I’ve recently been caught up in the KonMari tidiness phenomenon. Marie Kondo has sold millions of copies of her book, “The Life-Changing Magic of Tidying Up”, and was named on the Time 100 Most Influential People this year. Here’s how you can use her ideas for your money’s tidiness.
1. When you spend, ask yourself, “Does this Spark Joy?”
Research shows that experiences are worth more in terms of happiness than material goods. Think $20,000 vacations three years in a row instead of that new Porsche or Tesla lease. The goal of the game is to only keep the expenses that fit your model for true joy.
2. A passive aggressive credit card strategy
Subscription services are often too difficult to cancel and too numerous to hunt down. To fix this, I recommend changing your credit card number every 18 months or so. It’s less work than you think. Your subscription providers will contact you requesting you to re-up. Only respond to those you want to keep. Easy and tidy!
3. More rooms/accounts means losing track of your ‘stuff’
The average family I work with has well over ten investment accounts before we get started. That’s 529s, IRAs, Roths, Trusts, 401k’s, more 401k’s, etc. Many are invested without any particular goal in mind. The worst part is the smaller ones, $25K or less, that frequently get lost altogether! Consolidation into fewer accounts makes financial life easier.
4. Start asking questions
After you’ve consolidated, ask yourself, “what is my total allocation across all investments in all locations?” “How much do I own in aggressive style investments?” “Would market shocks or volatility affect my lifestyle more than I currently suspect?” We can help you answer those questions. Immediate digital access to all of this information and more is the gold standard in 2016. We have that for you.
5. Know your costs to know your savings
Most people are keenly aware of their income rate down to the last dollar. The same can’t be said about expenses. The more accurate a picture you have of your expenses, the better you can tune your portfolio to match your goals. That might even lead to a discovery that there is more room to take bigger risks for bigger future returns.
6. Watch the dollars not the pennies
You might think you are being thrifty when you use coupons to save $10 in the grocery store or go to a less expensive gym. Unfortunately, all of that thrifty hard work is voided when you spring for an extra car, a boat, a third home, upgraded appliances throughout or a pool in the backyard. Focus your limited time and attention on ‘thriftiness’ that comes in denominations over $1000 or even over $10,000.
Unless you’re a financial professional or aficionado it’s unlikely that this process will come naturally to you. Like Ms Kondo, at Osbon Capital we’re obsessive about financial tidiness at every level. Ask for help for what works and what doesn’t, we’re here.
Max Osbon – mosbon@osboncapital.com
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