7 Ways to Approach Financial Decluttering in Your Life
Financial decluttering is a method towards clarifying your current financial standing and what opportunities lie ahead.
Springtime is the perfect opportunity to assess your belongings, determine what is important, and let the rest go. The process of acknowledging what you have and what you want creates an ambience of simplicity and accessibility. For example, I know I feel a heightened sense of awareness after cleaning out my place of what items I need more of, what I have bought too much of, and what I can potentially accomplish with my current resources. (My advice to power through spring-cleaning is a great playlist and turning off your phone notifications!)
The same is true with finances; setting a task of periodically cleansing out your financial files and methods can clarify areas of opportunity and potential savings. It is a moment to assess your goals and how you are, in the day-to-day, working to achieve them. Remove what you do not need in your life to focus completely on what is truly important.
Understand Your Why
Prior to engaging fully in the spring-cleaning process, stop and contemplate what you hope to get out of the journey. How do you feel about your current standings financially and where are you trying to go? What about your financial process stresses you out and can this be broken down by organizing your system differently? This is all about you. Decluttering is about enhancing flow and efficiency in your life so you are able to accomplish your goals to your utmost potential. Channel that intentional positivity to focus your insights on where you desire change the most.
Consolidate Your Old 401(k) & Other Retirement Accounts
The past few years have meant changing jobs (even careers for some) for many people and this consequently results in multiple retirement accounts with varying funds. Consolidating these accounts into one larger traditional or Roth IRA account is not a complex process. And, it can highlight investment opportunities that previously, at lower funds in each account, may have been inaccessible. In general, it is imperative to keep track of your overall finances, especially long-term accounts. Pursuing and ensuring simplicity and clarity can help you and your loved ones prepare more effectively for down the road.
Cut Your Debt
While there are ways to make debt work for you, this should not be done without proper consideration and planning. Debt can be a huge stressor on your life and strategizing takes time and could be expensive. A good rule of thumb is to pay off the highest amounts of outstanding debts with the highest rates, first. Waterfall these payments down, freeing up more funds each time. Working with a financial professional can offer guidance and clarity in the process. Here at Amida, we offer a special coaching program for decluttering this area of your life.
Sketch Where Your Paycheck Goes
Actively understand how you divide your paycheck towards bills, savings, and spending money. There are many strategies you can use but what is most important is that your way makes sense for your life. Money is a personal energy and the way you move it in your life should propel you forward towards your goals. Financial strategy is not a one-size-fits-all. Take time when you receive promotions or bonuses to first celebrate! And also reassess how this can influence your paycheck journey to further your progression towards a wealthful life.
Unused Subscriptions and Memberships
Today’s reality is choc-full of subscription opportunities. There are signups for grocery delivery, makeup boxes, clothing rentals, etc. Some of these are innovative and helpful towards integrating efficiency and variety into your life. Yet, some are not contributing to a sense of peace. These stack up over the months as wasteful expenses because you are not advancing due to their presence in your life. Take a moment to go over your monthly bill to prioritize which memberships you find beneficial. If Netflix is the way you are able to relax at the end of a long day, perhaps find another subscription you use less to reallocate the funds over to continue your self-care habits.
Change Your Recordkeeping habits
Papers often get lost, torn, or thrown away under an assumption of irrelevance. It is difficult to keep hard copy files especially over the years of moving, redecorating, and updating your financial records. Take advantage of the technology available today to switch your financial documents to hard drives. Keep original hard copies of select, critical documents in fireproof storage in a safe area. Have the digital files saved in at least two locations; although tech can free up your shelf space and closet storage, it is not invincible and it is wise to have copies. This refers to computer security, as well; for many reasons, it is beneficial to ensure you are using safe browsing habits and security measures to not share financial information with anyone across the open Internet.
Traditional Spring Cleaning
The act of sorting through your physical belongings creates a sense of awareness of where your money and time goes. Minimalism may not be your personal goal and this is completely fine. Having a collection of sorts can be a passion project and a valid funnel for some of your income to go towards. Acknowledge where your spending is enhancing your life vs impending yourself from reaching your potential. This can be a challenging process and I encourage you to take your time. Break it down to a room-basis – tackle your bedroom, then your office. Embrace the intimacy of taking such a close look at your livelihood and enjoy the process for its rejuvenation and possibility.
Decluttering your finances breaks down obstacles in the way for your goals. Being aware of how your finances engage through bank apps, e-statements, memberships, debt, and investments raises your ability to make smart financial decisions with all the resources you need. With this additional boost in flow, anticipate more clarity and peace in your life. And of course, feel free to get in touch today for a guided coaching session to bring you closer to this joy.