CHAPTER 2
Your Relationship with Money: Invest with Your Heart and Mind

Everyone has personal beliefs about money. Developed in our formative years and throughout our lives, these stories guide our financial decisions for better or worse. By understanding our money stories, we can discard self-destructive behaviors and adapt new positive practices. While there is little you can do about the past, you can rewrite your stories from this day forward.

For years, my financial habits were dictated by the trauma my Depression-era parents experienced around money. They both suffered through poverty in their youth, with my dad often saying he had grown up “dirt poor.” My earliest money memory was the recognition that we did not have enough. We clipped coupons, saved pennies, and wore used clothing. So it's not surprising that as I became an adult, I believed I would always have to do without. I was a saver from the get-go, because I didn't want to end up as an impoverished 80-year-old woman living under a bridge eating cat food. Even as I became a better earner, owned my own home, and had excess money, I still clung to my fear that I would never have enough to avoid future poverty and hunger. That disempowering belief stayed with me through my fifties! It's only when I took control of my own money and began investing in the things I cared about that I was finally able to dispel my fears and embrace something more empowering.

The way you choose to reimagine your relationship with your money will determine the future of your financial life and the way you feel about it. You have an opportunity to create a story of empowerment that brings you joy and puts you into integrity with your values. This chapter will start you on a process of uncovering any of your self-limiting money behaviors and set you on a path to identify and integrate your values with your money.

We All Have Money Stories

Think back to when you were growing up; what was the most significant principle you learned about money? Perhaps you can even hear the voice in your head of the person who drilled it home. Or maybe you remember a time when a money belief was first imprinted on your psyche. Often, these rules take the form of something like “you should always” or “you should never.”

Sometimes our most influential and entrenched money stories are more mundane or can even emerge from pleasant memories. Rather than an explicit admonishment, our stories can evolve from what we pick up around us—from behaviors in our families to social cues to others' opinions. We may not even be aware that we're piecing together a story about our money along the way.

The Eight Financial Archetypes

Our money stories are revealed in our lives through our financial behaviors, which can carry both strengths and weaknesses. As Suzanne's story demonstrates, the way we show up around our money can also change over time as a result of circumstances and our conscious decisions. To be more intentional with our finances, it helps to understand these behaviors and to discover what drives them.

In his book It's Not About the Money, Brent Kessel, CFP and founder of Abacus Wealth Partners, introduces eight financial archetypes that describe the money behaviors that people most commonly display. The archetypes provide insight into the stories that might be driving our attitudes, beliefs, and behaviors around money. Each has a set of key attributes, positive gifts, and potential pitfalls. The gifts associated with each archetype highlight the strengths you carry, while the pitfalls point toward obstacles that might be blocking your way to a completely satisfying financial future.

No one archetype is superior or inferior to another. In fact, we are all more than one, sometimes a blend of three or four. As you read through this section, try to be compassionate with yourself if you notice negative patterns in your behaviors. Balance them against the gifts that are also present. You might find that through increased awareness you can modify your behaviors to minimize pitfalls and maximize the gifts that have emerged from your money stories to date.

The following narratives are composites of real women who exemplify each of the archetypes. You will meet some of them again in later chapters where they are used to illustrate key points or concepts.

THE GUARDIAN—ALERTNESS, PRUDENCE, THOROUGH ANALYSIS FOR SAFETY   Anika is 27 years old and single. She watched her parents struggle to make ends meet. Sudden, unexpected expenses—like a major car repair—could put the family in financial crisis for months. Anika grew up believing that money was scarce and could disappear at any moment. Now, she is vigilant with her money and saves aggressively. Most of her savings are in cash, because that is what she feels is safest. Anika believes her financial situation is precarious, even though she has enough money set aside to cover all her expenses for one year and is maxing out her employer's retirement fund.

THE PLEASURE SEEKER—ENJOYMENT, RELAXATION   Sydney is a 45-year-old life coach. She makes enough money for her needs and even has some left over. She derives great pleasure from clothes, her home, and weekend getaways. Sydney often treats when she and her friends go out to dinner. She knows she is not saving enough for her future and sometimes it worries her, but Sydney has a really difficult time turning down invitations to dinners, events, or minivacations.

