How to Tidy Up Your Finances Like Marie Kondo
by Lyle Daly | Updated July 17, 2021 - First published on April 8, 2019
Even your finances can spark joy in your life. All it takes is a little decluttering.
With a book and now an extremely popular Netflix series to her name, Marie Kondo has brought minimalism into the public eye like never before. If you spend much time on social media, you're bound to see people using the KonMari Method to declutter their homes.
Although Marie Kondo's teachings focus on home organization, they can be just as useful for tidying up your finances. With a few adjustments here and there, the financial side of your life will be a well-oiled machine that doesn't cause you any stress.
Map out your financial goals
When Marie Kondo works with clients, her first step is having them visualize what they want their home to look like. This image provides motivation and gives them a goal to aim for.
You can do the same thing by envisioning where you want to be financially and then figuring out actionable steps to get there.
Let's say you want to be debt-free, have $15,000 in an emergency fund, and save 20% of your income. To get there, you may decide that you need to:
- Cut your discretionary spending.
- Negotiate a raise to increase your income.
- Pay off your credit card balances.
- Start saving $1,000 per month toward your emergency fund.
Gone are the days when you needed to file away every receipt and financial document. It's much more efficient, both in terms of space and organization, to digitize your records.
There are some documents you'll need to keep physical copies of, such as birth certificates, marriage records, and your Social Security card. But for the vast majority of your documents, it makes sense to store them digitally.
Switch to paperless statements with your banks and credit card companies. With physical documents you need to keep a record of, just scan them into your computer and then shred them. If you keep your files stored on your computer and uploaded to cloud storage, you'll be protected even in the event that one storage method goes down.
Weed out your unnecessary spending
An essential part of the KonMari Method is decluttering by removing unnecessary belongings from the home. We can do the same with our finances by taking a good, hard look at our monthly spending.
Go over every expense and ask yourself:
- Was this important to me in some way? Either because it's a necessity, such as rent, or because it improves your quality of life.
- Am I comfortable spending this much? Even with valid purchases, you should still make sure that you're not overspending.
The point here is not to remove all but the bare essentials from your life. It's to ensure that you're only spending your hard-earned money on what really matters to you.
Consolidate your accounts
Aim for quality over quantity with your banking, credit card, and retirement accounts. More accounts just mean more to manage.
Here's how to consolidate your accounts in each of those areas:
- Banking: Use one checking account for your usual spending and one savings account for your emergency fund and any big expenses you want to save for. Research the best bank accounts to ensure the accounts you choose earn high interest and don't cost you unnecessary fees.
- Credit cards: Pick either a cash back card or a travel rewards card to use for all your spending. If you have extra credit cards, closing them could affect your credit score, so you may be better off leaving them in a secure location at home -- but don't lug them around with you.
- Retirement: If your employer offers a retirement plan and matches your contributions up to a certain amount, then use that account and roll over any accounts from previous jobs into your new plan. Depending on what's available to you, you can contribute to a 401(k), an individual retirement account (IRA), or both.
An easier way to manage your money
If you find yourself juggling multiple credit cards, having trouble keeping up with all your bill payments, and spending money frivolously, then tidying up your finances could be exactly what you need. It doesn't take long to make a positive change in how you handle your money.
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