One day early in January, I got home from work and my wife said, “there’s this new documentary about simplifying I think you would like.”
She knows I’m into tidying up and enjoy stuff like this. Or perhaps she knows I don’t like wasting time watching documentaries unless it’s really good and this was her way to get me to Netflix and chill.
So the next night we started watching the Netflix original series Tidying Up with Marie Kondo which was released on January 1st. It was something we got into!
Fast forward to February and I’m being asked about how the KonMari Method can be applied to your personal finances. I spoke with Mia Taylor at the Simple Dollar and answer a few questions about how this can relate to our personal finances. I will let you all know when that article is published!
What is Tidying Up with Marie Kondo?
Her whole message is about sparking joy in the world through cleaning.
The KonMari Method™ is a way of life that encourages cherishing the things that spark joy in your life. Belongings are acknowledged for their service and thanked as they are let go, should they no longer spark joy.
Today, Marie is a renowned tidying expert helping people around the world to transform their cluttered homes into spaces of serenity and inspiration.
People around the world have been drawn to this philosophy not only due to its effectiveness but also because it places great importance on being mindful, introspective and forward-looking.
This trend is not new. This idea of cleanliness and simplifying has been around for a long time. Let’s not forget Henry David Thoreau, the OG minimalist who wrote about how to live a life of simplicity and independence.
This idea of living a simple life really started to catch on in the 21st century a few years ago with the documentary called Minimalism. This was about focusing on what matters and it highlighted stories of people living minimalism. But it didn’t give you any actionable takeaways or “how-to’s.”
Minimalism is the “what.” The KonMari Method is the “how.”
Tidying is not just about cleaning it’s about creating a space that sparks joy. By doing this you get one step closer to your Ideal life.
Why would someone want to tidy up?
It’s easier to acquire stuff than ever before. My degree is in business and in business school we studied this idea called economies of scale. It’s this idea that the more you produce something the cost of production will go down. And with that, the price will go down making it a win-win for consumers and for businesses differentiating themselves.
Because goods have become so cheap our homes become filled with clutter and our space gets filled with stuff we don’t value.
H&M has been the leader in the high-fashion industry while simultaneously using economies of scale to drive the price of clothing down. You can purchase a shirt for $5.00 which is so cheap you may wear it a few times and forget about it. So why do people hold on to stuff they no longer value?
It’s called the endowment effect which explains how we overvalue something simply because we own it. This makes it harder to get rid of even though it no longer serves a purpose in our lives. It’s hard for people to declutter and get rid of things. We attach meaning and emotion to stuff. Even though we may never wear an article of clothing again we hang on to it because of the sentimental value.
When should someone tidy up?
You may feel slightly overwhelmed with the amount of stuff you hang on to. This is perfectly normal. But, there’s this sense of joy that comes when we get rid of stuff.
Why would someone put themselves through this? Just stop worrying about how much stuff you have and enjoy life. This is a common argument I’ve heard about simplifying. It’s hard. It’s not easy. You’re subjecting yourself to voluntary pain and personal anguish by decluttering. Not everyone needs to live this way nor should everyone, but if you’re someone feeling overwhelmed, maybe it’s time to simplify and you’ll find the joy that comes from doing so.
How does it work?
You break everything up into five main categories. Marie Kondo teaches it’s important to clean by item, not by location. Here are five categories:
- Clothing – Throw all of your clothing onto the bed so you can see how much you have. Get rid of all the clothes that no longer spark joy.
- Books – Place all of your books in one place and get rid of those that no longer spark joy.
- Paper – Gather up all of your paper and get rid of those you no longer need like loose papers and envelopes. She doesn’t go into this but consider what papers you could scan and store electronically and only keep a few hard copies of the stuff that’s really important.
- Komono (Miscellaneous) – This includes everything else in your kitchen, living room and garage. Go through everything and keep only the things you will use and continue to get value from.