THE IDEALIST—DESIRE TO CREATE SOCIAL OR ENVIRONMENTAL TRANSFORMATION   Jade is 32 years old, married, and part of Financially Independent Retire Early (FIRE), a lifestyle movement whose members have the goal of achieving financial independence and retiring early. Based in a coastal area, she and her husband, Denzel, are environmentalists and make their purchasing decisions accordingly. Because they plan to retire in their early 50s, they have chosen a simple lifestyle. They expect to have children but are concerned about the world they will be bringing them into.

THE SAVER—SELF-SUFFICIENT, SECURE FUTURE   Toni is a 73-year-old retired nurse with three adult children, one of whom has special needs. She and her husband saved consistently throughout their lives, and now have enough money to carry them through a pleasant retirement. Even though they don't touch their principal and live off dividends and Social Security, they worry constantly about their financial future. As a result, they scrimp and obsess about their daughter, Nina, who will need to be cared for when they die.

THE STAR—LEADERSHIP BY EXAMPLE, INFLUENTIAL, VOCAL   Natalie is 35 years old and recently married. She works in sales for a major corporation and was recently promoted to a leadership role. Natalie's leadership begins with herself, and she strives to set an empowering example of what is possible. She's proud to share her experiences with others, using her voice on different platforms to do so. She thrives on being seen as relevant and influential. She loves to share what she has learned. Natalie wants her money to nourish all parts of herself and wants to use it to help others.

THE INNOCENT—SIMPLICITY, TRUST, NETWORKS, COMMUNITY   Cynthia is an unmarried 58-year-old former schoolteacher turned educational consultant. Her work takes her around the country helping low-resource communities strengthen local education systems. Professionally, she is very well connected, creative, and accomplished. Yet when it comes to her money, she avoids looking at it. Instead, she relies on her friend and CPA to tell her what she needs to know. Because she prefers not to think about money, Cynthia doesn't have a handle on her actual income, expenses, or level of investments. She doesn't really know what amount she needs to retire or how to get there.

THE CARETAKER—COMPASSION, EMPATHY   Ava is a 46-year-old mother of two children in middle school. She dropped out of the workforce when her first son was born and relished the years she stayed home. She is now divorced and reentering the workforce. Ava needs to rebuild her career and gain control of her financial life. Although she was a tax attorney and good with numbers, she left all the investment decisions to her husband when they were married. A friend suggested Ava hire a financial advisor, which she is considering.

THE EMPIRE BUILDER—INNOVATION, ENDURANCE   Maria is 51 years old. She lives with her current partner and two teenage daughters. Her parents were immigrants who worked hard, but in low-wage jobs. Her upbringing was loving but financially stressful. Through hard work and grit, Maria became an engineer. She ended her career as a co-founder in a recently acquired company, leaving Maria a multimillionaire—an outcome she never expected. Always driven, Maria thrives on being relevant and influential.

You likely noticed a few familiar patterns as you read. Perhaps you are pleasantly surprised and ready to forge ahead, or maybe you're beating yourself up over your negative patterns. Regardless of your reaction, I invite you to continue exploring your money stories and the behaviors they engender. Table 2.1 lists each financial archetype, along with their attributes, gifts, and challenges. If you want more information about your own financial archetypes and to gain insight into how you can change behaviors that are not working for you, visit abacuswealth.com/quiz and take their five-minute quiz to reveal your primary archetypes.

