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When Making New Year’s Resolutions, Let’s Not Forget Financial Fitness

January is the time many of us set resolutions and intentions; things we want to do better, ways we want to grow, new habits to take on or incorporate. In California, we often set health-related goals: new exercise routines, new gym memberships, yoga commitments, plans to get outside, walk, jog, squat, plank, crunch, you name it—we are into physical fitness and the new year is a time to start over and re-commit.

For others, especially with Marie Kondo’s new Netflix series, it's about tidying up, de-cluttering the home or office, living that minimalist lifestyle. And still others are taking on mindfulness practices, dedicating themselves to being more present and more kind.

When setting goals for the new year, whatever they may be, what often gets left off the list is financial fitness. Getting your finances in order, in top shape and aligned with our personal values is a perfect goal to take on for 2019. For a lot of us, particularly those working in the non-profit sector, philanthropy or impact investing, we spend our days "fighting the good fight," working for social justice, or environmental sustainability. And yet when we go to sleep, our money, if not consciously invested with our goals in mind, can actually be undermining our efforts—causing the very problems we are working so hard to mitigate.

For this year, I am re-committing to writing about banking and investing with integrity, because I know our assets can serve as key levers for change. Our world will be more inclusive and sustainable when all of our money is invested in alignment with our values. Today, I am starting with banking because where we keep our cash-- individually and collectively --makes a huge difference.

5 Key Questions to Ask Yourself about your Bank:

1. How much do you like your bank?

2. Are you banking at a "Big Bank" or a local bank?

3. Do the owners, managers, and trustees of your bank live in your community?

4. Do you know what your bank finances? Are they making loans to small business in your community? Young entrepreneurs? Women owned businesses? People of color? Is your bank taking deposits and turning them around as loans in your local community?

5. Does your bank take your deposit out of your community for (what might be considered) riskier investing? Most of us know that the Big Banks were at the root of the foreclosure crisis, and in California alone they spent tens of thousands of dollars lobbying against disclosures that would have increased both transparency and accountability. Big Banks around the world also do most of the coal-financing that we as a planet really need to move away from.

Rainforest Action Network puts out a yearly report card on the large banks, rating them on their financing of coal and other polluting industries like fossil fuels, pipelines, etc. Check here to see how your bank measures up.

3 Good Reasons to Move your Money to your Local Bank or Credit Union:

1. Often times, you'll get the same services at a lower cost. According to research by Stacy Mitchell of the Institute for Local Self-Reliance, small financial institutions also offer, on average, better interest rates on savings and better terms on credit cards and other loans.

2. You'll support meaningful investing, not gambling. As Stacy Mitchell writes, "The primary activity of almost all small banks and credit unions is to turn deposits into loans and other productive investments. Meanwhile, big banks devote a sizable share of their resources to speculative trading and other Wall Street bets that may generate big profits for the bank, but provide little economic or social value for the rest of us and can put the entire financial system at risk if they go bad." If you saw the movie The Big Short, you have a sense of how important this is.

3. You'll be supporting your local economy. Small businesses that create the greatest number of new jobs often rely on the loans they receive from small and local banks and credit unions. Similarly, the well-being of local banks and credit unions is intertwined with that of their local communities, so they are incentivized to prosper together.

The Ella Baker Center published a helpful list, which I've adapted here:

5 Steps to Moving your Money:

1. Organize current accounts. Often, the road block to moving money is getting organized. Know which accounts you have, so you know which accounts you need to close. Make sure all pending transactions have time to clear. That's usually just a week or two.

2. Pick your new bank or credit union and open your new account/s. Hopefully your friends or colleagues have good suggestions, and if not, you may need to do a bit of research. I input my zip code into the Independent Community Bankers of America website and it gave me a list of all of my local, independent banks. You can open your new account with a small deposit (electronic transfer is often the fastest and safest way to do it).

3. Change your automatic deposits and payments. Make sure to update any direct deposit and automatic payments attached to your old account and update them. (ex. car payments, credit cards, utilities, Clipper card and loan payments).

4. Transfer your money into your new account. Once all automatic payments and direct deposits are linked to your new account, electronically transfer your money from your old Big Bank to your new account. If electronic transfers aren't possible for you, you can get your money in the form of a check when you close your Big Bank account and deposit it into your new account.

5. Say Goodbye to the Big Bank. (This is the fun part.) Go to your Big Bank and tell a teller that you want to close your account (each bank will have different procedures for closing accounts). I recommend giving them direct feedback about why you are closing the account. Let them know that when they do X or stop doing Y, you will consider banking with them again. Get written confirmation that your accounts are closed.

6. *Bonus Step - Celebrate! Let me know you have moved your money and I will celebrate with you! Moving your money is a powerful act and a great first step to financial fitness and alignment.

I encourage each of us to make a commitment today to put our money at a bank that puts people and planet before profit.

Thanks to Stacy Mitchell, Rain Forest Action Network and The Ella Baker Center for all of your work on these important banking issues!

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