Eco-Friendly Guide to Finances and Saving

Applying environmentally conscious habits to the way you budget and manage your finances can revolutionize the way you approach green living. Aligning your personal finance and green living goals means that your money won’t be used in a way that goes against the eco-friendly principles you care about.

Even if you’re not quite prepared or able to embrace environmental practices in all facets of your life, making even small changes to how and where you spend your money can go a long way towards making a difference and reducing your carbon footprint.

To aid you in your quest to incorporate green living finance principles in ways that work for you, this guide offers expert advice and insight, valuable tools and resources designed to help you develop a "green" approach to your finances.

The future of our environment depends largely on our spending habits today. There are many different ways to do your part and use environmentally friendly financial products and services. While this is not an exhaustive list, each of these options provides economic and environmental benefits for you as a consumer.

A green investment strategy involves not only focusing on financial returns but also on business practices that incorporate environmental and social benefits. This mode of investing is often referred to as environmental, social and governance (ESG) and socially responsible investing (SRI). The terms ESG and SRI are sometimes used interchangeably. Some of the ways investors invest in businesses that incorporate sustainable and ethical practices include:

• Considering financial projects or investments that will have a direct impact on poor or disadvantaged communities and individuals.
• Only investing in businesses that have taken proper steps to adhere to eco-friendly practices.

These steps could include measures such as reducing greenhouse gases or factoring climate change into their corporate planning.

ESG investing has its pros and cons. An advantage of being a sustainable investor could be the long term growth. Brown Brother Harriman forecasts that companies showing ESG initiative and performing well will prove to be the world's most valuable companies and thus gain significant value over time. A disadvantage that sustainable investors face, however, is the lack of diversification in these stock groups. Investing solely in ESG means you're usually limited to the exclusivity of the limited companies that participate.

Deciding if sustainable investing is a good fit depends on your risk tolerance and how you view a company. A few questions to consider include:

• How comfortable are you with a lack of diversification in your portfolio?
• Is your ESG assessment based more on performance or ESG aspects?
• Are you looking at a company as they are today or how they may be in the future?
• What are your rules and objectives for the ESG companies you invest in?

Taking the time to assess your investment style and how you operate the best when it comes to your finances will tell you if investing solely in ESG companies is a smart move.

Just as you would take out a home equity loan to finance a home improvement project, green loans can finance energy-efficient home improvements. Green loans are lending with an environmentally friendly planned use. There are plenty of ways to use a green loan. The project you plan to use it on is what makes green loans "green." Projects backed by a green loan could include a variety of uses such as installing solar panels, water-saving systems, LED lighting or Energy Star appliances.

The advantage of a green loan is that you can achieve green financing through a government-insured FHA or conventional loan program. They are open to borrowers without the need for cash upfront or home equity, and they are offered with historically low interest rates. The downside is they are limited to environmentally friendly uses, such as those previously mentioned. You can't use a green loan for a standard home upgrade or debt consolidation in the same way you would use a traditional loan.

The quickest way to see if you could benefit from a green loan is to consider what outdated systems and items in your home could be upgraded with more eco-friendly models. You could save money in the long run and make your home greener. You can also have a green contractor inspect your home and suggest home upgrades that will leave a smaller carbon footprint than what you currently have. Talk with your lender and see if your need qualifies under the requirements for a green loan.

Buying a home built with the environment in mind can be another way to make an eco-friendly investment. A green mortgage is an environmentally friendly way to finance your home or home improvements while reducing your carbon footprint.

As opposed to conventional loans, green mortgages are a green way to save money by lessening your home's overall energy usage. This could include adding in Energy Star appliances or incorporating a green heating and air conditioning system with programmable thermostats to save hundreds of dollars on your utility bill each year.

Having a green mortgage offers plenty of advantages, but namely, they stand as a green loan that can turn your home into a green investment, saving you on your monthly bills when you qualify for a green mortgage.

