The most trending tax and financial industry issues.

Author Picture

Lane Keeter, CPA

Partner: Tax Consulting, Estate Planning, and Heber Springs Managing Partner

Is It Time to KonMari Your Finances?

Have you gotten caught up in the KonMari craze (i.e, "Tidying Up with Marie Kondo" on Netflix)? Anyone else feels just a tad bit inadequate after watching that show?

In case you aren't aware of the show, in each episode, so-called organizing expert Marie Kondo helps clients clear out clutter in their lives with her KonMari method. Watching what happens is enough to make even the most ardent neat freak feel like a slob!

But as I think about it, it occurs to me that just maybe there is a way to "KonMari" your finances, or at least that there some principles from Ms. Kondo we can learn and apply to an area that many find to be one of the least organized in their liv...their money.

So today I'm going to claim the mantel (well at least temporarily) of being the Marie Kondo of your finances. There are some things we can learn from Marie, to help get and keep your financial house in order. Call them KonMari-esque financial tactics.

Find your joy!

When Kondo helps clients decide if they should keep or donate an item, she has them ask themselves, "Does this spark joy?" If so, it's a keeper, but if not, it's a goner (i.e., time to get rid of it).

You can do the same thing with your finances, but it may take asking some hard questions. Questions like:

- Do you really need a brand new car (or even a used replacement for your current one)?

- If available for a pending purchase, is leasing rather than buying a better option?

- Will renting office space for your online business actually grow your success?

- Do I REALLY need to update my smartphone with every new updated model?

Ok, I realize I really stepped on some toes with that last question.

But the point is, are you asking yourself the questions that help determine what expenditures really matter? A lot of the time, financial stability can provide the freedom to "spark joy" in your life. It harkens back to the old "wants vs. needs" lecture that, if you are like me, you heard from your parents. In other words, make sure you cover all your "needs" bases first, and then you are freer to decide what to actually splurge on.

Take care of the paperwork.

That junk drawer in your kitchen likely houses months and months of random bills and receipts, among other things. Kondo recommends getting rid of the paper items you do not need in order to declutter, especially if they can be found online (e.g., bank statements, credit card bills, etc.). But be careful not to throw out receipts that show details you will need come tax time to substantiate deductions and the like.

Establishing some kind of filing system where you can easily lay hands on needed documents can really eliminate a lot of worry and stress. So can employing the use of financial tracking software such as Quicken. Once you get going and in the flow, you can easily update things in a short period of time. For instance, reconciling bank or credit card accounts can take mere minutes rather than (for some) hours. Not to mention printing reports needed for tax reporting in seconds.

A word of warning - just as coupons, takeout menus, pens and note pads can overflow your junk drawer, so can tax documents. If you are doing your taxes yourself, prepare for something similar to Harry Potter's thousands of Hogwarts letters ambushing the Dursley's living room. If you are self-employed, you might have multiple 1099s, and then there are 1095s, 1098s, well, the list can seem unending. Thanks, gig economy!

Make sure everything has its place.

Kondo is a big proponent of categorizing items so that everything has a place of its own and is easily found. Similarly (and here comes the shameless plug), CPAs help you categorize and prioritize your finances.

Whether you are starting a college fund for your newborn baby, investing in your 401(k) or launching a small business, a CPA can help you budget for each goal and separate the money accordingly. If you don't have a CPA helping you with your finances, I encourage you to get one so they can help you rise above all that clutter.

Prev Next