Surely, you must have heard of Marie Kondo at least once this year. The Japanese decluttering guru who was previously a best-selling author, was propelled to international stardom when her Netflix series, “Tidying Up with Marie Kondo”, was released this year.
Apart from her cheerful and dainty demeanor, what’s so unique about Kondo is her KonMari method of tidying up. Kondo believes that a happy life requires organization, and in her own words, she says,
“Keep only those things that speak to your heart. Then take the plunge and discard all the rest. By doing this, you can reset your life and embark on a new lifestyle.”
Wow. Such a simple yet profound message. Don’t you think?! Why do we continue keeping things that do not spark joy in our lives?
While Kondo’s message was focused on organising physical mess at home, her tips can be very well translated to our financial life as well. Just like the homeowners who unknowingly collected a huge mess in their houses, the busyness of everyday life often leaves us losing track when it comes to being on top of our spending and finances.
And no, don’t beat yourself up over it – it is indeed hard. So if you have been out of track with your finances lately, we thought to come up with some simple tips and checklist like what Kondo has done in her KonMari method of tidying up, to help you get back on track with your financial life again.
1. Commit to tidy up your finances
The achievement of any goal starts with a decision to commit to following through with it. Tidying up anything, much less your finances, is an enormous task. Ironically, the process of tidying up would first require us to undergo the process of first messing everything up.
Just like the homeowners who had to dig out items from every nook and cranny to see what it was that they needed and what they could discard, we’d first have to come face to face first with the reality of our financial situation.
This would possibly involve finding and collecting your latest bank statements, credit card bills, insurance premium notifications, tax letters, utility bills, membership subscriptions, and the like. And that is indeed a lot of work.
But remember that it will get worse before it gets better. So commit to it and start getting out all the necessary documents! It will be painful, but it will also be worth it!
2. What is your ideal lifestyle?
What do you imagine your ideal lifestyle to be like? After all, being clear and organised about our finances is not an end in itself. The greater goal we are pursuing is to be on top of our finances enough, so we don’t become slaves to money. Thereafter, we can then actively pursue the ideal lifestyle that we have always dreamt about instead of having our financial situation dictate our lives.
Some questions to ask yourself as you reflect include:
- Where do you see yourself 1, 5, and 10 years down the road?
- What do you value?
- What do you want to achieve?
Having clear answers to these questions can become the driving force behind your commitment to tidying up and being on top of your finances. More importantly, it also serves to provide the bigger picture you strive to as you set your financial goals.
3. Discard your unnecessary expenses first
Kondo suggests for homeowners to discard what they do not want, first. What Kondo observed was that those homeowners who could never seem to finish tidying up often kept and stored many things.
It is the same for our finances. While we can’t entirely “discard” our financial commitments, what are some things you wish about your finances that you wish to discontinue? Is it that monthly gym membership that you only went less than a handful of times since you signed up? The frequent nights out eating out and partying?
Identify what you want to stop, and do it first – whether by cancelling that membership or subscription now, or by setting a plan on how to soon stop it.
4. Organise your expenses by category
Just as we categorise our household items, we should tidy our finances by category as well, especially our expenses..
I find it helpful to categorise my expenses in the following manner: first, by the type of items which they are spent on, followed by the nature of the expenditure – whether they are recurring or one-off , and whether they are necessary or discretionary (i.e. needs vs wants).
For instance, the main expenditure categories are often rent, transport, food, groceries, mortgage and education loans, etc. Of which, what expenses in these categories do you incur regularly? Under transport, this could be your monthly metro pass. The uber ride that you take after that late occasional one night out when you were too tipsy for the metro would be a one-off expense. Further, the metro pass is necessary as that is your main mode of transport to and from work, while the uber ride is a discretionary as you could have taken the metro, but preferred the uber for more comfort.
While it might seem that recurring expenses are often needs, you can work to decrease them if you find them to be a want that is excessive. It is often the one-off expenditures and wants that make us overspend if we do not keep track of them consciously.
Categorising and tracking your expenditure allows you to become more cognizant of your spending habits, and change them for the better. As they say, “Self-awareness is the first step to change”.
5. Organise and store your bills and documents
Kondo also encourages home owners to use transparent boxes to store things because it allows them to see and easily see what they have been storing. The same idea of storing our financial documents in an easily accessible and understandable format applies as well.
Organising our finances is not a one-off process but a habit that we need to commit to on a regular basis. Therefore, it helps to have your existing files and records stored in a place that is easily accessible for you.
This could come in the form of an excel spreadsheet stored on your laptop, or a budgeting app you have installed on your phone. Do what works for you that lowers to make organising your finances a habit going forward.
Our finances are often one of the biggest burdens weighing on our minds and it can frustrate us to no end when it seems so overwhelming. However, just like the initially overwhelmed home owners, take it bit by bit to instill these good habits for your finances. Over time, your finances would slowly but surely spark joy!
Tidying up your finances? Download the Miss Kaya “Tidy Up Your Finances” checklist by clicking on the image below.
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