Does it bring you joy?

If you’ve taken Marie Kondo into your heart and home it might be time to Marie Kondo your finances.

If you haven’t been swept up in Netflix’s cult hit Tidying Up with Marie Kondo aka the KonMari method, then you’ve probably heard of her or at least noticed overflowing charity bins outside your local grocery store.

Vinnies has never had it so good!

What is alarming about the Netflix series is the consumerism and how much stuff these people are sending to landfill. When I say these people, I sadly have to include myself.

The series shows that very little of the stuff we buy brings real joy. Quite the opposite, wondering where your money goes is painful when all you’ve got to show are matching Sheridan towels.

If you’ve taken Marie Kondo into your heart and home it might be time to Marie Kondo your finances.

Commit yourself

Kondo says that tidying up requires time and effort. When you have applied your mind and committed to it, all you need is the right method.

The same applies when sorting your money. You need to dedicate your time and energy. Understand that it may not always be fun but it will be worth it.

The order of things

Kondo says the reason so many people suffer rebound (ie fail) when trying to tidy up is they dive in too quickly.

It’s the same with money, you dive in and quickly become disheartened because of the enormity of the task. It’s overwhelming.

According to Kondo there is a strict order to tidying up. One of her tenants is that you declutter ‘one category at a time’.

She believes you should always go in order: clothing, books, papers, komono (ie miscellaneous) and finally sentimental.

It’s the same with money. Start with the basics and build up from there.

Marie Kondo 

1. Spending

Try to spend less for a month. Turn off social media, delete emails and avoid the shops. If you slip and find yourself in a shop real or online, close your eyes hold said item (or shopping device) close and ask “will this truly bring me joy in the future”. It it does, buy it. If not, let it go.

2. Budget and debt declutter

After your month off spending now is the time to assess your finances and other areas you spend money. This review of popular budgeting apps could be a good start.

Where are the pockets of money guilt that hold you back from feeling free from financial stress? Unused gym memberships you don’t use because you despise the gym? Cancel it, or as Kondo would decree: thank it, and bid it goodbye.

Spotify still sparks good feelings every time you discover an amazing new track? Keep it. Remember Kondo says it’s not about deciding what to get rid of, but deciding what to keep.

Credit cards, Afterpay and personal loan debts can weigh you down with guilt, draining any joy out of those original purchases. Pay-off the debt that has the highest interest rate first, do this until you no longer have high-interest debt.

3. Saving

Now you’re in a positive frame of mind you can to think about moving in a forward direction. Saving is the first step, it’s about having the money you need for those moments of joy you want to create over the next couple of years.

Look at your savings account. A ‘high-interest’ savings account should pay 2% interest rate or more. If yours doesn’t, find a better deal to maximise your savings potential.

4. Your future lifestyle

You’ve taken time out from spending. You’ve cut out the fat from your other expenses, paid off debts and started saving. Kondo suggests asking yourself ‘what is my ideal lifestyle’ when it comes to tidying up.

This is really about setting financial goals that will help future you. You need to understand where you are now and how you’re going to achieve that ideal lifestyle.

This can be a powerful exercise if you have the determination to see it through. Part of achieving your desired lifestyle is having the willpower to invest any money you don’t need soon to let compound returns do their magic.

Once you have some savings, invest the rest. The best time to invest is always today. This is the area of your finances that will bring you lots of joy in the future if you get the right mix of investments now. Investing your money in a well diversified portfolio creates two types of joy.

  • That which comes with taking control of your future

  • The future joy you’ll have when you achieve your goals

Take a look further into the future you’ll want to make sure your joy continues long after you stop working. Consolidate multiple superannuation accounts and consider if you need life insurance inside your super fund to protect your family.

Find a low fee super fund that takes enough risk for your age (more on that here). A good rule of thumb is to pay less the 0.75% in investment fees. Our Fat Cat Funds research shows if you pay more than 1% in fees you could lose over $250,000 by the time you retire.

The super funds don’t make this easy, but do persist. That money is better in your future, not in the pocket of a faceless fund manager living their ideal lifestyle.

5. Giving and charity

Multiple neurological studies show that helping others sparks the joy neuro-receptors in our brain. Once you’ve tidied your financial life it’s time to reflect on how you could lend a hand to others less fortunate.

Donating is one way, but giving your time by volunteering can be just as valuable. Those who give more, time or money, tend to rate higher for joy. People who give derive a sense of personal meaning from helping others and become more grateful for what they have.

As the Chinese saying goes, “If you want happiness for a lifetime, help somebody.”

Marie says you must set a deadline and stick to it

Finally, give yourself a realistic deadline to Marie Kondo your money. This will vary depending on your personal situation (if you’re working through debts or have plenty of savings). One month is not enough but 12 months is a bit luxurious!

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Communications & PR

Lauren is Stockspot's head of PR and communications. She helps us minimise the jargon and maximise the info that matters most to clients. She believes investing and creating financial security shouldn't be scary, difficult or only for those with a finance degree.

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