10 Steps to Declutter Your Finances

There’s a certain joy to organizing your space – just ask decluttering expert Marie Kondo and all of her bazillion fans. Having a clothing-free floor and minimalist bookshelves feels pretty darn good. But decluttering your finances can be even more rewarding than cleaning your physical space. And it’s definitely more important.

If you don’t know where your paycheck is going each week, your finances are cluttered. The same goes if you have a bajillion subscriptions. Have your credit card bills stuffed in a drawer… somewhere? You got it: Clutter!

Wondering how to organize your finances? Follow these 10 straightforward steps:

1. Gather all of your financial documents together and purge!

Do you know where a copy of your lease is? Your latest electric bill? Go through every room of your house for paperwork and keep anything that is recent or relevant in a single locked file box, with folders for each type of bill or account. Even better, scan it and shred the original copy.

Back it up: Set up a password-protected file on your computer with recent bank statements, investment statements and other important financial documents. Back everything up to the cloud for safety, and sort through this file each January to determine which of last year’s items can be safely deleted.

2. Say bye-bye to paper statements and physical bills.

Reduce your physical clutter by signing up for electronic bills and statements. Do this for each one of the bills and monthly costs listed in your budget, as well as all of your bank accounts (Don’t have a budget? See step #10). You’ll save trees … and your sanity.

Get help: If you’re having trouble keeping track of multiple statements, try an app like Mint®, which has bill monitoring tools built in.

3. Buy a shredder.

Yes, there are still some dinosaurs that don’t offer online statements and billing. Purchase a secure cross-cut shredder to dispose of paperwork and other financial documents after you scan them. It will also work great for credit card offers, marketing flyers and other junk mail.

4. Do a subscription “check-in.”

We’re not saying that you can’t splurge on Barkbox or Ipsy, but do you really need 10 pink lipsticks? Will another chew toy make Fido love you more? If you have so many recurring subscriptions that you can’t even remember them all — Hulu, car wash, massages, oh my! — it could be time to pare down.

5. Automate your accounts and investments.

Anytime you can move money automatically, you’ll save time and reduce mental clutter. Set up direct deposit for your paycheck, with retirement and savings automatically deposited or transferred into the appropriate accounts. Some investment platforms and apps allow for automatic transfer to investment accounts. Contact your financial advisor for more information on how to ensure your money is getting to the right place.

6. Set bills on Autopay.

Look at all of the monthly expenses you elected to keep and sign up on online banking to have the bills automatically paid from your bank account by their due date. Of course, this only works if you actually have money in your account to pay the bill, so consider using one of your bank or credit union accounts (like a free checking account) solely for this purpose.

Schedule it out: Spread out your due dates so that everything isn’t due on the 1st. If a company doesn’t offer Autopay, set up a monthly calendar reminder of that bill’s due date on your phone.

7. Combine like things together.

If you have accounts at multiple banks or credit unions, find out whether having separate accounts actually benefits you. Could you combine savings and money market accounts together for a higher interest rate? What about retirement accounts, 401(k)s and IRAs? How about student loan consolidation for multiple loans? Do your research, and consult a financial advisor if you need more guidance.

8. Pay down debts whenever you can.

Obvious fact: Fewer debts = fewer bills/statements. If you can completely pay off a small debt, that’s one less bill you’ll have to worry about — physically and mentally.

9. Use payment apps.

Studies show that people generally spend less when they use cash versus credit cards1 – in part because you can’t go over the amount in your wallet. However, if you’re trying to declutter, carrying around wads of bills kind of defeats the purpose. Instead, set up a digital wallet (Apple Pay, Google Pay, etc.) that contains your debit card info so you can pay bills or make purchases. You’ll eliminate paper clutter while also reducing the likelihood of overspending since you only have so much money in your checking account. Additionally, you can link your debit card to peer-to-peer payment apps like Venmo, Zelle and PayPal for when you need to pay someone directly or split a check with a friend.

A gift to yourself: When using retail apps, like the Starbucks app, purchase a digital gift card out of your monthly spending budget instead of linking the app directly to your bank account or credit card.

10. Revisit your budget to make sure it’s working.

Don’t have a written budget? No judgment here. But living without a budget automatically creates mental clutter because you don’t know where your money is going. Start by determining exactly how much money is coming in each month through work income and other sources like alimony or child support. You should also know the dollar amounts of every bill you pay, when they are due and how much money you’re setting aside for essentials (groceries, gas) and non-essentials like streaming services and clothing.

Decluttering your finances is a lot like cleaning your house: It might not be the most fun thing to do on a weekend, but you’ll feel loads better when it’s done. Once your money management systems are in order and you know exactly how to organize your finances, you’ll be able to set more realistic and achievable financial goals for the future.

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1https://www.forbes.com/sites/billhardekopf/2018/07/16/do-people-really-spend-more-with-credit-cards/

The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.