In a 2022 Financial Wellness Survey conducted by Ellevest, 62% of women indicated they’re concerned about climate change. In fact, “more women ranked it as a top financial concern above retirement planning (51%), credit card debt (46%), stock market (38%), and childcare costs (30%).”
This makes sense given what we’re starting to see across the globe with increasingly intense wildfires, flooding, and storms – but for women, the impact goes deeper than that.
The ripple effect created by these catastrophic events is more acutely felt by the world’s most vulnerable populations: women and girls.
That makes this not only a global problem, but specifically a female problem.
You might be wondering why I’m writing about climate change on a financial planning blog, and we’ll get to that. You’ll see how you can make a difference through your investments so that you don’t have to make a choice between helping the environment and saving for retirement; you can do both.
But first, let’s talk about what’s at stake.
Living in the United States it can be easy to look at the climate issue as something that basically affects our weather. Yes, many people in this country have found themselves in dangerous situations as they evacuate fires and lose homes to massive flooding - but compared to other areas around the world, we have it pretty good.
Here's why.
…women are more likely to live in poverty than men, have less access to basic human rights like the ability to freely move and acquire land…. In fact, women are denied property rights in half of the countries around the world. They are often barred from borrowing money for fertilizer and tools, which prevents them from successfully guiding their crops to harvest. They also can have trouble accessing markets to sell their harvest.
As soil quality worsens and water becomes more scarce, women will be less able to find the credit and financing they need to be resilient to the changing conditions. And without any possibility of buying new property, many female farmers will be stuck with ever-declining yields on their existing land.
"The majority of women lack deeds or titles to the lands that they farm, so their avenues for compensation or redress are limited when climate change adversely affects their agricultural output," Alam said. "Generally speaking, it’s not as if smallholder farmers have insurance, either, so they have to look for alternative income-generating activities, which can leave them desperate and vulnerable to exploitation." (Source)
Climate change is rarely discussed in relation to violence against women. It has become a global common concern due to its role as a contributing factor in exacerbating (sexual and gender-based violence) SGBV. Though entire populations are affected by climate change, women and girls face double victimization as human beings as well as because of their gender.
During emergencies, especially conflicts and disasters, women are at high risk of SGBV because of crisis in the family and society as well as due to sudden breakdown of family and community structures arising from forced displacement. As a result, women and girls become more vulnerable and face physical, sexual, psychological harm as well as denial of resources or necessary services. (Source)
Gendered roles in much of the world also make women more susceptible to the negative impacts of climate change. Women are the primary gatherers of water, food, and fuel, and they dominate subsistence farming, caregiving, and cleaning. These duties are more prone to feel the effects of environmental degradation and rising global temperatures as they rely heavily upon natural resources. In the future, this can drive a negative feedback loop of increasing poverty. (Source)
If you’re looking at these statistics and wondering what you can do about this insurmountable problem, take a deep breath; as women have always known, we’re stronger together. Now, it’s time for us to take that togetherness to a global level.
In the next piece, we’ll talk about how investing in your own future can be a big step toward helping others. Through ESG (Environmental, Social, and Governance) investing you’ll be able to invest in companies that can not only help your investment accounts, they’re also helping combat this crisis through their own initiatives.
Socially Responsible Investing (SRI)/Environmental Social Governance (ESG) Investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
I’m just going to say it: some people think that those who work in the financial industry can be kind of smarmy.
Yes, that’s a word.
And there’s a reason they think that. It’s because some advisors can be.
There are people out there who don’t have your best interests at heart. They think about the bottom line and about what products they can sell you that will make them the most money. There are people out there who aren’t interested in your values and goals – they’re only interested in your money.
And then there are fiduciaries.
There are lots of ads on TV that talk about being a fiduciary, but many people aren’t familiar with that term.
Investopedia defines a fiduciary as “a person or organization that acts on behalf of another person or persons, putting their clients' interests ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other's best interests.”
This means that as an investment advisor with LPL Financial and when providing advisory services, I must act as a fiduciary. If there are multiple options in which you can invest, I must recommend the one that is in your best interest. Practically, this means that I cannot and will not recommend a product that nets me a large commission if there is a less expensive option for you that is suitable. It also means that I must disclose any conflicts of interest.