The money you save yearly from having energy-efficient appliances, water-saving systems and utility savings can be used to pay down your mortgage. They can serve as a marketing plus when it comes time to sell. The downside to this is figuring out if the upgrades outweigh the total savings they yield. For example, if you're buying a water-saving sprinkler system that costs you $2,000, then it should deliver savings of over $2,000 in its lifetime.

If you already qualify for a conventional mortgage, you should be eligible for a green mortgage loan. The best way to see if this is an efficient move is to look at the increase in home value the upgrades would bring versus the upgrades' costs.

A discussion of green finance wouldn't be complete if it didn't include a mention of green credit cards. A green credit card offers green-friendly rewards.

Unlike standard rewards points that you usually earn from credit cards, green credit cards can benefit the environment. With credit cards like the Sustain: Green Mastercard, your points can translate into carbon offsets that help heal the planet. The Sustain: Green card rewards users with carbon offsets that can be applied to fund rainforest preservation. Arthur Newman, CEO of Sustain: Green said in a press release, "Just by using our card for purchases they would make anyway, consumers can shrink their carbon footprint for free, every day, while also helping to preserve rainforests critical to combating climate change. We hope they will use the card in conjunction with other carbon reduction lifestyle changes, such as fuel-efficient transportation choices."

Sustainable banking encompasses more than just return and risk; it also considers impact. Similar to the process we see in sustainable investing, sustainable banking uses ESG and SFI to influence strategic decisions. Not too long ago, banks realized that they were setting themselves up for failure by not looking at the environmental impact of their actions. As time passes, it becomes more evident that consumers were not just concerned with their risk and return but also how it affected the world around them.

As a part of the environmental finance initiative many have adopted, sustainable banking is another way consumers can decide how their spending affects the environment. With certain socially responsible banks, you don't have to worry about your money being used to finance industries that harm the environment. Instead, your funds will be used to invest in community development, give-back donation programs and projects that contribute to an eco-friendly objective.

Depending on which institution you use, you may forgo some of the conveniences that a conventional bank offers. These conveniences include free accounts, online-only banking versus brick-and-mortar storefronts and fees for ATM usage.

With some SRI banks offering traditional checking accounts, low fees and high rates, there's a good possibility you won't miss the switch. Plus, you can have peace of mind knowing the institution you support also supports social responsibility.

There are additional options to consider when you choose to support a green lifestyle. When adopting green habits, there is no one-size-fits-all approach. Aside from ensuring your investments and finances are adhering to green finance standards, there are smaller-scale options as well. While some of these options may seem unconventional or untested, each can provide financial and environmental benefits for you as a consumer.

When hearing "donation," many people might think of a financial donation. However, there are several eco-friendly donations you can make that don't involve touching your pocketbook. For example, taking the time to donate your clothes, old appliances, furniture or even a car can be beneficial.

Some might assume that these types of donations don't qualify as eco-friendly. The truth is a good number of resources go into creating, packaging and shipping these items. Plus, by donating instead of dumping, you're essentially keeping them out of landfills and junkyards where there's potential for them to cause more pollution. Also, there is the bonus of receiving tax-credit for charitable donations to specific organizations.

Responsible retailers are gaining in popularity, and they are going out of their way to make environmental choices. Everyone does their fair amount of shopping. By putting your money back into a retailer that does their part, you are essentially helping them in this respect.

Different retailers have different ways of being sustainable and socially responsible. For example, some supermarkets partner with agriculture programs to help Americans make healthier and more sustainable choices. Others, such as clothing retailers, make commitments to produce zero waste and become carbon neutral. They are also stepping away from offering "fast fashion," which means trendy, cheap clothing made in sweatshops overseas and usually only worn a few times by consumers.

Commonly known as upcycling, repurposing everyday products is another green way to save money. If a product can't be used for its original purpose, get creative and find a new way to use it. Also, taking the opportunity to repair an item instead of prematurely throwing it away keeps landfills from getting bigger and pollution from rising. While it may cost money to make a small repair or upcycle an item, cutting down on trash, manufacturing effects on the environment and the cost of purchasing a whole new item far outweighs the cost.

