How to KonMari Your Money

konmari your money

You can KonMari your money.

KonMari is the Marie Kondo method of decluttering. The method is designed for simplifying the mess in your home. There are a popular book and a Netflix TV show all about it.

However, you can take the main principles of the method and apply them to your finances. Doing so, you can make smarter financial choices and feel more in control of your money.

Put It All In One Place

One of the first things that you do when you Marie Kondo your home is to take all of the things in one category and place them where you can see them. For example, if you are organizing your clothes, then you take every single clothing item out and place it into one pile.

It absolutely makes sense to KonMari your money in the same way. You should have one place where you can look to see your income, expenses, investments, budget, net worth, etc. If all of that information is scattered in different places, then you aren’t going to be able to make sense of it. For example, if you use a bunch of different credit cards, and you don’t really know what your total amount of debt is, then you’re in trouble.

Find a method that works for you to KonMari your finances in this way. You might use an app like Mint. You might use pen and paper. Whatever it is, make sure that it’s both clear and complete. Just this simple act of putting all of your money information in one place can help you feel like you’re more in control of personal finance.

KonMari Your Money with a Budget That Sparks Joy

One of the things that Marie Kondo is most known for is the idea that everything that you own should spark joy. When it comes to your closet, you pick up each item of clothing, hold it, and if it sparks joy then you keep it. If it doesn’t spark joy, then you get rid of it.

You can apply this same concept to your budget. Look at all of your expenses and how your budget is allocated. Go line-by-line to determine whether or not your spending choices truly spark joy. For example, let’s say that you spend $100 on cable TV. Does watching cable TV spark joy for you? If not, then maybe that’s a cost that you can eliminate. Where in your budget could you reallocate that money to spark more joy?

Of course, there are some things in a budget that just have to be there, whether or not they truly spark joy. However, you can use this information to help you set goals. For example, paying your mortgage probably doesn’t spark joy. However, your home itself should spark joy. If it doesn’t, then you do still need to keep your mortgage in your budget. However, that’s good information to know that perhaps moving should be part of your larger financial plan.

When you KonMari your money, what you’re really doing is figuring out your financial priorities. The idea is that you want to spend less on things that don’t give you joy and more on things that truly make you happy at a very deep level.

Practice Gratitude

If you watch the Netflix show, then you will see that Marie Kondo does something interesting before she even begins helping people organize their homes. She pauses and does a silent prayer of gratitude to the home. Likewise, when people give away an item that doesn’t spark joy, she suggests that they thank the item for the purpose it has served.

This attitude of gratitude is really helpful when it comes to changing your attitude about money. Our society tends to make us think about money in a negative way. We may feel like we never have enough, for example. On the other hand, we may be unhappy with our past spending choices or with the way that money impacts our relationships. Starting from a place of gratitude makes it much easier to work with our money.

Additional Ways to KonMari Your Finances

I’ve read some of the other articles out there that people have written about how to KonMari your finances. Here are some of the tips that I liked:

  • Go paperless with financial statements. This helps you KonMari your whole home.
  • Carefully organize all paper you do keep in one specific, limited places.
  • Simplify your financial life as much as possible in order to make good decisions.
  • Declutter your wallet by reducing the number of credit cards, loyalty cards, etc.
  • Stay in touch with how you feel when you spend and save money.
  • Continue cleaning up your money on a regular basis to avoid another financial mess.

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2018 Tax Changes: What You Need to Know Before You File

2018 tax changes

There are some important 2018 tax changes. If you haven’t filed your taxes, yet, then make sure that you know about these changes. In some instances, adapting to the changes might save you money. Everyone wants to get the most they can back from their tax refund so don’t let the changes mess that up for you.

2018 Tax Changes Come From Tax Reform Bill

These 2018 tax changes are coming as a result of the Tax Reform Bill. It is better known as the Tax Cuts and Jobs Act (TCJA). This bill passed in late 2017. However, the changes didn’t go into effect right away. That’s why you didn’t notice it last year when you filed your 2017 taxes.

It’s time now for those changes to go into effect, though, so it’s important to review the bill. There are changes that impact individuals, businesses, tax-exempt entities, and governments. However, we’ll only be looking at the 2018 tax changes for individuals in this article.

Overall, the Changes Should Make Filing Taxes Easier

One of the biggest changes is that the standard deduction has been expanded. Therefore, people who previously took itemized deductions may now be able to get as much (or more) money back just using the standard deduction. As a result, this simplifies taxes.

Many other deductions have been taken away. For example, you can no longer take a deduction for job searches or moving expenses. Therefore, you’ll probably benefit from just taking the standard deduction.

That said, if you do your own taxes, you may find that you need to figure out your itemized deductions first. That’s the only sure way to calculate whether you get more back from the standard deduction or not. Therefore, it might not save you as much time as it should.

