form of investment that allows you to have the impact you want through any type of investment vehicle.

Impact investing can take many forms, and asset managers leaned heavily into impact-focused funds over the last decade. The Global Impact Investing Network estimates the size of the global impact investment market to be $1.164 trillion. Renewable energy, affordable housing, social enterprises, diversity and inclusion, and thousands of other causes have grown through impact investment.

ESG has become politicized in recent years, however the concept is not new to the industry. There have been Christian and Muslim Sharia criteria for investments for generations. The acronym is a starting point for a larger shift toward personalization, empowered by an ever growing set of data that may be categorized to align with personal criteria.

Spending with Companies You Believe In

Another way to align your financial decisions with your values is to purchase products and services from companies you believe in. For those who are environmentally conscious, this may mean supporting companies that are committed to environmental responsibility. Patagonia is a perfect example of a company that very actively promotes its values to connect with the “why” of its loyal customers. Values-driven purchasers care about the values exhibited by companies in their policies, marketing, employment practices, and commitments.

Not Spending or Investing in Companies That Don't Align to Values

In addition to supporting companies that align with your values, it is equally relevant to avoid spending or investing in companies that do not align with your values. This may mean avoiding companies that engage in practices that you deem unethical, such as exploiting workers or harming the environment. By doing so, you may feel that you personally avoid contributing to these harmful practices, and further, send a message to companies that their behavior is unacceptable.

For example, if you are opposed to animal testing, you may choose to avoid purchasing products from companies that engage in animal testing. Similarly, if you are opposed to fossil fuels, you may choose to divest from companies that extract or produce fossil fuels.

Philanthropy

Another way to exhibit purposeful money is through philanthropy. #Philanthropy involves donating money or resources to organizations that work to address a broad array of issues. By supporting these organizations, you can create positive change in the world and help to advance causes aligned to personal values.

For example, if you care about education, you may choose to donate to organizations that provide educational opportunities to underserved communities. Alternatively, if you are passionate about animal welfare, you may choose to donate to organizations that work to protect endangered species.

Some individuals may prefer to be agnostic in their values-based spending and investing behaviors, because they choose to concentrate their purposeful money in donations. They may even aim to maximize returns at all costs, i.e. investing in companies that conflict with their personal values, in order to have the most funding available to donate to causes of importance later in life.

Respect for Unique Interests

Each of us has unique interests and passions that guide our financial decisions. Whether it is supporting local arts organizations, investing in startups that are developing innovative solutions to social or environmental problems, or donating to causes that are close to our hearts, our unique interests and passions can help to shape our financial decisions in meaningful ways.

It’s critically important to recognize that values are personal. As individuals make choices about how to channel their own financial resources, they rationalize, make tradeoffs, ignore, and promote their values in deeply complex context formed by unique life experiences, attitudes, emotions, and interpretations. We make hundreds of financial decisions daily and we’re all doing the best we can. Rather than focus on perceived misalignment (some may go so far as to say hypocrisy), focus on individual respect and, where applicable, education.

Conclusion

Data access and real time analytics change the purposeful money game. For those who want to align financial decisions with values, the day is not far when every one of your purchases and investments will be supported with real-time assessment versus your personal values. Several startups have already launched products toward this end.

The move toward impact investing has demanded more #data and #transparency from investible companies, especially those trading in public markets. The missing data to help you find more purpose in your money is your own. Knomee helps you build a profile that captures values as a component of your financial identity™️. You may change your values at any time and opt into sharing them with companies that can help you find investments or service providers that align perfectly with you.

Living life purposefully improves your sense of #wholeness, integrity, and impact. Knomee is excited to support you on your journey and would love your thoughts and feedback! Contact us anytime at info@knomee.com!