All CFPs (CERTIFIED FINANCIAL PLANNERTM) are required to act as fiduciaries in our advisory practices, so that is already part of the service I offer. I’m also part of Aspen Wealth Management which is a Registered Investment Advisory firm (this means that we charge money for advice, rather than sell products), and RIAs always follow a fiduciary standard when assisting advisory clients.
This makes a big difference in the relationship I have with my clients. They know they can trust me, because they know my recommendations will always be in advancement of their goals, and not mine.
This is such an important question. No, they’re not! I am so pleased to notice that over the past few years, many more potential clients are asking if I provide advisory services as a fiduciary. I’m glad it is now part of the conversation.
As you’re looking for the right fit, I encourage you really interview the advisor and ask important questions. CLICK HERE for some guidance.
And remember – your financial planner is working for YOU. If at any time you feel they are not working in your best interest, trust your intuition and make a change.
Depending on your employer or your industry, you might be offered different types of compensation. Most people are familiar with employers who do some sort of 401(k) matching, but what if your company offers you Restricted Stock Units?
RSUs are stock-based compensation in which an employee is granted shares in the company, but they are “restricted.” Shares are released from those restrictions based on various factors such as time with the company, or performance of the employee. Once they are unrestricted, or granted, the employee owns the shares and can hold them or sell them.
This type of compensation is pretty typical of any public or private company that issues stock and has shareholders – especially tech companies expecting high growth.
As more and more women enter STEM careers (“Since 1970, the representation of women has increased across all STEM occupations and they made significant gains in social science occupations in particular – from 19% in 1970 to 64% in 2019.”), it’s important for employees to understand how their compensation works.
Let’s break down the pros and cons of Restricted Stock Units:
Also keep in mind that shares are taxed as ordinary income in the year they vest, and you are not able to control that as you might with stock options. The value of the stock can go down, but you will still owe tax on the value of the shares at the time they vested. You will also owe capital gains taxes on any growth that occurs between vesting and when you sell the shares. (I like to call this “a nice problem to have.”)
Working with a financial planner can be a huge help when it comes to eliminating the confusion surrounding RSUs. For example, I can help you determine whether or not to sell when your shares vest. I’ll also take a look at your portfolio; accumulating many shares is great but can be a problem for your portfolio if you have too concentrated a position. And as far as taxes, I can help you create a tax-efficient strategy for selling shares and understanding how the RSUs fit into your overall financial plan.
Ready to take a look at where you are with your financial plan? So am I. CLICK HERE to make an appointment!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
In our last blog, you likely saw yourself in one of our money personality profiles. Were you a…
We talked about how each of these personalities might handle the thought of budgeting. Now let’s discuss how each of these women might effectively put together a spending plan.
To recap, givers might put off crafting a spending plan because you are too busy with your commitments to other people. As a Giver, you should think of a spending plan as a gift you can give to those you love and charities you support. If you can shift your mindset from “budgets are restrictive” to “this is an opportunity to help others” the task may seem a bit easier.
As a keeper, you’re crushing it as a saver and because you have a hard time not saving, you may think you don’t need a spending plan. But keeping too much does not lead to a balanced life. The Keeper needs to add a category or two for items or activities that bring you joy. An exercise I like to use with clients is to picture what you would do if money were truly no object (like you just won that billion-dollar lottery). Whatever comes to mind should be part of your spending plan, in whatever way possible, even if it is small.
Who needs a budget? Life is short! Sorry, but as a Merry-Maker you likely need the most assistance with a spending plan. While living for the moment has its place, crafting a spending plan can actually bring you MORE joy than a devil-may-care attitude. How? By eliminating that nagging guilt that you often feel, or fear that you are not saving enough.
Take a look at what purchases of yours are the most impulsive and set aside a small percentage of your income to those. Don’t try to completely eliminate them (“No more shopping ever!”) because that is not realistic. By creating a pot of money to spend on what makes you happy, you give yourself permission to enjoy life AND be responsible.
You’re doing everything right, so creating a spending plan is a little different in your case. You don’t need a ton of help with creating a spending plan, but you do need to keep in mind that it is a guide. No one in the history of money has ever hit their spending plan exactly. Things come up!
A trick that can help the perfectionist is to set a percentage that your budget is allowed to “drift.” By allowing line items to vary by your plan by, say, 10% you are giving yourself the freedom to relax, because technically you are still within your budget. At the end of the month or quarter, determine if the drift was a one-time event or if your spending plan needs to be permanently adjusted.