If you want to save time and are willing to take the chance that you may or may not save money, then just take the standard deduction. In most cases, it’ll be the right thing to do. The standard deduction has almost doubled, which means that most people won’t save money with itemized deductions.

On the other hand, these 2018 tax changes are designed to last until at least 2025. Therefore, you might want to do the math this year, see if the standard deduction truly makes sense for you, then use that information when filing in future years.

The Changes Benefit Low and Mid-Income Filers

The people who benefit the most from these changes are those who are low-income or middle-income. They are most likely to get more back from the new standard deduction. Tax Foundation reports that the use of itemized deductions will drop more than 70% for people with an income between $10,000 and $50,000. Furthermore, it will drop at least 63% for people earning between $50,000 and $200,000. Therefore, if you earn less than $200,000 then chances are that you benefit from the new standard deduction.

Additional 2018 Tax Changes

Here are some other important things to know:

  • Fewer people will need to pay the Alternative Minimum Tax Liability.
  • The maximum credit for the Child Tax Credit has increased so it pays to have kids.
  • Furthermore, there’s a new additional credit for other types of dependents.
  • Tax brackets have changed, generally lowering marginal tax rates.
  • If you are self-employed or a small business owner, there are additional changes to learn about.

There’s one more important thing to note. Due to the 2018 tax changes, many people had less money taken out of their paychecks this year than in years past. If that’s true for you, then your refund will likely be smaller than years past as well. Even though you may pay less in taxes, you get less back because you paid in less.

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Why Aren’t Millennials Investing?

millennials investing

Why aren’t millennials investing?

Millennials investing seems to be a scarcity in this decade, but it doesn’t mean they shouldn’t. So what’s the problem? Why aren’t we millennials investing more?

I can’t speak for everyone, but I know personally, my top reasons for not investing in earlier years are as follows:

 

  • Lack of funds. When I first graduated college in 2009, I was feeling the recession along with many other freshly graduated college students.
  • Lack of knowledge. I never felt confidently enough to invest. I thought the risk was much too large and that the return would reflect this.
  • Lack of skill. I did not create a steady budget for myself nor did I have any type of savings. My personal finance skills were nonexistent.

Over the years, I’ve educated myself and learned the importance of investing. I’ve also improved my personal finances by taking the time to grow my savings and seek out financial opportunities. But, despite the improvement of the economy over the years, the rate of millennials investing is still low. Why is this?

Various studies show similar reasons as mentioned above as to why the amount of individuals that dedicate time to invest is lower than in previous generations. If parents were not encouraging or enforcing the investing, it seems to have rarely happened on its own. Or rather, it takes longer for it to happen on its own.

We need answers.

While this age group tends to be stereotyped as self-centered and entitled folk who are focused on instant gratification and all things digital, these studies portray a different (and more accurate) light. In addition to simply a lack of investing confidence, Merrill Lynch’s Private Banking and Investment Group’s survey on millennials and money shows that this generation is very careful in making investment choices. They want to be “shown the math.”

We want more control.

Merrill Lynch’s survey also found that trust is a big issue for millennials investing. In fact, 72% of the 153 young Americans surveyed stated that they are “self-directed in their investing.” We’d rather be the ones making the decisions than having an adviser we don’t trust working with our cash. We want to invest with people or resources we personally trust rather than just any certified professional.

We’re more conservative (when it comes to investing).

Millennials, in terms of money, have been compared to post-Great Depression era. We not only watched what happened to our parents in the early 2000’s due to the stock market crash and recession, many of us experienced it ourselves after college. Jobs were harder to come by, and therefore, our focus has shifted. We are just as concerned about our parents and their future as  they are with us. UBS Investment Bank’s 2014 survey confirms this notion. We do our research and are much less willing to take high risks with our money. Although high risk investments do often yield high returns, we are typically holding more than half of our assets in cash, according to the research.

Surprisingly, the results of these surveys show that it is more about being careful and not as much about student debt. We are still feeling the effects of the financial crisis, and this generation needs more education on the topic in order to confidently create a diversified financial portfolio. Millennials tend to have more short-term investments instead of long-term, and we also tend to care more about life experiences than substantial wealth.

The good news is that there are more online tools and resources to help educate and guide millennials on investing. WiseBanyan and Acorns are just a couple of examples of investing sites to get a beginner started. Additionally, if nothing else, young Americans should at least focus on a retirement account as their form of investing, whether it be a workplace 401(k) plan or a Roth IRA.

Knowing the importance of investing is the first step in this process, and it’s one that we need to know we can truly benefit from with the right tools and knowledge.

Are you a millennial who invests? What routes do you take?