By Sarah Pacheco
Marie Kondo has sparked a decluttering movement through her best-selling books and hit Netflix series that ask people to sort through their possessions to find what brings them the most joy, then chuck the rest.
The result, Kondo assures, will be a tidier home and happier home life.
Followers have found these techniques can translate easily to the dieting and dating realms, but can you use the KonMari method to declutter your finances?
The answer is a resounding yes, and here’s how you can find your way to financial tidiness in five steps.
Sort Through the Clutter
If you’ve picked up a copy of “The Life-Changing Magic of Tidying Up” or “Spark Joy,” then you know step one of bringing order to your life involves first getting a little messy.
Gather all your financial information – bank statements, credit card bills, pay stubs, receipts that reveal your penchant for dining out and spoiling your “fur babies” to new toys every other week … anything tied to how you earn and spend money should be brought together so that you can get a complete picture of your current financial health.
Now is not the time for judgement or hurry.
Be patient with yourself and allot adequate time to the task of sorting through the clutter.
Just as Kondo emphasizes a gentle approach to going through physical items in the home, go through each piece of financial information with equal care.
And if you’re moved to do so, say a little “thank you” to transactions that allowed you a memorable experience.
Once you have everything literally out on the table, it’s time to get organized.
The KonMari method divvies up the home into five major categories – clothing, books, paper, sentimental items and miscellaneous.
It may seem intuitive to lump finances into one giant “paper” category, but a deeper dig into your spending habits may reveal your finances fall into several buckets.
To discover your own financial categories, look at the past few months of bank statements (between four to six months back is a good gauge) and go through each transaction.
Themes like “rent/mortgage and utilities,” “groceries” and “loans” will begin to appear. Depending on where you are in life, you may have categories that cover education for children or health care for aging parents. Or maybe you designate a certain amount of money go toward a charity each month.
Two things that should be on everyone’s list? Savings and miscellaneous (i.e., fun!).
This stage also presents the opportunity to look at areas you could tidy up by either spending a little less or saving a little more.
Which brings us to the next step.
Once you know your present financial standing, map out where you want to be in the future, and identify how much money you’ll need to put aside each month to get there.
After budgeting for necessities like housing, food and repaying bills, plan to allocate a portion of your monthly income to savings. How much you put aside will depend on your current circumstances; there are online calculators like this one from HawaiiUSA FCU that can help you figure out a percentage that works best for your goals.
Designate a Space for Financial Documents
When your budget is streamlined, it’s time to find a home for important documents.
Whether it be a physical location in your home or a digital destination online, create a place for your financial information to live.
Now also is a good time to let go of paper clutter that no longer serves a purpose. Purge old bills, bank statements and other documents you no longer need.
However, it is best to keep certain records as proof of payment (hello, student loans) or ownership (think your home, car and even health insurance).
Financial literacy advocate and author Tony Steuer created this detailed planner that lists how long to hold on to common documents. (The guide also has a column where you can list the location of your most-important documents, which will make finding them a snap in the even you need to access them.)
Stoke the “Spark Joy” Flame Before Spending
One final lesson to take away from Kondo’s method is maintenance.
Continue to use the systems above to keep your finances in order moving forward, and be scrupulous when it comes to spending.
It may not sound like fun, but by pausing to question the amount of joy a potential purchase can bring into your life, you can save your future self unnecessary stress, guilt and regret without burning a hole in your pocketbook.