By now, every Singaporean with an internet connection would have watched all 8 episodes of the Netflix series Tidying Up with Marie Kondo and fallen head over heels in love with the titular pint-sized organization goddess and her adorable (and just a tiiiny bit psycho) smile.
And, from the piles of junk lying outside the Salvation Army, I gather that many of us have also been decluttering around the house too.
But… have you done the same ruthless culling with your personal finances?
It’s difficult enough to Konmari your physical possessions, but when it comes to financial stuff like your bank accounts, credit cards, investment portfolio, and loans… that’s a whole new level. Plus, no one particularly wants to hold their banking relationship manager close and ask if they spark joy.
Never fear. Here’s a 5-step plan for adapting the Konmari method to personal finance, with absolutely no bodily contact needed.
Step 1: Visualize your ideal financial state
Every Tidying Up with Marie Kondo episode starts with a background set-up: What’s the featured household’s relationship with clutter? Why are they going to Marie Kondo now? What do they hope to achieve?
Then Marie Kondo leads them in a silent “prayer” to the house to visualize what their ideal life to be like.
You don’t have to bow your head and pray to UOB or Maybank, but it’s worth taking a step back from your personal finances and thinking about what you want them to look like, and why.
I’m not talking about fantasy scenarios like finding a tree made of money on Pulau Ubin or becoming a fengshui sensation like Joey Yap. I mean simply picturing a new and improved version of your life, and considering what the money aspect looks like.
Your ideal finances are dependent on your larger goals and values. Are your kids the most important thing to you? Then imagine what it would take to provide the best for them and protect them from harm.
Or perhaps you don’t want to work in your soul-crushing job for another 40 years. Think about what freedom from that looks like, and what it would take to get there.
How about a life where you give in less to impulse shopping sprees, and focus more on your health, family and friends? Think about how you would channel your money towards that.
Step 2: Get everything out where you can see them
Marie Kondo is a strong proponent of tidying up as a “special event”, i.e. cancel all appointments and mute your phone, because you’re gonna be doing nothing but tidying and purging all weekend long.
There’s no point half-assing it by doing a little bit at a time – too much wiggle room and you’ll end up putting the next bit off till 2020. So go big or go home.
With physical belongings such as clothes and books, Marie Kondo would get you to go around the house and pull everything out onto the bed or floor into a giant mountain. But how do you do it with abstract things like bank accounts and Grab subscriptions? That’s tricky.
Personally, I just write everything down with good old pen & paper or on my phone. Marie Kondo is big on categorizing, so I’ve come up with 4 categories.
Financial inventory: First, list out all the money you have in various forms – bank accounts, fixed deposits, investments, etc. I’d even include all those tiny things like PayLah account balance, Lazada wallet and GrabPay credits. (Doing this exercise will probably make you realise there’s WAY too many e-wallets out there…)
Financial products: Next, list the other financial products that represent outgoing expenses – credit cards, loan repayments, insurance and so on.
Monthly expenses: List out all the day-to-day expenses that you spend money on because of your lifestyle, like food, petrol, diapers, rent, gym membership, subscriptions, etc. For this exercise, the actual amount is not as important as the item you’re spending on.
Annual expenses: List of annually recurring expenses like taxes, car insurance, school fees, holidays, and festive spending. Requires quite a bit of thinking but it’s also very important, because we tend to overspend on these again and again.
Step 3: Tidy by category & ask what “sparks joy”
According to the Konmari method, after you’ve laid everything out where you can see them, you should go through the famous “spark joy” ritual category by category.
Marie Kondo is ultra-methodical about this. She even specifies the order to do this in: Clothes, books, papers, komono (miscellany) and finally, sentimental items. Supposedly, this is in order of least to most emotional, so you won’t simply crumble into a heap of tears when you face your old Ten Year Series notes.
In the same spirit, I recommend that you start pruning the categories from least emotional to most.
Financial inventory: Start by taking stock of your bank accounts, investments, e-wallets, etc. Ask yourself if each one “sparks joy”. Blue chip stocks probably do, at least when the dividends come in. But those EZbuy credits that you bought to take advantage of a promotion? Ehh, not so much.
Financial products: Look at your list of credit cards, loans and insurance payments. These probably spark an emotion that is very far from joy, to be sure. Sadly, you can’t simply “declutter” your housing loan repayments from your life…
What you can do, though, is to strike out the ones that no longer serve you (credit cards that changed their T&Cs, anyone?) and commit to optimizing the rest (e.g. by refinancing your home loan).
Annual expenses: While you can’t exactly banish property taxes from your life because they don’t make you happy, there’s a lot you can do with the other recurring expenses.
Do you really need that atas car insurance that you got sweet-talked into signing up for? If you’re getting less out of your plan than the insurer is, then maybe it’s time to jump ship.
Did that blowout holiday to Europe with your extended family spark joy? If the emotion you felt was most emphatically NOT joy, maybe save the money and treat everyone to a nice buffet instead.
Monthly expenses: I saved this for last, because day-to-day expenses are disproportionately significant in our minds. They’re also more difficult to discard, because doing so seems to require a sacrifice to your lifestyle, which no one wants. So, you need discipline to go through this list of things you spend on daily and prune the ones that don’t serve you.
News subscriptions and telco bills are notorious examples of what you can eliminate. Other discard-worthy things are gym memberships that you don’t utilise anymore, atas lunches/drinks that you get peer pressured into, and constantly taking Grab/Gojek rides because you’re lazy.
Step 4: Ruthlessly eliminate while saying “thank you”
After identifying which items make you tingle with delight and which items don’t, the next step of the Marie Kondo method is to discard the latter from your life. After thanking them, of course.
Unfortunately, things that are related to personal finance are not so easy to shake off. Stuff like underused credit cards and online subscriptions are relatively easy to take care of, and you can usually sell off gym memberships, but good luck converting your e-wallet balance or lousy investments back into real cash.
You also need to devote significant time and effort to optimizing some of your existing expenses, such as your home loans, car/home insurance, savings accounts, and even your phone plan. At the risk of sounding like an advertisement, MoneySmart can help with that by doing the legwork.
This is the most admin-intensive part of the exercise, but don’t give up! Think of how rewarding it would be to finally gain control of your finances.
Konmari purists would also want to thank each item before dismissing them from your service. It sounds a bit lame, but I guess the point is to not beat yourself up for accumulating stuff – instead, acknowledge that things can simply lose their value over time.
Step 5: Organize what’s left
So, if the Konmari method is done right, you would only need to declutter once in your lifetime, because from here onwards, you “just” need to maintain the nice tidy state you’ve worked your ass off for.
… Yeah, we all know that’s not gonna happen.
Nonetheless, Marie Kondo-ing your personal finances should leave you with a clearer picture of what fits in your life and what doesn’t. More importantly, it should illuminate how hard it is to get banks, insurers, telcos and other bloodsuckers to ease their death grip on your hard-earned money.
Just like how there’s a Konmari technique for folding clothes to keep things tidy after the big Kondo-pocalypse, you should also adopt some sort of housekeeping strategy to maintain your newfound financial neatness.
Whether this is something old-school like keeping a ledger, or using the latest personal finance tracking app, it doesn’t matter. The point is to be aware of your financial habits and be accountable to yourself, so that when you spend money, you do so intentionally and to add real value to your life.
This is also a good time to revisit that personal finance vision you pictured in Step 1. Are there certain things you can be doing for yourself/your family with the money you’ve just freed up that will bring you closer to your idealized scenario? You’ll have the rest of 2019 to work on that.
What would you like to declutter from your personal finances? Tell us in the comments!