Kristin Daily, a lawyer based in New York, is a philanthropist. And no, that doesn’t mean she’s rolling in dough, it means she chooses to use the money she makes to help others.
Each month she allocates 3% of her income to donations to charities, like food pantries and soup kitchens in her Brooklyn, New York, neighborhood. “I consider it a fixed expense rather than something I do with extra cash,” she says. To make room in her budget, Daily cuts back on what she considers unnecessary expenses, such as dining out and theater tickets. “Those are sacrifices that are easy to make, especially when people around you are struggling.”
Daily is far from the only person to align her personal values with her money values. A recent study found that while nearly half of respondents felt pessimistic about the economy, more than 90% still planned to give the same amount or more to charitable causes that year — up from 81% the year before.
And it’s not only charitable giving: Many are using their dollars to support local stores, sustainable brands, energy efficiency products and responsible investing.
“There are more ways to support causes beyond direct donations to organizations,” says John M. Hirano, a goals coach at U.S. Bank. “Through purchasing your everyday needs from brands and stores that match your values, this is a simple way make a meaningful impact with money you would already be spending. In addition, it allows you to put your money toward building the future your desire.”
So, if you’re short on new year resolutions, why not make 2024 the year you weave your personal values into your financial decision making? Here, are some simple ways to do that.
Buying the products you need from a local bookstore, farmstand or family-run pharmacy rather than from a big box store not only allows you to support your neighbors, but it also benefits the economic health of the place where you live.
Local businesses generate about $52.90 of economic return for the community for every $100 spent with them, as opposed to $13.60 generated by shopping at national chains.
That can translate into more jobs, a diversity of local offerings and as local businesses thrive, even a bump in home values.
Each year consumers show that they are more interested than ever in buying sustainable products.
The World Economic Forum reports that consumers are prepared to spend more on sustainable products than they were two years ago. And 84% of people say that poor environmental practices would alienate them from a brand or company.
Even still, sustainable products are often more expensive — due to things like the cost of environmentally friendly packaging or organic materials. For example, sustainable fashion is often made with fabrics that are 2.5 to 4 times more expensive.
One way to find money in your budget to purchase such products is by defining what is important to you — is it using recycled products, eliminating plastic waste, ensuring fair wages? Once your goals are established, it’s easier to cut back on expenses that don’t bring you as much satisfaction so you can use the extra cash for those that do.
“Goals are not often accomplished in a single step,” cautions Hirano. “And so, it is best to start with small steps. Identify one item that you can purchase, which is in alignment with your goals and allow yourself to transform your spending habits over time.”
You have many ways to make your home more energy efficient — installing energy efficient windows and doors, upgrading your heating and cooling systems, and adding solar panels to your roof, to name a few.
But as any homeowner knows, these upgrades, while they may save you money in the long-term, can be expensive upfront.
One common rule of thumb is that you should set aside 1 to 4% of your home’s value for repairs every year. If you can, invest those savings in energy-efficient upgrades, especially when it comes to heating and cooling, which accounts for an average of 43% of home utility bills. Doing so may also qualify you for the energy efficient home improvement tax credit, which is worth up to $3,200.
There are also ways that you can make your home more energy efficient without breaking the bank, like programming your thermostats to adjust the temperature when you’re not home or sleeping, installing Energy Star light bulbs, and caulking leaks in windows, fireplaces and doors.
Environmental, social and governance (ESG) investing is when you invest your money in companies that are trying to make the world a better place across these three areas — so, for example, you can buy shares of a company that is curtailing its carbon footprint, striving for racial equality or addressing leadership diversity (or invest in a mutual fund that holds those kinds of firms).
And people are jumping at the opportunity to get involved: The total amount invested in U.S. ESG funds reached nearly $300 billion at the end of the third quarter of 2023, a 10% increase from a year earlier. Another study shows that ESG-related assets are predicted to make up 21.5% of the global assets under management by 2026. In other words, they will account for $1 out of every $5 invested.
If this is something you want to consider, working with a financial advisor is a good way to review investing options to determine the right ones for you.
Not only does donating to charity help others, but giving away your money may also provide tax benefits. Consult with a tax advisor who can help you determine if you can deduct your donations to charity from your itemized deductions, lowering your taxable income and trimming your tax bill.
The first step is deciding what causes you want to support. Think about your values and what organizations best embody them. Is it education? Access to clean water? Science or health research?
Even if you don’t have a lot of extra cash, you can still be philanthropic by volunteering your time and energy. It’s a great way to give back to organizations you believe in.
Taking these simple steps can have a big impact on the world and your wallet. Change happens in small moments; by making impactful choices, on a small scale, on repeat.
Explore more ways to be smart about how you spend and save your money.
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