How can we apply KonMari – The Japanese Art of Tidying Up to our finances?

Monica Singhania

Recently, I read a book called The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo. This book had become an instant bestseller on release in the United States in 2014. It’s author made it to the top most influential people in the world list by 2015. Marie has been interested in organizing ever since her childhood and is the founder of the KonMari method which follows these six basic rules of tidying.

RULE 01 Commit yourself to tidying up.

RULE 02 Imagine your ideal lifestyle.

RULE 03 Finish discarding first.

RULE 04 Tidy by category, not by location.

RULE 05 Follow the right order.

RULE 06 Ask yourself if it sparks joy.

At the core of this method lies a simple question “Does it spark joy?”

The book has some profound yet straightforward rules to declutter our homes and in the process our lives. It is no surprise that we are all living in a world of things, and we keep buying more and more. When the KonMari method is applied correctly, it can be a precious tool in simplifying not only or homes but also other aspects for our life.

After we (my husband and I) read the book, we were able to declutter our closets, kitchen, and garage. Now our house feels more organized. We said, “Thank you for your service” (as prescribed in a book) to the inanimate things and discarded them one by one. By expressing our gratitude, we were able to let them go effortlessly. As a result, we now have more space to enjoy the things we kept.

This clearing and cleaning process, made me think of three finance-related areas where we could apply KonMari and declutter our lives.

An excellent place to start will be by analyzing our monthly/ quarterly cash flow/credit card statements. Let us face it, most of us never examine our statements or tally our expenses. There can be many factors at play here, some of it could be fear of actually realizing how much money we spend, or it just might be that we lack time as we lead busy lives. With everything being on auto pay these days there is no reason or incentive to check for correctness either. However, we must commit to checking these statements periodically if we want to achieve financial clarity.

By reviewing our cash outflows, we can map our spending story. Check various categories like entertainment, eating out, clothing, services, etc. in your credit card statements and compare this with your budget goals if you maintain them. Next, see what can expense you can let go. If that means saying no to a friend who likes to eat dinner at fancy restaurants every week or canceling an expensive gym subscription that you thought you would use but haven’t gotten around to going. Do it. Spend your time, energy and valuable money where it sparks joy.

It is easy for all of us to slip in an autopilot mode when it comes to specific expenditures. A couple of years ago when I was going through my monthly card statements, I discovered to my disbelief that we were spending $70 on coffee shops buying expensive lattes every month, that ads up to $840 spent on coffee annually. I was not happy about this choice, as that coffee money could be spent more wisely on buying a weekend getaway that my family would cherish. The result was we purchased a coffee machine for our house and now only go to a coffee-shop when we are traveling or meeting a friend. Many online apps and tools are available that can help you track your monthly expenditure category wise and allow you to set budgets.

The second place where we can apply this decluttering process is in the way we invest. Here we can modify the question “Does it spark joy?” to “Does it meet your goals?” Over the years, I have analyzed several client statements and found that often we tend to have too many fund selections in a particular asset class or among investment categories like growth, value, blend or small, mid, large caps. When we analyze each of these funds on a more granular holding level, we may find a concentration in just a handful of company stocks. We need to be more clear and systematic in our approach and select the portfolio allocation in such a way that is consistent with meeting our short-term and long-term goals.

Finally, when we change jobs and leave money in our old 401(K), we might end up in a situation where we have too many accounts to handle. Over time, these accounts are forgotten and not managed holistically. Talking to your advisor about rolling over old 401(K) account is a good idea. You can end up saving money on account of administrator fees and benefit from the vast array of choice of funds available outside the company sponsored plans arena. The only caveat being the company sponsored plan come with creditor protection which you lose when you roll over the account.

The last and final frontier for application of KonMari method might be in examing our thoughts, habitual behaviors and mindsets and determine if “Does this serve me well?” If not, then we should discard our old ways and develop new ones to live more wholeheartedly. Easier said than done!

The KonMari is not a one time process instead it is a philosophy that needs to be applied periodically. We all tend to collect stuff over a period, that is what we humans do. So, whether it is your home or your finances or your mindset set time aside to declutter, do it all together to get rid of the old and make space for new. Either, you do it yourself or seek the guidance of a professional who can help you get started and keep you accountable.

Do you have any questions? Reach out to us; we are here to help.

 

 

 

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Monica Singhania

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