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A Six-Step Process For Decluttering Your Finances – And Your Life! Thumbnail

A Six-Step Process For Decluttering Your Finances – And Your Life!

One of the best books I read last year was Marie Kondo’s “The Life-Changing Magic of Tidying Up.” Kondo is an organizational consultant who says her mission is to “organize the world and spark joy in people’s lives.” Her world-famous “KonMari Method™” teaches folks how to apply traditional Japanese simplicity values to decluttering, freeing us from stuff we’ve accumulated over the course of our lives that doesn’t really make us happy.

Reading Kondo’s book got me thinking about how important it can be for people to declutter their finances as well. Let’s take a look at Kondo’s six rules, and see how we can apply her decluttering philosophy to get our money, planning, and long-term goals in order in 2018.

Rule 1: Commit yourself to tidying up.

The first step to any resolution is always the hardest: commit. Embrace that wonderful blank-slate feeling that a new year provides.

And if you need a little extra motivation, think about the people you’ve chosen to be your beneficiaries. When you pass, do you really want to burden your grieving children with the task of sorting through boxes and filing cabinets because they don’t know where you kept your will or trust? Are your heirs really going to want the lifetime of old clothes and knickknacks overflowing from your basement?

This is the year! Trust me, the clarity this approach will provide for you is truly priceless.

Rule 2: Imagine your ideal lifestyle.

One of the first questions we ask new clients at Keen Wealth is, “What does your dream retirement look like?”

Where are you going to live? With whom will you be spending your time? Doing what? Are you going to continue working part time? Take a volunteer position? Start your own small business? Do you have passions or hobbies you want to pursue with more dedication?

Answering these kinds of questions will bring some specific lifestyle goals into focus. With those goals in mind, decluttering non-essentials from your life will be much easier. You’ll also have a much easier time working with your fiduciary advisor to put a plan in place that will help you achieve those goals.

Rule 3: Finish discarding first.

Shred any old bank, credit card, or account statements that have been cluttering a desk drawer forever. Consider switching accounts to paperless billing and autopay to keep that extra paper away for good – just make sure you still check your statements every month to guard against hacks or fraudulent charges. Consider cancelling any subscriptions or magazines you keep renewing but don’t use.

As for your stuff, sorting things into Save, Throw Away, and Donate is always a good place to start. Many charitable organizations such as Goodwill will give you receipts for your donations that you may be able to use for tax deductions in the following year.

There’s no right or wrong way to organize your life, but having space and a system in place will make decluttering a heck of a lot easier. Clean out an old filing cabinet. Buy a reliable external hard drive or cloud storage subscription where you’re going to save scanned copies of your important documents. Download an app or desktop software that will help you organize all your income, expenses, and deductions for tax time.

Rule 4: Tidy by category, not by location.

Tell me if this sounds familiar: “Today, I’m going to clean the living room.” And you do! Great! Except the next day, when you move on to your kid’s bedroom, you’re cleaning up books, DVDs, toys – the same categories of stuff you picked up yesterday, just in a different place.

Kondo has found that decluttering by category is much more effective. Declutter ALL your clothes – the ones you’re not wearing in your closet and the ones boxed up in the attic. Declutter and organize ALL your important personal documents – your Social Security card, which you keep in your home office, and your spouse’s, which he or she keeps … Hey, maybe you don’t know where some of these things are! This approach to decluttering will help make sure both you and your spouse know where all your family records are stored, which will be a big time-saver for your financial and legacy planning.

Rule 5: Follow the right order.

Kondo recommends a specific order for decluttering: start with things that are easy to discard, like clothes, and build to the hard stuff, like mementos and other sentimental objects. This approach eases you into what could turn out to be a stressful process. Like any other habit or resolution, the easier a task is – especially at the beginning – the more likely we are to stick to it.

Your fiduciary advisor can help you establish the “right order” for your financial plan as well. So many people walk into my office confused about how to prioritize their savings, or the order in which they should be taking distributions from their retirement accounts. The amount of conflicting opinions online will make your head spin, and that’s because there’s no one answer. Tax brackets, the types of retirement accounts you have, student loans for your kids, retirement goals – all these factors have to be considered. Talking to a fiduciary advisor is a great way to declutter this part of your finances and focus on what’s best for your specific situation.

Rule 6: Ask yourself if it sparks joy.

Kondo believes that you should get rid of any possession that doesn’t spark joy when you’re looking at it, using it, or wearing it. When you’ve reached the final phase of decluttering, this question of joy can help you make tough decisions about things you aren’t sure you’re ready to part with. If you let this feeling of joy be your guide, then at the end of your decluttering, you’ll have created joyful spaces full of joyful things in which to live, work, and relax.

Isn’t that what we all want from retirement too? After all, “you can’t take it with you,” so the payoff for a lifetime of hard work and prudent planning should be happiness and fulfillment. If your current financial goals don’t spark joy, then come see my team at Keen Wealth and let’s work together towards goals that do.


About Bill

Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 25 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.

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