We all had thought about decluttering our lives at a certain point in our lives and ended up in front of our closets. Well, that is because it is the most accessible place to start. Moreover, trust us, most of us need to spend some time decluttering, and we are not just talking about decluttering your house. We are talking about decluttering your finances too. Managing a cluttered wardrobe is more manageable than sorting messed-up finances. And when we talk about sorting our lives, Marie Kondo is the first person to come to our mind. So, how do you get started when it comes to sorting your finances? Basically, how can you know that it is the time to Marie Kondo your finances?
Realize! Better financial management starts with realization. You must know and understand your spending habits, what and how much you are spending, and your financial plans. If you are looking for the signs to start working on your finances, then reading this is the first sign! But let us look at some more signs which can tell you if you need to Marie Kondo your finances:
1. Never ending credit card bills
Credit cards are bliss until you can pay off the bills on time. But you must know that you are off track the moment credit card interest starts accruing. Many people, especially those who have maxed out their credit cards, start paying minimum payments to reduce the credit card debt burden. Unfortunately, though minimum due can help you save the late fee, it accrues high interest, eventually pushing you towards the debt trap. So, having never-ending credit card bills indicate that you need to sort out your finances as soon as possible.
2. No control over spending habits
Your spending habits are the reason behind financial mismanagement. If you are an impulsive buyer, you most definitely need to sort out your finances. Overspending puts a financial burden on you and might push you into the debt trap. The problem is not spending money, but it is spending money on non-essential things without financial planning. For example, if you are planning to buy a new television, you should make sure that you can afford it. If you cannot afford it, make a plan, save money and then buy it. Buying something late is better than paying high interest on it.
3. No savings
If you have ever said, ‘I can’t save money because of my expenses,’ chances are that you spend money on non-essential items and end up with no savings. Savings give you a financial cushion for the future. If you are still in the paycheck-to-paycheck cycle, then it is time to go Marie Kondo on your finances. It would be best to find ways to get out of it and save for a better future.
4. Repaying debts take up a significant amount of the income
Not all debts are bad. If you can manage your debts without skipping any scheduled payment, you are on the right track and manage your finances properly. The real problem starts when you take too much debt and end up using more than 40% of your income to repay it. Spending a significant amount of your income in debt repayment limits your options to save or plan a better financial future. So get it together, make a payment plan to pay off your debts as soon as possible, and start building your financial future.
5. Borrowing to make ends meet
There are good days and bad days too, but one bad day should not push you to the verge of making wrong financial decisions. For example, living in a paycheck-to-paycheck cycle can push you to borrow money from friends and family for regular expenses, especially towards the end of the month. It might seem like a decent option, but one emergency and your castle of “I am doing okay” comes crashing down. If you also end up borrowing money to make your ends meet, it is about time that you start working on your finances.
Now that we have talked about the signs, the next step is how to actually Marie Kondo your finances? We will be talking about it in the next blog. Till then, stay tuned with us and keep reading!
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