When it Comes to Resolutions, Don’t Forget Financial Fitness:What Do You Know About Your Bank?

The New Year is a time when many of us set resolutions and intentions; things we want to do better, ways we want to grow, new habits we want to take on or incorporate. In California, where I live, we tend to set health-related goals: renewal of exercise routines, new gym memberships, yoga commitments, plans to get outside, walk, jog, do squats, planks, crunches, you name it—we are into physical fitness and January is a time to start over after the often indulgent holiday season.

For some of us, it's about diet. We decide to reduce caffeine or sugar, re-up our commitments to kale or green smoothies, eliminate alcohol, as they do in England with the adoption of Dry January. For others it's about tidying up, decluttering the home or office, taking on kindness practices, or being more present.

When setting goals for the new year, whatever they may be, let's not forget about financial fitness. Getting your finances in order is a perfect goal to take on for 2023. For a lot of us, with the past several years with all of the uncertainty—from the pandemic and political turmoil at home, to Russia’s war of aggression in the Ukraine, inflation, and the new “work from home” / “back to the office” realities—there’s no wonder many of us left 2022 feeling a bit overwhelmed personally and financially.

Those working in the non-profit sector, philanthropy or impact investing, have spent our days "fighting the good fight," working on and for social justice, environmental sustainability, or other great causes, and yet when we go to sleep, our money, if not invested with our values, could actually be undermining our efforts—causing the very problems we are working so hard to mitigate.

This January, I am committing to writing more about specific things we can do to increase investing with integrity. As ESG (Environment, Social, Governance) becomes a topic in the headlines, the opportunity is here to examine just how ESG criteria can affect our investment portfolios.

Not only will our world be a better place when all of our money is invested in alignment with the economy we want to see, we stand to reduce risk in our investments by taking a values-aligned approach.

For January, I’ve started with banking because where we individually and collectively keep our cash makes a huge difference.

5 Key Questions to Ask Yourself about your Bank

1. How well do you like your bank?

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

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

4. Do you know what your bank finances? (Is it small business loans in your community? Young and/or BIPOC entrepreneurs? 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) 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 fossil fuel and coal-financing that we as a planet really need to move away from.

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

1. Oftentimes, 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 will 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.

Lining up the steps of what needs to happen to move your money is key.

One important trick may be to not go it alone–As Women Power Our Planet have demonstrated, bringing friends to “break up with your bank” can be empowering.

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

5 Steps to Moving your Money:

1. Organize current accounts. Often, the roadblock to moving money is getting organized. Figure out which accounts you have, so you know which accounts you need to close. Make sure all pending transactions have time to clear. That process usually takes just a week or two.

2. Choose 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. Consider bringing friends for this step.

6. *Bonus Step - Celebrate! Moving your money is a powerful act and a great first step to financial fitness and alignment.

I encourage us all to make a commitment today to put our money at a bank that puts people and planet in line with profit. Thanks to Stacy Mitchell, Rain Forest Action Network and The Ella Baker Center for all of your work on these important banking issues!