Mississippi Money: Your Finances Should Spark Joy
By Ryder Taff
“Hey!” – my neighbor shouted from across the fence – “I borrowed this book ages ago, but we’re Marie Kondo-ing so we have to get rid of it now!” I read the book The Life-Changing Magic of Tidying Up and knew that the Netflix special based on it was inspiring many to purge their closets and otherwise get their spring cleaning started early. Marie Kondo’s system for tidying up physical surroundings promises to “put your space in order in a way that will change your life forever.” If you want to change your financial life, you may still find guidance in her methods.
Marie Kondo’s first two steps are to commit to tidying up, and to imagine your ideal lifestyle. These translate well to having both short term and long-term goals with your finances. Maybe right now you just want to get control over your debts, ramp up your savings or better understand how your retirement accounts work for you. What many advisors talk about as long-term goals really are questions about the lifestyle you want to live. Your short-term goals will keep you motivated to the tasks at hand while your long-term goals, or ideal lifestyle, will guide your path and inform your priorities.
With your goals and lifestyle in mind, you discard what you no longer need. While you shouldn’t throw away money, you can consolidate old accounts. For years I kept a bank account open even after moving to a new bank. I got statements on it, earned a tiny bit of interest and forgot about the money in it for long stretches of time. Old accounts can be consolidated and closed. Debts can be consolidated and paid off.
The next point is to focus on one category at a time, and tackle those categories in the right order. Your highest financial priority will depend on your situation, but it may be high interest debts or spending. You may be able to consolidate debts to pay them off faster. One aspect of Marie Kondo’s system that people comment on is her method of folding socks, shirts and even underwear so that all of your clothes are visible when you open your drawers. This visibility is important when tacking any category. Having your spending come from one account or one credit card makes it far more visible to you. Consolidating investment accounts at one custodian gives you a quick overview of your assets every time you log in.
Does it spark joy? This is truly one of the most life changing tips that I have found when it comes to spending. While some expenses are fixed, or unavoidable (I need gas for my car and can’t do much more to reduce my electric bill) I have discretion over a lot of my expenditures. I can eat out for less, or cook at home. I can shop for bargains or ask myself if I really need what I am buying. Every month, review your finances. As part of that review, look at every expense, if it is necessary. Ask yourself if you’ve done what you can to reduce it, if it is discretionary, if that purchase sparked joy. You’ll develop a much deeper appreciation for where your money goes and a more conscientious attitude towards spending going forward.