TABLE 2.1 The Eight Financial Archetypes


Archetype
Key
attributes
Positive
gifts
Potential
pitfalls
The guardian Always alert and careful, fear of financial loss Alertness, prudence Worry, anxiety
The pleasure seeker Prioritizes immediate pleasure and enjoyment Enjoyment, pleasure Hedonism, impulsiveness
The idealist Values creativity, social justice, and compassion Vision, compassion Distrust, aversion
The saver Seeks security through accumulating money Self-sufficiency, abundance Hoarding, penny-pinching
The star Spends, invests, or gives to increase self-esteem Leadership, style Pretentiousness, self-importance
The innocent Avoids focus on money, hopes for the best Hope, adaptability Avoidance, helplessness
The caretaker Gives and lends money to express compassion Empathy, generosity Enabling, self-abandoning
The empire builder Thrives by creating enduring value Innovation, decisiveness Greed, domination

Our money stories and financial archetypes influence how we behave around our money. As you begin to recognize behaviors that may be holding you back, know you can change them. You can create new stories around your money. New stories about how to earn it, control it, save it, and invest it. You don't have to stick with what has been true in the past or with the status quo. The way you manage and invest your money is an expression of your “how.” As you learn, you'll be able to bring more awareness to your “how” and make more informed investment and money management decisions.

Integrating Your Values

Just as the way we manage and invest our money is an expression of our “how,” our values and what we choose to invest in are an expression of our “why.” They guide how we show up in the world and drive our actions and choices. Each and every day, as a friend, partner, parent, consumer, and citizen, you are living your “why” through the choices you make about where you put your time, attention, and resources.

Yet, this “why” has been left out of most investment decisions and discussions. Just because it has been that way for a long time, does not mean it has to be that way going forward. Our “why” is connected to our hearts, to our deepest-held feelings and values. Do we really want to leave that out? Particularly if we do not have to give up financial return?

When you invest with both your heart and mind, you can step into your real power around money. If you are reading this book, you probably want to see a world that supports you, your family, your community, and the planet. Most of us strive in our daily lives—in big and small ways—to make the world a better place than we found it. We are committed to justice. We are committed to equity. We are committed to sustainability. We want the world to be a healthy place to live and to offer even more opportunity to our children and future generations than it has for us. Not surprisingly, people everywhere have the same ideals, dreams, and visions.

In recent years, a framework has emerged that is connecting organizations and people around the world to a global movement that has a shared vision for our collective future. You can use this framework to clarify your values and prioritize the ones you want to inform your investment decisions.

The SDGs: A Powerful New Way to Think About Your Investments

This framework is referred to as the Sustainable Development Goals, or SDGs. It originated at the United Nations Conference on Sustainable Development, which was held in Rio de Janeiro in 2012. Representatives from over 30 countries were involved in the design of the SDGs. The designers of the framework aspired to create a set of universal goals that addressed the most urgent environmental, political, and economic challenges facing all of us. On September 25, 2015, the SDGs were ratified by the 193 member countries in the United Nations.

The SDGs provide a new model for how you can put your money to work. They offer a simple way to prioritize the values you want to see reflected in your investments. Because they are straightforward and easy to use, the SDGs are becoming a de facto standard among many values-aligned investors. When you use the SDGs to guide your investments, you become part of a movement that is larger than yourself. You join governments, businesses, and citizens from around the world who are working toward a common set of goals. By participating, you can amplify the impact of your investments.

As shown in Figure 2.1, there are 17 SDGs that range from ending poverty to tackling climate change to providing peace and justice for all. Each goal is broken down into a set of measurable indicators that are being used to track progress.

Snapshot of the Sustainable Development Goals.

FIGURE 2.1 Sustainable Development Goals

Using an Investment Lens Approach with the SDGs

Some people prefer to make their investment decisions with an overarching goal in mind. They look at every investment through that perspective, or “lens.” Gender lens investing is a great example. In this case, the investor seeks financial return while also considering the social well-being and economic opportunities available to women and girls. Multiple SDGs support this lens. Figure 2.2 shows how SDGs can be applied to four common impact lenses. If you want, you can create your own lens and assign the SDGs to it that you believe support that goal.

FIGURE 2.2 Applying SDGs to Investment Lenses

Putting Your Heart and Mind into Your Investments

If you're like most people, you've probably been taught there are two things you can do with the money that you don't spend—you can either invest it to maximize your return or you can give it away as charity. This is known as “two-pocket thinking.” Money that goes into one pocket is for wealth creation and what goes into the other is for creating positive change. Unfortunately, this reasoning does not accurately reflect what is really happening.

