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Marie Kondo’s principles of tidying aren’t just for your closets, dressers and cabinets. According to the Japanese decluttering expert, the same method can be applied to your finances as well.
“Fewer items does not make everyone happier; it’s about finding the balance of items that makes you feel the most comfortable — and the same thing applies to your wealth,” the bestselling author and star of Netflix’s hit show “Tidying Up with Marie Kondo,” told NBC’s Know Your Value in an email. “What is important is to foster an awareness of what you need — and to make a plan to get there.”
For the implausibly unfamiliar, the KonMari method revolves around discarding personal items that no longer spark joy. With finances, there is also some discarding and careful categorizing, but of dreams, rather than objects.
Here are Kondo’s top five tips:
1. Create a financial plan
“The same general principle of committing time to creating a plan definitely applies!” Kondo said. “If you procrastinate, you’ll never get around to it.”
Having a financial plan might seem obvious. But only one in four Americans have written one, according to the Schwab Modern Wealth Index. Those who take the time to map it out are more likely to practice other positive financial behaviors, like saving money regularly and managing debt, according to the index.
“When creating a financial plan, you want to think about how you want to live your life, whether you want to, say, buy a house in the next five years or save up for retirement,” Cynthia Loh, vice president of digital advice and innovation for Charles Schwab, told Know Your Value.
2. Imagine what you want your life to look like
“Imagining your ideal life serves as your motivation and clarifies your goals before you tidy,” said Kondo. “Similarly, imagining your ideal financial life allows you to see the gap between what you have now and what you’d like to obtain in the future.”
Kondo added, “this practice will clarify your next, actionable steps.”
You’ll want to evaluate how you want to live your life and ensure your partner or family is on the same page. Consider milestones such as whether you want to retire at, say, age 55 or 65, where you’d like to live and the costs associated with that lifestyle, Loh said.
3. Prioritize what you want to save and invest — and in what order
Kondo stressed the importance of saving and investing.
“Think of your top priority and where other financial priorities rank in your list of short and long-term goals,” Loh suggested.
Don’t know how to start investing? You’re not alone. Over half of Americans say they want to spend more time investing but don’t know where to begin, according to a Schwab Consumer Digital Demands Report.
Schwab recommends eight savings fundamentals. Your first priority should be matching your employer’s 401(k) contribution, followed by accelerating credit card payments. Next, focus on building an emergency fund and maximizing savings to tax-advantaged retirement accounts. Saving for your child’s education and a down payment on a home could follow. Then, you might want to prioritize paying off other debt and investing.
4. Discard spending habits that don’t spark joy
“My method of tidying is focused on what to keep in life – and letting the rest go with gratitude,” said Kondo. “After tidying the home, many of my clients say that the ability to identify what sparks joy for them can be applied to other areas of their lives as well.”
Her popular method encourages tidying by category (not by location) beginning with clothes, then moving on to books, papers, miscellaneous items and, finally, sentimental items. “Keep only those things that speak to the heart, and discard items that no longer spark joy,” Kondo wrote. “This practice allows you to identify what brings you joy, which is especially important when considering how you spend your money–what you’re saving for, how much money is needed and so on.”
“After tidying, my clients are more mindful about what they purchase, and they avoid buying in excess,” Kondo added. “I do believe it is important to use this self-awareness to guide your spending habits and let go of any tendencies or habits that are hindering you from meeting your financial goals (and your ideal lifestyle, overall).”
Small steps can go a long way. Take a closer look at your spending habits and discard certain habits (like buying lunch out on a regular basis) that might not serve your long-term goals, Loh recommended.
5. Categorize your dreams
Also, consider categorizing your dreams by setting short- and long-term goals. This means weighing important decisions like saving for an annual family vacation or spreading your vacations out every few years so you can save up for something else, like a Florida home when you retire.
“Some people find it helpful to categorize their goals while others don’t; it all depends on the person,” Kondo wrote. “Give it a try and see if it fits you.”