By Tokiso TKay Nthebe
Like many, I have bought and collected clothes over the years which I have not really worn. With each item bought, I quietly watched as the space in my wardrobe filled up, leaving no room for anything else. I recently decided to declutter my space to shed off some layers and embrace the new season. It started with identifying and removing pieces of clothing and shoes that I have not worn over the last six months and giving them away. Not only did this create the much-needed space but helped me organise my physical space.
People frequently ask me “how can I organise my finances and be in control?”
In this blog, I discuss and share five practical steps to help you to declutter your finances and gain control.
What is financial decluttering?
Much like decluttering your wardrobe or physical space, painting a clear picture of where you are financially is important. Financial decluttering requires that you organise, streamline and simplify your finances. To better manage your finances and create efficiencies you must regularly identify, review and remove financial commitments, accounts or spending habits that no longer align with your goals. This includes but not limited to reviewing bank statements to identify spending patterns, subscriptions, debit orders and old accounts.
How do you declutter your finances?
As Marie Kondo, a Japanese organising consultant puts it ‘tidying is the act of confronting yourself’. Sadly, many people do not like confronting their finances or how they spend their money.
To start decluttering your finances and tidying up, create time and confront how you are spending your money by reviewing your bank statements
- Review bank statements
Start by downloading your three-to-six-months bank statements and then conduct a comprehensive audit.
- Are there spending habits that you need to change?
- Are there expenses that you are incurring that need to change?
- Are there potential cases of fraudulent transactions on your account?
- What is your expense-to-income ratio?
- Cancel subscriptions.
The second step is to identify and review what services you are subscribed to that have not been used in the last twelve months.
- Which subscriptions are you paying for including publications, entertainment, and games, then cancel those that are not relevant.
- When last did you login and use the subscription service?
- How much are you paying per month?
- Review debit orders
Like the bullet point above, it is important to review your existing debit orders.
- Which debit orders have you authorised to go through your account?
- Are there debit orders that you do not recognise?
- Are they any suspicious debit orders?
- Close inactive accounts.
The fourth tip is to close inactive bank or investment accounts and policies. Take time this month to review all your accounts.
- Do you have accounts with positive or negative balances that you have not used in the last twelve months?
- Do you have existing insurance policies? When last did you review them? Are you adequately covered?
- Do you have investment accounts? Have you checked performance in the last twelve months?
- Review financial goals.
Every year we set financial goals; I encourage you to time to also review your financial goals.
- How are you tracking against the goals you set at the beginning of the year?
- Are there adjustments that you need to make?
- If you are behind, what is the plan to close the gap?
As aforementioned, being in control of your finances does not JUST happen; you need to do the work. If you do not like the financial picture that you see, seek professional help and act. When you make time to declutter your finances, you give yourself permission to let go of things that are not aligned to your financial goals, create clarity and allow yourself to start on a clean financial slate.
