Financial • 4 minute read
Tidying Up Your Finances, Marie Kondo-style
By Kristina James
Published by Ruby
Ruby helps you and your family work together to prepare and organize finances.
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“Getting your financial house in order” is almost a cliché and doesn’t sound like a lot of tedious work. But it’s necessary after a lifetime of different investments and a build-up of financial assets.
Let’s approach finance the way Marie Kondo thinks about tidying up a household.
Kondo is a Japanese organizing expert who’s written four books on the topic and currently has a hit show on Netflix. In the show you see different folks follow her principles, and their homes going from disorganized disasters to models of order.
The wider benefit of this is the feeling that these new, organized spaces have: What was once stressful in mess is now calm and welcoming in order.
You want your financial house to look, and feel, that good.
Follow these KonMari inspired Smart Steps.
The first thing Kondo advises followers to do is to take everything out of their containers – In the bedroom you take all the clothes out of the closet, in the kitchen you empty kitchen cabinets – and put everything in a big pile.
Then you can see exactly what you have.
Emptying the “Junk Drawer”.
Most of us have a financial version of this, a “junk drawer” full of insurance policies, stocks, bank accounts, certificates of deposit, and other financial instruments.
With financial organization this is the key step: You have to lay everything out so you can see exactly what you have, and then make sure you’re not the only person who knows this!
The goal is to organize them into an easily manageable collection that will not only help you see a clearer financial picture but will also be a roadmap for your beneficiaries when the time comes.
I’m still paying for THAT?
In addition to that, you may have monthly, quarterly or yearly expenses that don’t make sense anymore, things like a gym membership you haven’t used in years or a phone plan that still includes your now-adult children.
You’ll need to treat these two financial buckets separately.
You can do general tidying up like canceling virus software for computers you no longer own or cutting the cord on cable in favor of video streaming services. For your financial “pile” you might need a certified financial planner. You can, of course, educate yourself as best you can, but combining multiple types of investments may have tax implications that can be explained easily by an expert.
2. Decide What Sparks Joy
In Marie Kondo’s world, once everything is out of the closet or cabinet you should hold each one of them up and answer the question: Does this spark joy? If it does, keep it. If it doesn’t, thank it for its years of service and dispose of it.
In your financial house, you need to do the same.
Thank you. Next.
You may have stocks you’ve held on to for years because you bought them for sentimental reasons but the return isn’t worth the investment. You may be more diversified in your investments than makes sense and need to consolidate.
This should be done with the advice of an expert.
Just as it’s never a great idea to diagnose your own health issues it can be problematic to become your own financial planner. This is especially true if your finances include lots of investments, a diverse portfolio of financial products, or tons of tax implications. A certified financial planner can pull all your assets together, weed out the ones that don’t make sense, consolidate the ones that do for the best tax advantages and give you a clear roadmap to your financial future.
3. Make Sure Everything Has A Place
Your finances are one thing. Documents that look to the future are another.
By the time you’re in your 70s, you should have all your estate documents in order.
Your Will should be up to date. You should have a Durable Power of Attorney for financial decisions and a Healthcare Power of Attorney/Living Will for medical decisions.
Make sure with both Powers of Attorney that you’ve appointed someone who will follow your wishes and who really knows you and your desires. This article has more information about this.
Getting your financial house in order will eliminate any confusion about your assets and increase your sense of control over this vital part of your life.
The Ruby Vault is the perfect place to store all your important documents where they are both secure and available to those who need them, 24/7 – 365.
With all your financial assets linked through your Ruby account, you’ll get a weekly summary so you can watch what’s coming in and going out, and look for fraud or missteps.