- Sentimental items – After you’ve hit on the first four major categories it gets a little harder to dig through your sentimental items and decide what no longer excites you and what is worth keeping.
Everything in your house at one point was money.
How does it relate to finances?
Now that you’ve learned about the KonMari Method, how does this relate to your finances?
If you adopt this lifestyle of simplicity — there’s a natural progression into being better with your money. Because you start to ask yourself what you value, you’re more aware of where your dollars are going. Or vice versa, if you’re someone that likes personal finance, I’ve also noticed there’s this natural progression into getting rid of the things that no longer bring you value. This is how I got into it.
Tidying up your finances means being frugal. It’s not about being cheap. It’s about eliminating what you don’t want and focusing your time and attention on the things that you value.
We can draw some parallels by breaking down your finances into five major categories.
- Housing – Where we live will be one of the largest expenses most people will have throughout their lives. You should live somewhere that sparks joy. Somewhere that you can call home that doesn’t have to be a financial burden on you. If it is a burden consider something else.
- Transportation – The second largest expense is transportation. You should drive a car that sparks joy but let’s not get carried away here and forget what a car is actually meant for. Transportation. Not social status.
- Food – Perhaps the third largest expense is food. We all have to eat and ideally, we should be spending money on healthy food but sometimes that’s not the most affordable option. Do what works for you but set a limit on how much you want to be eating out. 70% of all spending is done in these first three categories.
- Entertainment – This is a big expense for some people and non-existent for others. I always teach that you should have an amount of money that you get to blow at the end of the month so you can enjoy life a little. But don’t let this get out of hand either. Plan beforehand.
- Miscellaneous or all other expenses – Everything falls under this category and it will take some discipline to tidy this area of your finances up. But if you can focus on the first four main categories, your personal finances will start to take care of themselves.
If we can learn to simplify and get the most out of those five categories we will inadvertently almost accidentally become smarter with our money. Everything else will fall into place.
It’s not about simply budgeting your money, it’s about how to live a more joyful life by being smart with your money in order to do more with your life.
How to spark joy with your finances
If you want to get really excited about managing your finances you’re going to need to break up your spending into more categories.
- Categorize your expenses. A software that I use is Mint. Mint will allow you to categorize all of your expenses so you can get a clear picture of where your money is going. It allows you to aggregate all of your accounts in one place. This is sort of like throwing all of your clothes out on the bed. Until you bring all of your accounts together you don’t know how much debt you have and where your spending problems are. This is an essential step on getting clear with your finances. By process of elimination, you can start to cut back on things you don’t need and pay off those debts that no longer serve you.
- Separate savings accounts. Most people have one checking account and one savings account. Another way to spark joy with your finances is to open up different savings accounts for different savings goals. You’re less likely to spend money set aside in your vacation account on clothing if you have to transfer that money out of your account. Make sure you avoid bank fees though because many banks will charge you fees. You should never have to pay fees for a checking account and a few savings accounts.
- Just start somewhere. We all start somewhere different when it comes to tidying up our finances. Organized for one person may not be organized for another. It’s a constant process of elimination. When you go through for the first time you’ll get rid of a lot of stuff. The second time you might think why did I think I need this. And you’ll get rid of more. By the third and fourth time going through things that you want to organize it starts to get a little bit harder because you really have to dig deep and ask yourself does this bring value
- It’s not about more money. For many people, their main objective is how can I make more money. When you simplify your life and you simplify your finances you start to realize maybe I don’t need more money maybe I can learn to maximize the utility of every dollar that I have stewardship over in order to live a better life. The money that you are making will go away farther because you’re smart with it.
Sparking joy with your finances is not about deprivation it’s about what you value.
For most people, their finances do not spark joy, mostly because they do not feel in control over where their money goes or that their financial future is heading in a positive direction. The first step in gaining financial control is to set goals, establish a budget, and understand which of your expenses are optional. Once you’ve KonMari’d your money, you will be able to see there’s now more space for saving money and working toward your financial goals than ever before. Now that sparks joy!