Sparking joy: How to Marie Kondo your finances
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Sparking joy: How to Marie Kondo your finances

Jul 2021
Mar 2019

Personal finance doesn't really spark joy in many of us. In fact, it has been proven that people would rather talk about death then money. But as Marie Kondo says: "Tidy up your space (finances), transform your life."

A global phenomenon with her own Netflix series who inspired her 2.8 million Instagram followers around the world to declutter their sock drawers, Marie Kondo knows a thing or two about decluttering life. Instead of messy pockets of assets and liabilities spread out in various parts of our lives, perhaps applying her Konmari principles to tidy up and better manage our personal finances will allow us to choose joy.

1) Commit yourself to tidying up and imagine your ideal financial lifestyle

At the beginning of every episode of "Tidying up with Marie Kondo", she asks her guests to visualize their ideal life. You should likewise first commit to taking control of your finances, and then think about what your goals are ?is it to save for a down payment on a home, build an investment portfolio for your child's education, or to have the freedom to retire at a certain age? This is goals-based investing, where your goals are at the centre of your investment portfolio and success is measured by how well your portfolio tracks against reaching that goal.

2) Put all your items out where you can see them

Kondo-converts start tidying up their bedrooms by taking out everything in their wardrobes and piling it up onto their beds in order to get a holistic view of their belongings. You should do the same ?manage your personal finances by taking a broader look at what you actually own. The easiest place to start is your bank and brokerage accounts, where you can go through your statements and list down all the stocks, bonds, mutual funds, fixed deposits and cash balances you possess. Look at any private investments you have, such as real estate and investments in private companies or businesses. Even a small investment in your friend's restaurant counts. Next, look at your insurance policies, CPF or other retirement accounts.

Make a list of everything you have.

You might notice that you hold a significant portion of your assets in cash and are not taking as much risk as you should be, or that you are still holding remnants of poor financial decisions from a few years ago.

3) Finish letting go first

Do you have multiple funds with the same market exposure, small positions of various tech companies that were supposed to be the next big thing (5 years ago), or brokerage accounts in other countries that you've forgotten about? Do you just have too many single stocks? Portfolios with too many securities spread across too many accounts can make it difficult to monitor and track.

Now that you have a good view of your entire financial picture, it's time to be ruthless.

Simple can be beautiful ?you do not need a dozen portfolios to build a diversified portfolio. Any holding that represents 1% of your portfolio is not going to make much of a difference in terms of performance: if it went up 200%, your entire portfolio would only move by 2%.

4) Ask yourself if it sparks joy

Kondo believes in only keeping things that speak to the heart and discarding items that no longer spark joy. Thank them for their service, then let them go. But just remember ?what should spark joy shouldn't be the most exciting investments in your portfolio (just look at Bitcoin), it should be what gets you closer to your goals. If it sparks joy but costs an arm and leg, throw it away. There won't be much joy left in a few years when you realise all your returns have gone to paying fees.

Transform your investment portfolio with Kondo's 'life-changing magic' with a strategy and a purpose in mind. A cluttered financial life is stressful. Tidying up, managing and taking back control of your financial life means giving yourself choices and priorities. The likely result will be more joyful than organising your closet.

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