1. Purge, don't splurge
"Keep only those things that speak to your heart," Marie Kondo says. "Then take the plunge and discard all the rest. By doing this, you can reset your life and embark on a new lifestyle."
One of the lessons here: Resist the urge to splurge. If you focus on things you really need and want, then you’re less likely to spend on stuff that you won’t really cherish and use.
Having a money goal is a good way to keep your spending on the right track, says Kelly Lannan, director of young investors at Fidelity Investments.
"Think about your financial goal and build a plan to help achieve it," she says. "Whether it’s paying down debt, making rent, saving for retirement, or buying a home — make sure to visualize it by writing it down or even drawing a picture."
Watch your money grow while you sleep
2. Own today but don't regret later
"The question of what you want to own is actually the question of how you want to live your life,” says Kondo.
From a financial standpoint, what you own today — perhaps a fancy sports car, a beachfront vacation home, or even that weird stuff you collect and you can't stop buying — affects what you can do tomorrow.
So, make sure you're saving enough today to have the kind of life you want to lead in the future, maybe at retirement. A great way to invest in your future is if your employer offers a 401(k) or 403(b) retirement savings plan, Lannan says.
"If you enroll, you can choose to contribute money directly from your paycheck," she says, "and what’s great about this is you likely won’t even notice the difference in your paycheck — and you won’t be tempted to spend it!"
3. Work at building better habits
Marie Kondo says: "Tidy a little a day and you’ll be tidying forever."
How does this apply to money? Take a little time each day tidying up your finances, and it then becomes a habit.
"Habits take discipline and being a good saver and investor is no different," says Lannan. Start by setting budgeting goals and making regular increases to your savings and your investing.
"At Fidelity, we recommend saving 15% of your income for retirement," Lannan says. "But if you can’t save 15% right off the bat, make it an annual habit to increase your contribution by 1% each year until you reach that goal."
Invest in Real Estate with Just $100
4. Rethink your relationship with money
As Kondo sees it, “People cannot change their habits without first changing their way of thinking."
Embracing a smart approach to money matters — whether it’s investments, credit cards or loans — demands a hard look at your spending and saving habits.
Can’t stomach the idea of wading through this on your own? Seek out a certified financial planner (CFP) professional or other qualified financial professional.
A pro can help you craft a household budget or develop a financial plan that puts you on the path toward cleaning up your finances.
5. Don't carry financial 'baggage'
"No matter how wonderful things used to be, we cannot live in the past," Kondo says. "The joy and excitement we feel here and now are more important."
How many of us have made serious financial mistakes? Perhaps, for instance, you took on too much credit card debt and ended up filing for bankruptcy.
To move past any monetary slip-ups, you certainly should learn from the past, but you also shouldn’t dwell on it, says Fidelity's Lannan.
"At my first job, I didn’t open the 401(k) offered to me," she recalls. "I wasn’t educated about my options, but years later, I started to educate myself and invested in my 401(k). Even though I was 'late' to the game, the important thing was I started."
More: 12 best investing books
6. Tame all that paper
"Designate a place for each thing," Marie Kondo tells us.
Your credit card statements, tax returns and other financial documents may be scattered throughout your home, hiding in different drawers and spaces. If those documents are a mess, how organized can your finances be?
Commit to shoveling through your blizzard of paperwork. A great time is after tax season, says Ed Hutton, associate professor of finance at Niagara University in upstate New York.
"Look at that stack of papers you had to put together for taxes, and decide what you really need to have for another year," Hutton says. "Are there credit cards you can cancel, or bank accounts that you can consolidate?"
7. Move swiftly (but carefully)
"From the moment you start tidying, you will be compelled to reset your life. As a result, your life will start to change," says Kondo. "That’s why the task of putting your house in order should be done quickly."
Don't waste time with your financial housecleaning either. Hutton says when he cancels credit cards and other accounts, he prefers to send letters — rather than phoning, and having customer service representatives try to change his mind.
"It's very motivating to know that I will have fewer statements to keep track of, and that I can better understand why I have each account," he says.
But just be careful with your credit score. Closing long-standing credit cards with high limits of available credit can be harmful to your credit score, especially if you're carrying balances on your remaining cards.
8. 'Spark joy' with your spending
“The best way to choose what to keep and what to throw away is to take each item in one’s hand and ask: ‘Does this spark joy?'" Marie Kondo famously says. "If it does, keep it. If not, dispose of it."
That goes for your spending, too. Lose the spending that you don't need — but be sure to treat yourself to a little joy!
A 2018 Fidelity Investments survey found that more than a quarter of millennials felt that after a rough week, it was important to treat themselves to movies, a happy hour, dinner with friends or a concert. And that's the right idea.
Lannan says a good recommendation is to use about 30% of each paycheck for what the economists call "discretionary expenses." In other words: fun stuff.
9. Give yourself time to get it right
"Changing lifestyle habits acquired over many years is often extremely difficult," says Kondo.
Here’s the translation of this in financial terms: Be patient with yourself if you’re seeking to change your monetary habits.
No one gets into financial trouble overnight, and no one gets out of it overnight either. It might take several years to erase debt, for example.
But just think of how much joy it’ll spark when you’re longer buried by bills — and when your credit score reflects your hard work.
10. Stop trying to measure up
"The process of facing and selecting our possessions can be quite painful," Marie Kondo says "It forces us to confront our imperfections and inadequacies and the foolish choices we made in the past."
As you sort out which of your financial practices you want to keep and which you want to discard, examine the reasons for your foolish money mistakes.
Are you often driven to spend by peer pressure? FOMO? Then, it's time to stop making comparisons and be true to yourself.
"Instead of being influenced by what you see on social media, focus on your own opportunities," Lannan says. "Remind yourself to remain focused on your goals, not the moments others may be displaying through a rose-colored filter."
Kiss Your Credit Card Debt Goodbye
Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.