It's been widely said that reducing your carbon footprint is good for the environment, but why? Your carbon footprint is a measure of how much carbon dioxide you put into the environment. Carbon footprints are created by traveling, consumer habits and waste. Reducing your carbon footprint is an active approach to living that keeps unnecessary carbon dioxide from entering the atmosphere. This is accomplished through evaluating your habits from a broader perspective, much like the triple bottom line concept.

The triple bottom line accounts for three parts: social, environmental and financial. These all coincide and affect each other either directly or passively through other means. Taking the initiative in all three areas can have a drastic effect on your carbon footprint and serve people and the planet better both now and in the future. Below are some specific examples of money-saving activities that reduce your carbon footprint with economic and environmental benefits that overlap using the triple bottom line concept.

Carpooling, popularly now known as ride-sharing, is one way to both save money and emissions. According to rideshare.org, depending on where you live and how much you drive, you could be saving over $1,500 annually. The U.S. could save an average of 33 million gallons in gas each day if the average commuting vehicle carried one extra person. Then, there's the household saving. The average household uses 1,143 gallons of gas per year. Multiply that by the average price of gas per gallon, and you're looking at significant savings.

While there is research that proves a diet consisting of heavy amounts of meat can lead to obesity, cancer and heart disease, it's also contributing to greenhouse emissions. According to the Food and Agriculture Organization of the United Nations, global livestock's total emissions equaled 14.5% of all anthropogenic emissions. This amounts to a total of 7.1 gigatonnes of carbon dioxide per year.

You can cut costs from your budget by reducing your meat intake as well. Some vegetarians who have cut out meat altogether report saving nearly $1,000 per year living a meat-free lifestyle. Depending on how much less meat and dairy you want to consume, you can find plenty of ways to supplement your diet and wallet by making this lifestyle change. The best ways to see a price reduction in your grocery budget this way includes buying dry goods in bulk, taking advantage of sales, buying frozen instead of fresh vegetables and creating a meal plan and shopping list before going to the grocery store.

To piggyback off the ride-share initiative, the original staple in carpooling is that of public transportation. Although some may see larger vehicles emitting more pollution, this is not the case. Actually, transit vehicles emit less pollution per person than a traditional car would with separate emissions. This is also good news for your bank account. The U.S. Department of Transportation reports that users can save over $10,000 annually by utilizing public transportation rather than owning a vehicle. The average American family spends about 19% of its household income on transportation, which drops to 9% if you live in an area with an effective public transportation system.

Giving back to the community can happen in a variety of ways. One fundamental way is by shopping local and contributing back to the community economy. By shopping local, you are keeping money in the community, contributing to local jobs, a unique town character and a cleaner environment. Shopping locally usually means the goods or products are made locally and are cheaper to buy because you're avoiding shipping costs. Local businesses might also offer local discounts in some areas and price matching to compete with bigger chains. Additionally, you can get a shorter commute or can walk to your local shop to purchase items or have them delivered. Plus, never dismiss the added bonus of better customer service and personability that you get from local shop owners as opposed to big chains.

There are many resources available to aid you on your green finance journey. Taking the time to do research can help you be more knowledgeable about spending better and saving your money in an eco-friendly way. Below are some resources to get you started.

• 1% for the Planet: Created by Patagonia founder Yvon Chouinard and Craig Mathews, founder of Blue Ribbon Flies, 1% for the Planet helps corporations give to environmental causes.
• Green America: This nonprofit organization focuses on harnessing financial power to facilitate environmental responsibility and social justice.
• Zero Waste Home: Best-selling author Bea Johnson offers advice and resources for living a zero-waste lifestyle.
• Earth Easy: This company makes caring for the earth easy by offering tips, products, news and project how-tos for eco-friendly living.
• Going Zero Waste: This blog focuses on sustainable living and zero waste by breaking it down into manageable steps.
• Energy Star: This site provides information for Energy Star energy rating on products and homes.
• Green Finance Platform: This site provides information regarding eco-friendly finance practices.
• Institute for Sustainable Communities: The Institute for Sustainable Communities facilitates communities addressing environmental, economic and social challenges.