Marie Kondo Your Finances



By Wendy Wan Turk
02/04/2019

If you don’t know what I’m referring to by suggesting KonMari, then you’re missing out on one of the biggest organization movements to hit Netflix and the US this year. Using some of the concepts presented by Marie Kondo, author of “The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing,” and host of the show “Tidying Up with Marie Kondo,” you can not only have a cleaner closet, but also a more organized financial life. According to Kondo, the process should help you create systems that will allow you tidy in a much faster, more streamlined way. Her system helps to declutter and organize without nagging, guilt, or shame—all feelings people may have towards their finances.

Categories

Marie Kondo uses categories of items to organize in order, rather than by room or location. This technique can help you focus as you organize your finances and other important documents. Take similar items, such as all credit cards, all retirement accounts, medical bills, insurances, etc. and sort through them to create an organizational scheme and then list all the accounts you have for that particular category. Once you compile the list of all the accounts you own, you’ll be able to clearly see the purpose for each account. If you don’t see the purpose, then it’s time to whittle and consolidate, such as combining old retirement accounts, closing certain credit cards, etc.

Paper

One specific category Marie Kondo asks her clients to go through as part of the process is “Paper.” First and foremost, it’s time to go through all those old papers and figure out whether you need them anymore. Generally, most statements and paperwork can be found online, but for older paperwork, there may be items you’ll need to keep. Tax returns should be kept for 3 years from the filing date. Also keep deeds, titles, legal documents, current insurance policies, wills, and trusts. You should also consider keeping old stock purchases and medical records that occurred before electronic recordkeeping since this information was probably never transferred to electronic records.

While you’re at it, decide on a method to organize your electronic financial records as well. Perhaps the easiest way is to use the categories you started with (e.g.—credit cards, retirement accounts) and make an electronic filing system. Also, be sure to back this information up to either a hard drive or a secure place on the cloud, just in case something should happen to your computer.

Practice Gratitude and Embrace the Pain

While this may sound awkward and strange, Kondo asks that you consider your belonging’s feelings. Yes, finances are inanimate, but truly, this exercise is much more about appreciation and an examination of the things you already have. Before tossing any of your belongings, you must thank them for their service. On the flip side, if you’re keeping them, be considerate of how and where they’re kept in your home. This conscious organization is meant to leave you with a greater sense of peace.

A key aspect of the KonMari method is making conscious decisions about what surrounds you. Being honest with yourself about how you acquire things—assets and debts—can be joyous, humbling, and embarrassing. Kondo says, “It forces us to confront our imperfections and inadequacies and the foolish choices we made in the past”. It’s not easy to look at yourself critically or to acknowledge your flaws. However, without seeing the patterns and understanding why you can’t save, why you have credit card debt, or how hard it was to save for a house, you can’t find the ways to be financially healthy.

Keep the Things that Spark Joy

While the KonMari method is meant to streamline the decision-making process, it also emphasizes that you keep the items that “spark joy.” Kondo recommends to “have nothing in your house that you do not know to be useful or believe to be beautiful.” Within your finances, keep some things or expenses that “spark joy,” whether it is vacations, hobbies, classes, etc. These items should be budgeted, whether monthly or annually, maybe into a separate “fun/joy” account, where this money should be spent with no guilt and only pure happiness. This ensures you can enjoy the journey along the way, even while saving for your long-term goals.

If you KonMari your finances, you can think about what adds value to your life and carry those things forward.

Securities offered through LPL Financial, Member FINRA(http://www.finra.org/)/SIPC (https://www.sipc.org/).

Investment advice offered through Gerber Kawasaki Inc, a registered investment advisor. Gerber Kawasaki and Gerber Kawasaki Wealth and Investment Management are separate entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss.

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