4 ways to clear out financial clutter

Tidy up for 2019! Photo by Ana Tavares via Unsplash.

2018 is in the rearview mirror, and 2019 is filling up the windshield. Let’s get after it! Financially, of course. Clear away your money clutter and get ready for a financially healthy new year.

The queen of tidying is, of course, Marie Kondo. Her techniques on folding socks may not be as useful for financial clutter. But her method does have some wisdom you can put to use for tidying your finances. (I find the words “tidy” and “tidying” funny, for some reason.)

Let’s tidy!

“People can’t change their tidying habits without first changing their thinking.” — Marie Kondo

Paper clutter

This is probably the easiest financial clutter to deal with, now that everything is online. You don’t need to keep stacks of paper, even if you’re meticulous about keeping financial records for their appointed time. You can simply keep them in online form.

Concerned about security? Large electronic storage vaults are safer than your home or even work computer. If you’re still nervous about cloud security, you can download your docs to a thumb drive that you stash away somewhere safe. (Label it something like “Parents Having Sex” so no one will ever look at it!)

You don’t need to digitize everything, if you’ve got older paper. No one, including you, needs your tax returns from 10 years ago. Just shred those and don’t waste time scanning them.

Once you’ve digitized your financials, shred the paper versions. Throwing them out is not secure. Many communities have paper shredding available. Financial advisors often offer a shredding day for their clients as well. If you want to invest in your own paper shredder, you can, but it’s not necessary.

Because you won’t receive any more paper! Sign up for electronic billing for everything.

Pay through your bank online and use online programs for taxes. Easy!

Knowledge clutter

Actually, this is more like lack of knowledge clutter. There are some basic things that you need to know about your household finances. When you don’t know what’s going on, questions about what’s happening tend to pile up in your brain, whether you voice them or not.

And it doesn’t matter if you’re married, and not the one who handles the finances. You still need a basic understanding of what your assets, debts, income, and expenses are.

You may not want to get too deep into details, but you do need to know the overall picture.

If you’re married, you can schedule a date night to go over your finances on a monthly or quarterly basis, whatever works for you. (Those just getting started might need more frequent meetings until you figure everything out.) You only need to look at (long-term) investments, such as retirement accounts, once or twice a year.

If you’re not married… schedule finance date nights with yourself!

Either way, make it as relaxed a setting as you can. If you need to light a soothing candle, light a soothing candle. If you need your dog on your lap, get out the treats. No need to make this a difficult or miserable time. You’re empowering yourself to handle your finances, either alone or with your partner.

Old decisions clutter

Sometimes the decisions we’ve made in the past are just lying around like twigs in the forest, and you have to rake them up to freshen the path.

For example, consider your retirement account. (If you don’t have one, and you’re not already retired, go start one right now!) How much are you contributing if you’re not already maxing out?

If you started your 401(k) at your job three years ago and you got a 1% raise each year, bump up your contributions 3%. Commit to adding more each time you get a raise until you reach the maximum amount allowed.

Have you looked at where your retirement contributions are going?

Maybe they’re in the default option. This is fine if the default is a target date fund that corresponds to you turning age 65 or 70. But if the default is a “stable value” fund, or cash, and you’re under 60, change your fund to something more aggressive (more stocks in it).

Or maybe you subscribed to a travel site several years ago because you were single and did a lot of traveling. But now you’re married and have a baby coming. You’ve decided that world travel will have to be on hold for a little while.

Should you still be subscribing? Do the emails from the site “spark joy”? Or do they just depress you because you know you can’t travel for a while? Give yourself a break!

Mindset clutter

Some people think that finance “isn’t for them”. This might be because they think they’re bad at math, or they’re the wrong gender, or they just don’t care. None of these is a good reason, honestly.

Math has almost nothing to do with household finances.

We’re not talking calculus here, just simple addition and subtraction. And you don’t even have to do it! There are so many online apps out there to help you with your budgeting. They track and categorize all your spending. All you have to do is input your account information.

Same thing with investing. True, compound interest is a bit more complicated than addition/subtraction. It doesn’t matter because you don’t have to do the calculations yourself. Search “retirement calculators” online. They can tell you how much you need to save if you want to retire by a certain age.

Plenty of these calculators are available. They’ll all give you different answers, because they use different assumptions. But you’ll get a rough idea of how much you need to save. In general, unless you’re already diligent about saving at least 10% of your income, you need to save more. Some 401(k) plans provide this information automatically, too.

In other words, you can’t use math as an excuse now that you don’t actually have to do any.

What about gender?

That tooth-grinding noise you hear is coming from me. No, there is no little section on the Y chromosome that is reserved for financial matters. Men and women can both be bad or good at finances. Actually, women tend to be better equity investors.

You need to know how to manage your money, whether you identify as male, female, or nonbinary.

Many people will find themselves being responsible for their own money for some period of their life. Investors who rely on their parents for advice will find themselves without that advice. (Not to mention that financial literacy is already decreasing by age 60.) Couples get divorced, and usually one spouse predeceases the other.

So if you don’t already know how to handle your finances, what are you going to do?

Finally, what if you just don’t care?

Many people find finances boring. I get it.

But money doesn’t just handle itself, somebody has to manage it.

You might decide you want to offload these financial details to someone else.

There are daily money managers as well as financial advisors. Or you might prefer to let your spouse handle the money.

But if you don’t understand the basics of your own finances, how will you know if something goes wrong? Every profession has its bad apples, unfortunately. A basic understanding of your finances (and paying a little bit of attention!) will help you pick up on some red flags. You’ll be able to stop or minimize the damage before you’re completely wiped out.

What if your spouse suddenly decides they want to trade you in for a newer model and starts hiding money (or spending it) without you knowing? Or they are incapacitated due to an accident? You’ll be able to take over with much less stress when you know the basics.

Summary

Start the year fresh by cleaning out your old financial clutter. You’ll have a good start on a great 2019.

You can thank the clutter, as Kondo does: whether it’s paper, old decisions, mindset, or knowledge. Thank them for the service they gave you, and let them go.

On with the new, brighter financial future!

Want more help with investing? Click here to get the eight great concepts.

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Unlocking The Secrets To Business Achievement With More Life Balance For Women ⎸Speaker ⎸Productivity Queen ⎸Ghostwriter ⎸Author ⎸Pun Lover

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Jennifer Jank

Jennifer Jank

Unlocking The Secrets To Business Achievement With More Life Balance For Women ⎸Speaker ⎸Productivity Queen ⎸Ghostwriter ⎸Author ⎸Pun Lover

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