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The Life-Changing Magic of Organizing Your Finances
By Colleen E. Maldonado, MBA, CFP®
Clear the clutter to find clarity, even joy
“The calm, motivated mindset it can inspire.” Marie Kondo
I remember when I was a kid watching ‘Growing Pains’. In one episode, Kirk Cameron’s character, Mike Seaver, had a big school assignment he needed to finish. He sat down at his desk to do the work and noticed his room was a wreck. Before he could do his homework, he had the strong urge to clean his room. If you ever watched the show, then you know this act was completely out of character for Mike. This scene perfectly illustrated how having areas of your life in disarray can take up space in your mind and prevent you from living optimally.
In Marie Kondo’s book, the life-changing magic of tidying up, the KonMari method of tidying promises to help you clear your clutter and enjoy the unique magic of a tidy home and the calm motivated mindset it can inspire. Kondo says,
“Once you have experienced what it’s like to have a truly ordered house, you’ll feel your whole world brighten… This is what I call the magic of tidying. And the effects are stupendous. Not only will you never be messy again, but you’ll also get a new start on life.” 
This same result can be true when we look at our financial life. Just like when a calmness falls upon us when our house is organized and tidy, peace will find us when we have our financial lives in order too.
In the KonMari method, the process starts with taking an inventory of the household by category. Kondo has her clients start with placing every stitch of clothing in their home in one giant pile. Having gone through this process with my family of four, I can tell you first hand, it is daunting and intimidating! After the fact, I realized what I was accomplishing in the process of taking an inventory was really seeing what we had in its entirety! If I had tackled this step room-by-room, instead of holistically, I wouldn’t have gotten my arms around the big picture of what we owned: the good, the bad, and the ugly (like that shirt I bought three summers ago and never wore!)
When we think of tidying your finances, it’s the same first step. We recommend laying out all of your statements in order to identify what you have and what you owe. Print out everything and lay it out in an open space. I find kitchen tables are the perfect venue.
These documents should include (but not limited to):
Checking and Savings Accounts
Insurance Documents (home, auto, umbrella)
Credit Card Statements
Estate Planning Documents (trusts, wills, Power of Attorneys)
When working with our clients at Creative Planning, we gather this information and put it into a net worth statement. This step ensures clarity of current financial picture; just like with the KonMari process we are getting our arms around the entirety of what you actually have.
Does It Spark Joy?
If you have heard anything about the KonMari method, chances are you have seen a meme or read about the step ‘Does It Spark Joy?’ Taking the clothing example, you pick up each item and ask yourself if it sparks joy. If the answer is no, then you discard the item and move on to the next. If the answer is yes – it does spark joy, then you keep it.
In the case of your finances, every dollar you have saved is probably going to spark joy. However, many of our clients identify assets that they don’t want to continue owning. Our CEO, Peter Mallouk discusses this idea in his recent interview with Tim Ferris.
“And you start to unwind all of these things. So you spend the first 20 years of… accumulating all of this stuff. And then you’ll spend the next 20 years, if you’re like the clients I’ve observed, trying to get out of one thing after another to simplify your life.”