Hipster money: tips to make your cash as cool as you

Written by Lisa Stanley Mann on 9th February 2016

Organic, free range, ethically-sourced, fair trade, eco-friendly. If any of these terms “resonate” (dreadful word, hard to avoid) with you, you could be a hipster.

But is your money as responsibly-sourced as the rest of you?

Probably not. For millennials, despite wanting their work and money to have more of a positive social and environmental impact and being attracted to brands that match their values, research from Experian shows that this does not necessarily translate into motivation to do anything about where their money is going.

56% of “millennials” (you’ll know if you are one, but basically, under 34s) say they would be willing to switch to a different service provider that offered them something extra; however, a quarter (23%) say they are not willing to switch at all.

Motivations to switch to an alternative provider included cheaper services (47%); better products/ services (46%) and cash incentives (44%) or rewards and privileges (37%). 21% said they would switch to a more convenient (technologically advanced) product.

The Experian survey did not include an “ethical” option in the questionnaire. Perhaps if it had, it would show that a values approach among financial services providers would help overcome the apathy (could we go as far as ennui or resignation?) among some in the hipster demographic towards their personal financial choices.

The good news is, there are options for hipsters wanting their money to reflect the values they look for in clothes and food.

IFISAs.

There’s a new kid on the block when it comes to your ISA. Innovative in name, innovative in nature, the new Innovative Finance ISA (IFISA in industry speak) will open up the peer-to-peer lending market to tax-free ISA savers. Ratesetter, the UK’s biggest peer-to-peer lending platform is first out of the blocks with the launch of its IFISA, available from April. Ratesetter’s founder says: “we calculate that existing investors could save as much as £376 in tax per year if they are higher rate taxpayers.”

Given the potential for significantly better rates on offer, it’s no wonder that one in four cash ISA holders say they are considering opening an Innovative Finance ISA. With peer-to-peer lending, your money is going straight to other people (or sometimes companies) who wish to borrow, not being invested in random derivatives or sectors that leave a bad taste, such as oil and commodities. Bringing us on to…

Move your money out of oil and gas. 

Where students go, we follow. Students across the world have been leading the divestment movement, with some great results so far. They’ve managed to nudge some of the world’s biggest universities and pension funds to divest from oil and gas, from the universities of Warwick, Glasgow and Sheffield, to the Guardian Newspaper Group, the British Medical Association and the cities of Oxford and Bristol, and many more.

With the oil price as it is, this switch can make financial sense, too (although whether the oil price rout is a long term trend is anyone’s guess). You don’t have to be a big fat educational institution or pension fund, or even a fat cat with a wadge of investments, you can make your own finances divestment-friendly, too. You can simply switch your bank or savings account to a bank or savings brand that doesn’t fund oil and gas – find out how your bank fares here.

Of course, if you do have any money invested, you need to check underlying fund holdings. If you don’t like what you see, then choosing a green fund (also called Socially Responsible Investment funds, investment with Environmental and Social  Governance, ethical funds, eco funds, you get the picture) is a way out of the bad stuff. There’s a good list available on the new Fund EcoMarket.

Impact Investment.

Recently launched tax breaks for higher rate tax payers, as well as the chance to do your bit for society either locally or nationally, are starting to make the impact or social investment sector a groovy thing.

Investing in charities and social enterprises is easier now than ever before, and it’s a win-win for those beneficiary organisations as well, as public sector spending cuts continue to bite.

As the Government looks to the private investor market to plug this ever-growing gap, Social Investment Tax Relief (SITR) of 30% is currently available on some investment opportunities. Ethex is a not-for-profit investment platform offering a range of ‘positive investments’ by way of Social Impact Bonds or shares in Community Benefit Societies.

More social investment opportunities are listed on the Big Society Capital website here. Meanwhile the Social Stock Exchange is a new platform for social investing, with 31 companies now listed for investment.

Shopping-to-give, gifting and rewards-based crowdfunding. 

Where you shop, what you buy, wear, or gift can make a huge difference to the end entrepreneur or charity. Our current favourite cool-with-values pick is www.SelfishMother.com. All profits from these sales go to charities such as Women for Women International or Kids Charity for disabled children. For stylish homewares, skincare and clothing you can be assured is is sustainably produced and sourced, check out our friends at ethical department store Liv. Or, if you want to give a gift with a difference, give a Deki gift voucher of a loan to help a struggling African entrepreneur; or choose one of the amazing rewards available for crowdfunding UK projects such as tea-rooms, swimwear, films or surfing lakes available via Crowdfunder.

£38k joint income