Looking for more insight into your money personality? Download the eBook below!
Have you ever fluctuated between knowing you need to save…and wanting to live life to the fullest?
I would think that many of us have argued with ourselves about that at least a few times over the course of our lives. And I’m about to offer a solution to that.
A budget.
Wait! Don’t close this blog just yet! Hear me out.
No one – and I mean NO ONE – wants to sit down and create a budget. I’m picturing some couple in the 80s sitting at their kitchen table with one of those big clunky calculators fighting over how many times they went to Burger King the month before.
The NEW way to budget is to create a spending plan. See? That sounds better already. When you create a spending plan, you’re giving yourself permission to spend in certain areas, so you don’t have to have that moment of guilt before you hit “purchase” – you know it’s okay.
The thing about creating a spending plan is that we all think about money differently depending on our personality type and our life experiences. In my eBook, Stop Financial Freakout, I talk about four different money mindsets.
Let’s take a look at how each one would handle putting together a spending plan:
A giver would put off crafting a spending plan because they are too busy with all of their commitments to other people. They would definitely have a “charity” line item as well as a “gifts” category.
A keeper crushes budgeting. They pay themselves first, and have allocations for emergency savings, travel fund, replacement car account, retirement, and a line item to save for their parent’s retirement because they will probably need help and they want to be ready.
What’s a budget? They just look at their checking account balance and that’s how much money they have left until payday.
A perfectionist has already downloaded budgeting software, and meticulously tracks every penny they spend, but doesn’t allocate any money for fun because what if they don’t have enough savings? As soon as they hit “X” goal then they will spend some money on themselves. And then the goalpost keeps moving because one can never be sure they have enough money saved, can they?
Do you see yourself in any of these scenarios? In the next blog we’ll talk about how each money personality can effectively put together their own spending plan, so they hopefully won’t have to decide between saving and FOMO!
With all the turmoil we’ve experienced during the last few years, it’s important to concentrate on the positive side.
According to CNBC.com, “Over the past couple of years, the effects of Covid-19, social activism and economic uncertainty have profoundly impacted women’s attitudes about their finances, according to a UBS survey.
Nearly 9 in 10 women believe money is a tool to achieve their personal “purpose,” the report uncovered, polling 1,400 women investors in January and February 2022.
“Many women have a deeper commitment than ever before to leading more purposeful, intentional lives and making a positive difference in the world,” said Carey Shuffman, head of the women’s segment for UBS.”
While we’re always tempted to send money where it’s needed, it’s also important to make sure your money is being used wisely – both by the charity and in your financial plan. Here are three steps to help ensure your money is going where it should.
Research organizations that align with your values. Do you want to help a smaller organization? Global or local initiatives? Here are a few questions from Fidelity Charitable to ask non-profits before you commit your funds:
When I work with a client, it is helpful for me to understand their values when crafting their financial plan.
For example, is it more important for you to retire early and spend time with your family or to have more money to spend in retirement? Or, if not being a burden to your children is important, we may allocate more money to long term care insurance.
We can use the conversational tools I use to determine values to help select charities.
Another important aspect of charitable giving is understanding how it affects your taxes.
I also like to show my clients ways to “help” without giving money. There are myriad investments that are focused on doing good, such as individual companies and mutual funds that are focused on helping women, or clean energy. It can be hard to sort through them all and make sure that they really are investing in line with their mission statement – I have tools to use and experience to help select these investments.
I can also help you figure out how much you have to give, and where that will come from. You can also see how it will affect your overall plan; for example, if you donate 5% of your income to charity each year, you may only have to work 1-2 years longer to reach your same goals in retirement and that may absolutely be worth it for someone charitably minded.
We’ll also discuss your estate plan and how charitable giving might play a part. You may not have cash flow to give right now, or money to invest, but leaving money to charity as part of an estate plan can be very beneficial to those charities. Beneficiaries get the full value of your assets without taxes on gains (“a step-up in basis”).
If you’ve been watching the news and are finding it endlessly depressing, giving back could be a wonderful way to feel a little more in control. If this is something you’re considering, I would be happy to discuss your options with you and help ensure your money is helping both the cause and your financial plan.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
If you click on this article - 8 Reasons Gen X is Especially Good With Money – you might wonder why I, a financial planner, am talking about it. After all, in the opening paragraphs it says this:
Born between 1965 and 1980, they're used to doing things for themselves, so they don't need to waste money paying someone to manage their money or tell them how to manage financial stress. They'll handle it all themselves, thank you.
