Earth Day 2021: How To Go Green With Your Finances

Doing your part to help protect the environment on this year’s Earth Day can be as simple as thinking twice about how you manage your finances.

Environmentalists and policymakers have called climate change one of the most significant issues of our time. With it comes threats to food systems, ecosystems and livelihood for billions of people. But you might not realize some of it also comes down to who you decide to bank with and how you allocate your cash.

Here’s how you can manage your wallet in a way that supports the environment – from banking and budgeting to spending, housing and investing.

Green finances begin with banking

1. The easiest of all options: Go paperless with electronic transactions and e-statements

When it comes to going green with your finances, start with something simple: Limit your paper trail.

Take a close glance at your finances and make a list of all the financial institutions you regularly work with. At the top of the list are banks, credit card and utility companies. Consider opting in to paperless statements across all of those firms, so you can receive any bills or notices over email or through an app. You might also end up saving money in the process, given that some institutions charge customers fees between $1 to $5 per month for receiving statements in the mail.

“Anything you can throw into the cloud rather than printing and saving, that’s going to be a win for Earth Day,” says Kacie Swartz, CFP, senior wealth manager at Stone Wealth Management, who specializes in finding environmentally sustainable and socially responsible finance strategies.

Along the way, consider sticking to electronic transactions as much as possible and using a credit or debit card instead of paper checks. You might also find success in using instant-payment services such as Zelle or Venmo if you’re trying to pay an individual.

2. Find a bank that cares about the environment – or better yet, go local

Many of the nation’s largest depository institutions are now vocalizing a commitment to sustainability. JPMorgan Chase, for example, announced in 2020 an ambitious plan to fund $2.5 trillion over the next 10 years to address climate change and contribute funds to sustainable development. Bank of America also said it became carbon neutral last year.

Yet, some of the nation’s depository institutions might still be invested in less environmentally friendly practices, such as coal mining pipelines or oil rigs. Remember the 101 of banking: Parking your cash in a savings account or certificate of deposit (CD) in any financial institution essentially acts as a loan for the bank. If you want part of your dollars to go toward funding environmentally friendly projects, make sure your financial institution aligns with your goals.

And in some cases, going local might be the best route, particularly if you’re worried about protecting the area where you live. That might be a credit union or local bank.

“Consumers could move the majority of their money from a big bank into a credit union,” says Nate Nieri, CFP, a financial planner at Modern Money Management that specializes in socially responsible investing (SRI). “Local credit unions that are really built for communities, all the money that is built into them goes right back out into the community.”

3. Consider online banks – and make more money along the way

You might find that banking with an online depository institution is the best route of all, simply because they maintain a smaller overhead and carbon footprint by not operating individual branches. You’ll also generally receive more bang for your buck, with online banks offering higher yields on your cash – in the best of cases, that could be eight times the national average.

If the environment is your first concern, perhaps you’ll want to select a sustainability-minded firm. Limelight Bank, the online division of Capital Community Bank, is an eco-friendly minded firm. However, it has some…