How to Marie Kondo Your Monthly Budget
Learn all about how auditing your personal finances doesn’t need to be a drag with the KonMari method.
Looking at your monthly finances can be boring at best and at its worst can make you want to turn a blind eye and pretend everything will work itself out. All is not lost - Elizabeth Warren, a Harvard bankruptcy expert coined the 50/30/20 rule for breaking your finances down into bite-size chunks. Join us as we show you how this budgeting approach can turn your finances around.
This is great, but what has it got to do with Marie Kondo? We hear you ask. If you haven’t heard of Marie Kondo, you’re in for a treat. She’s the Japanese tidying guru who took to Netflix to help Americans address all aspects of their clutter and to ask which items ‘spark joy’. Her methodology is tried & trusted for physical tidying, so why not financial tidying? Budgeting can be dull, so we’ve drawn some Marie parallels to make this topic more fun for everyone.
Let’s get stuck in…
Allocate 50% of your Income to ‘Needs’
Marie Kondo: Clothes, Books & Papers Elizabeth Warren: Home & Travel.
Marie always starts her clients off with these items as they are the physically essential possessions inside the home. Breaking your essentials down into larger and broader categories makes it easier to see what’s what.
Get yourself set up in a spreadsheet and take note of everything that comes under home & travel – this will be your ‘big mountain’ of finances. These are your utility bills, rent/mortgage, food, car, minimum credit card payments etc.
Add these up to create a total sum, then divide this by your monthly income (after tax). This will give you your actual percentage.
Is it above 50%? Don’t panic!
The next step is to ask yourself Marie’s iconic question: “does it spark joy?” Naturally, paying for housing, bills and our car to get us from A to B does not spark joy in the way that we perceive.
But even these things spark joy in their own way. Having a roof over our head, warmth and the ability to feed ourselves sparks a different kind of joy and over-spending on this category robs us of this joy.
How can we fix this? Why not try regularly swapping energy providers to keep your outgoings on your utilities as low as possible. If you have a car on finance but you don’t find that having a flashy car ‘sparks joy’ swap it out for a cheaper vehicle, leaving more money to go towards your ‘wants’ and ‘savings’ to bring more happiness to your life.
Allocate 30% of your Income to ‘Wants’
Marie Kondo: ‘Komono’ (Garage, Cleaning, Office, Kitchen, Bathroom) Elizabeth Warren: Shopping, Dining out, Hobbies.
This category is tricky because it can vary so much for each individual and from month to month, which is why Marie’s ‘Komono’ label is perfect as an umbrella term for your miscellaneous outgoings. Simply sift through the last couple of months’ bank statements to figure out your average spend, then divide the total by your income again to figure out your current percentage for this category.
According to recent studies, Brits are spending around £80 a month on takeaway, and around £87 a month on clothing. If you take home the average monthly income (after-tax) of £1,800 then these costs already make up 9% of your wants.
Chances are, these things truly do spark joy so they’re going to be tricky to cut back on. It’s common knowledge that we Brits waste billions a year on unused gym memberships and other subscriptions. Start by truly asking yourself if they spark joy and if they don’t – get cancelling.
One great hack for cutting down on how many treats you buy yourself, is to become an avid freebie hunter. Sites like Magic Freebies trawl the web to source genuine freebies every day so you don’t have to! You can receive beauty, food, home and other types of treats through your letterbox on a regular basis. Plus, there are loads of product tester panels you can sign up with to receive free products on a regular basis. This is ideal for getting the ‘buzz’ from something new, without spending a penny!
Allocate 20% of your Income to ‘Savings’
Marie Kondo: Sentimental (Photo Albums, Souvenirs, Heirlooms) Elizabeth Warren: Rainy day fund, Big life events.
Last but definitely not least, you need to work out how much you’re saving for the future. At the core of both Marie’s method and Elizabeth’s budget rule, is the goal to help you bring ‘joy’ to the forefront of your life and feel at peace with your finances so you no longer have to worry about the future. This parallel is the most fitting, as our savings truly do represent the sentimental aspects of our lives. We save money for our hopes and dreams and the big life events coming our way. Once again, note down the total amount you’re saving in a month and divide it by your after-tax income.
If you’re currently not saving a penny and your percentage is at 0%, don’t lose heart! Having the percentages in front of you will give you the clarity to see exactly which steps you need to take next to start working towards a breakdown of 50%, 30% and 20%.
So, to Marie Kondo your finances – simply empty all your outgoings onto your proverbial bed (which here means a carefully organised spreadsheet) and ask yourself what sparks joy for you!