So, while it might seem counterintuitive to point out that Gen Xers don’t want to pay for financial services, there are some qualities about this generation that make them perfect for professional financial planning.
A productive financial planning partnership between a client and an advisor embraces all of those qualities. Yes, we’re there to create a plan, but it’s also up to the client to implement some of the pieces.
Every advisor has had a client who has come back to them disappointed in an outcome they were hoping for, and every advisor has asked the question, “Did you do [this part of the plan that we talked about before]?”
The answer is almost always no.
The fact that Gen Xers are more open to new ideas when it comes to their financial plan AND are more likely to follow through with them, makes this a win-win for both the client and the advisor.
“Gen X'ers are more likely to have a 401(K) and believe that the ability to save for retirement is mainly their responsibility.”
Perfect. Let’s come up with a plan to get you where you want to go because I know you’re going to implement it. You like to do things for yourself and I’m going to give you the tools to do it.
“…they are more likely to manage their time and make sure they have enough time for both work and play. And this extends to their choices for how to make money.”
YES. Let’s create a plan that not only prepares for the future but allows you to enjoy life now. You understand the need for a diversified portfolio. I understand that everyone’s goals are different. Together we’ll do something amazing.
“Gen X'ers are more likely to start their own businesses, have online brokerage accounts, and invest in a broader range of assets than other generations.”
I love that you want to start your own business and that you also understand that we don’t save for the future like our parents did. You know that it’s up to you to create the future you want; pensions are pretty much a thing of the past and you’ve adapted to that change. You also understand that a plan needs to be fluid and you’re willing to communicate these changes with your advisor. There’s no shame there; it’s just life!
As with most things – yes – you can go it alone. You can fix your own car. You can do your own taxes. You can replumb your entire house. I know you have it in you do it all.
But do you WANT to?
Let’s take the amazing qualities you already have and make them work for you and your money. CLICK HERE to contact me.
If you’ve turned on the news any time during the last few months, it’s likely you’ve heard the dreaded word “recession.”
Investopedia defines recession as “a period of declining economic performance across an entire economy that lasts for several months.” The last major recession we experienced in the United States began in 2007 and ended in 2009 after the bursting bubble of the US housing market.
These days, according to The Street, a possible recession could be because of a number of factors:
1. The Federal Reserve and higher interest rates
2. There was massive fiscal stimulus during the pandemic, financed by the Fed buying bonds
3. Rising input and wage costs
4. High oil prices
5. China Is decelerating sharply
But as with anything when it comes to finances, the big question is…what does a recession mean for YOU?
If you have a solid financial plan in place, you’ve likely already “recession-proofed” your finances. However, there are a few other things you could do to better prepare:
Try to avoid cutting down on retirement plan contributions unless absolutely necessary. Missing even a small number of contributions can have a major impact on account growth. Also, down markets can actually be good for savers (hard to believe, but true!) because of dollar cost averaging.
Remember that there are always going to be periods of economic slowdown; this is inevitable in a modern economy. But taking some action, like the tips above, might minimize the impact on you personally while you wait for the economy to begin “growing” again.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels . Such a plan does not assure a profit and does not protect against loss in declining markets.
Investing includes risks, including fluctuating prices and loss of principal.
I live in the beautiful state of Colorado. We experience glorious snow for skiing in the winter, the flowers bloom in the spring, the leaves change in the fall…and the fires happen in the summer (or even during a dry winter as we experienced in 2021).
“…while many residents may have expected safety in urban areas, fire experts have warned wildfire risk isn't limited to mountain areas. In 2017, state foresters estimated nearly 3 million Coloradans lived in fire-prone areas, which scientists refer to as the wildland-urban interface, known as the WUI. That’s about half the state’s population.” (CPR)
Colorado isn’t the only state that has to deal with the threat of forest and brush fires. That’s why it’s important to have a plan in place to keep your loved ones and your important documents safe.
REMEMBER THE SIX “P’S” (readyforwildfire.org)
Your advisor might also have copies of the following information (if they have asked for it):
If your financial advisor does not have copies of these, your tax preparer or estate planning attorney may have copies. It is important that you ask them if they retain copies of these documents and for how long they keep them.
I hope you have a safe, fun, and smoke-free summer. But get your plan in place just in case!
