A key focus of my blog is Financial Literacy/Money. Something that’s rarely associated with money management is ethics. Do the two go together? Who decides what ethical money management is? The following contributed post is entitled, Why You Should Manage Your Money Ethically.
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Ethical money management is a pretty niche topic but it’s something we should be talking about more. How we spend and how we manage our money has a big impact, not just on our own fates, but those around us. Indeed, the American dream is just that: a dream that is unlikely to become a reality for more than a lucky few.
When the world’s 26 richest people have roughly the same amount of wealth between them as the poorest 3.8 billion, there is a serious problem and the inequality is growing every day. But, while you might like to think that this has nothing to do with you, the reality is that everyone has spending power and your ethical practice matters just as much as a billionaire’s.
Taxes and Compliance
Paying your taxes comes first and foremost in ethical money management. Tax can be incredibly controversial and while some people believe in lower taxes and greater individual spending, others prefer a higher tax rate with more community services and assets.
You must also make sure that you comply with any relevant laws. Most compliance applies to business owners but some laws apply to individuals too. For example, you should declare any interests overseas through the Offshore Voluntary Disclosure Program OVDP. Whether you believe in high or low taxes and whether or not you agree with the law, this is a basic requirement for ethical money management.
Ethics and shopping are often difficult to navigate together. As shoppers drive down prices, the conditions of manufacturing workers diminish, unsustainable practices aren’t challenged and, ultimately, everyone is worse off as products don’t last as long as they should. But considerate shopping is easier than you might think if you are willing to put some time into research.
Considerate shopping often comes down to the difference between frugal and cheap. Someone frugal will do their research, buy good quality, fair trade and sustainable products but might wait until the sales. Someone cheap doesn’t care how something was made or whether it is good quality – they are just interested in saving money no matter what.
Ethical investments require a bit of research too though you can find funds that are dedicated to ethical investments alone. Choosing ethical investments can be difficult, though. Some unsavoury companies have been known to present themselves as ethical and then be anything but. However, this shouldn’t put you off trying to uphold your values.
The best way to get started is to research the areas you are most interested in. For example, if you are particularly interested in the environment, you should look for investment opportunities that align with your beliefs. Remember: you’re not going to find a perfect opportunity so you will need to think carefully about what is most important to you.
Ethical money management is perfectly possible as long as you are willing to do some research and think carefully about where you put your money. Ethics are never clear cut, so see this as a chance to grow, not a one-off.