Let organizational joy guide you and avoid spending money on things that don’t bring you joy.
We’re pretty obsessed with Japanese organizational consultant and popular Netflix show host, Marie Kondo. She organizes and purges the homes of hoarders. She helps families dealing with loss respectfully say goodbye to their loved one’s possessions. Most importantly, she helps people understand the linkage between true joy, which lasts, and their possessions, which don’t.
Having followed her method, we’ve realized that many of her principles apply to organizing your personal finances, too. Getting your financial house in order is not only fantastic for reducing stress, but it makes tax season smooth and helps you to make smarter and more realistic financial decisions.
Show gratitude for what you do have: It’s easy to focus on the negative aspects of money; not having enough of it, debt pressures, high costs for housing or child care. But take a moment in complete silence and think about all of the positive things that your money has brought you in life. Perhaps it’s being grateful for having a job or it could be that you’re happy that your student loan paved the way for a fabulous education. Better still, show gratitude that your money has enabled you to live in the home you’re living in.
Lay all of your cards on the table: If you’re like most people, you’ve got papers, cards, and receipts shoved in drawers, used as coasters for your morning coffee, hidden in a box in a closet or tucked into pockets of your briefcase or purse. Take it all out. Drop everything in the centre of your dining table or on the floor of your living room. Don’t worry if it looks like a gigantic mess. That’s the point. We need to see what we’re working with.
Organize your financial records into piles: Push your statements, cards, forms and the like into unique piles for banking records, insurance (health and life insurance should be their own piles aside from your home and auto policies), pay stubs, T4s, T3s and other tax documents that have started to arrive over the past few weeks, mortgage documents, lease agreements, vehicle financing, vehicle maintenance, repairs or registration, home repairs, property taxes, investment statements, annual pension documents, loans (student, lines of credit, personal or loans to friends and family). Essentially, if you receive mail from any organization, it likely means you need to place it in a distinct pile.
Purge what you don’t need: In Canada, it’s recommended that you keep up to six years worth of your financial records and that’s because the Canada Revenue Agency may ask to see your records that far back. I’ve also found that this applies to other financial records such as insurance. The rest can be purged; and in the era of identity theft, you’ll need to shred anything with sensitive information like your address or SIN number.
File your records: Perhaps you haven’t used a trusty old file folder for a while, but you will now. Label each file folder according to the piles you’ve made and place the relevant documents within each. If some of your information is in e-statement format, set up the same file structure on your computer or in a secure cloud, and file accordingly.
Make a permanent home for your financial information: Now that you have your filing structure, find a good place in your home to keep your records safe. MeVest founder, Lesley-Anne Scorgie uses a locked filing cabinet that she got at a garage sale for $20, and she keeps the cabinet in her closet. As new information comes in, she reviews it immediately and then files it into its appropriate file, which she happen to keep in alphabetical order. When she receives unnecessary paperwork such as marketing newsletters from realtors in the neighbourhood, she shreds these.
The empowerment you’re going to feel when your finances are organized is massive, and this excitement will trickle into the way you spend and save your money in the future. Let this organizational joy guide you and avoid spending money on things that don’t bring you joy.
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