Far too often the dollars invested to grow wealth and maximize return actually contribute to the very problems the charitable dollars are intended to address. What's more, the amount in the “grow wealth” pocket usually dwarfs the amount in the “do good” pocket, raising questions about which is realizing the greatest impact—the invested or the charitable dollars.

Values-aligned investing moves beyond this limited, two-pocket perspective. As Figure 2.3 shows, it is a new landscape that has emerged between the pillars of traditional investing and traditional philanthropy. Values-aligned investing brings together the best of both—the informed mind of the investor and the heart of the philanthropist—to offer investment opportunities that are completely new. And it does so without giving up financial return. Because of this, we no longer have to choose between doing well financially and doing good for society.

Snapshot of the Values-Aligned Investing Landscape.

FIGURE 2.3 Values-Aligned Investing Landscape

The values-aligned landscape stretches across all the asset classes, or categories of investments, that we will be discussing in this book. As you will discover, there are opportunities for you to move your money into alignment, regardless of whether you are using cash, stock, or any other investment vehicle. For example, let's consider gender lens investing again. This goal could be addressed by moving:

  • Cash into community banks;
  • Fixed income into municipal bonds;
  • Stock investments in to companies that advance gender diversity and leadership;
  • Private investments into women-led start-ups;
  • Alternative investments to support affordable housing;
  • Philanthropy to nonprofits that improve the lives of women and girls.

These are not the only options for gender lens investing but rather a sample of what's possible. Similar lists of potential investments can be created for other lenses or for your SDG priorities, with some caveats. Because the market of values-aligned financial products is still growing, it's not yet possible to find a full array of investment options for every SDG or investment lens. However, the rate of new product introductions is accelerating, and there are already a lot of options to be excited about.

Levels of Impact

Referring to Figure 2.3, you'll see there are three levels of impact within the values-aligned investing landscape: do no harm, benefit stakeholders, and develop solutions.

  • Level 1: Do no harm is closest to traditional investing. Investments at this level eliminate involvement in selected industries, such as tobacco and weapons, from your portfolio. This approach, which is also known as negative screening, was the first way that socially responsible investments were designed.
  • Level 2: Benefit stakeholders moves to the next level of impact by actively selecting only those companies that adhere to ESG best practices. As values-aligned investing has become more mainstream, fund managers are shifting from “considering” ESG in their investment decisions to integrating these criteria as a central element of their investment philosophy.
  • Level 3: Develop solutions is the most impactful approach to investing. At this level, investments support companies that are creating solutions that result in positive social and/or environmental change.

You can't achieve all levels of depth with every investment—at least for the time being. But you should be able to find options in every asset class that can move you closer to your values and impact goals. I firmly believe our options will broaden and deepen going forward. As more of us actively shift our money into alignment with our values, the faster that change will come.

Take Action

This section provides some action steps you can take to deepen your understanding of your relationship to money. Choose one or two to do this week.

  1. Explore your money stories

    If you haven't already, take the archetype quiz mentioned earlier in this chapter to learn more about your financial archetypes or download one of the toolkits on our companion website, activateyourmoney.net, to engage in another method of exploring what money means to you and how it fits in your life.

  2. Bring clarity to your values

    Find a quiet place and grab a pen and paper. Then write your answers to the following question, taking care to be as thorough as you can. What changes would you like to see in our society over the next 20 years? Think about your community, the country, the economy, the environment.

    Once you complete your writing, look back at the SDGs in the previous section to see which of them are most related to your vision. Now, explore which resonate the most with you and pick your top three to five. Then put your list away and return to it in a few days.

    Do the SDGs you chose still feel like your top priorities, or has something changed? If they are the same, you're ready to move forward. If they changed, reflect on why.

    Perhaps you realized one or two really stand out and you want to use them as your lenses. Perhaps you dropped a few and added others. Assuming you feel good about your choices, move on. If you're still wavering, you might want to sit with them a bit longer.

  3. Engage with others

    Start a conversation with a few of your female friends and ask them about the early childhood messages they received around money and how those messages are still influencing them today. Alternatively, have a conversation about the SDGs and aligning your investments with your values.

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