This article is a part of a month-long Morningstar Money Challenge. You can find the details here.
We’re almost at the end of the first week of our Money Challenge, and today is a fun day because you get to save money without really doing anything! Actually, that’s not true. You do need to do a few things – but you might be able to do it in the comfort of your couch!
The task for today is simple – just get rid of the things you don’t need. That’s right. You have to ‘KonMari’ your money!
Inspired by organizing consultant Marie Kondo's Netflix show and best-selling book, "The Life-Changing Magic of Tidying Up," people are filling up dumpsters with possessions that no longer "spark joy," while the more environmentally conscious of us are donating our old things to charity.
Additional Reading
- Marie Kondo Your Retirement Portfolio
- Taming Your Financial Records
- What to Stash, What to Trash
“Should your portfolio be next on your "To-Kondo" list? I'd say yes, emphatically yes. As with decluttering your home, winnowing down your number of accounts--and the holdings within them--can be incredibly clarifying. With fewer accounts and holdings, you can better focus on the really big determinants of your financial success: your asset allocation, your savings or spending rate, and your proximity to reaching your goals,” points out Morningstar’s director of personal finance Christine Benz.
Do You Need So Many Memberships?
I know that I have subscriptions to at least three stores that promised free use for one month, and a “nominal” monthly charge after. I keep making excuses for the stores, saying I should support them especially in the times of the coronavirus pandemic, but deep down, who am I kidding? I really don’t need to pay $3.99 every month to collect a free whey protein ‘super pack’ the next time I go to one store that’s about 30 kilometres away.
I’ll be willing to bet almost all of us have at least a few unneeded subscriptions or memberships, if only because we haven’t had the time or inclination to cancel them. Well, today’s task is to do it!
First, go through all your bank statements, and your credit card statements. Look at the recurring charges and try to spot the ones you don’t need. Once you figure out what’s unnecessary, simply cancel. And that’s it.
Additional Reading
- Get Organized
- Create a Master Directory
Master Directory
Benz also reminds you that you need to document all of your financial accounts in case something should happen to you. Compiling a master directory with essential account information is apt to be just as valuable for you to rely on while you're alive and well as it would be to your loved ones should something to happen to you.
As a part of the challenge, we’ve already completed a net worth statement and sorted out your accounts. But even if you haven't, creating a straightforward document of your financial accounts shouldn't take long at all.
Here’s how Benz suggests you do it. Your master directory can be either electronic or paper. In it, include financial assets such as bank, mutual fund, and brokerage accounts; company-retirement plan and pension fund details; real estate holdings, and business interests. Alongside or beneath each account name include account numbers, URLs, passwords, key contacts, and phone numbers. Include similar details for debts you owe and insurance policies.
“Given the amount of valuable personal information it includes, your master directory would obviously be manna for identity thieves. So once you've created such a document, it's essential that you take steps to keep it safe. If it's a physical document, keep it under lock and key in your house. If you've created an electronic file, password-protect it using a hard-to-guess password. Then alert a trusted loved one of this document's existence as well as details about how to gain access to it in a pinch,” Benz says.
Additional Reading
- Should You Take the Extra Credit Card?
- How to Organize Your Financial Records
