How To Declutter Your Finances To Take Charge of Your Money

Decluttering your finances may seem like a chore, but it is necessary if you want to take charge of your finances. Start with these steps to get organized.

by Andrea Norris-McKnight

Decluttering can help you reduce stress, feel empowered, and gain more clarity. It’s not just about organizing your living spaces like Marie Kondo’s philosophy; you can also apply it to your finances.

Getting your finances in order starts with getting organized. To improve your money management skills, you need to understand your cash flow and how you’re spending every dollar. If you want to take control of your finances and life, here are some practical tips to get you started.

Monitor and Track Your Credit Health

The saying “cash is king” couldn’t be further from the truth, but a good credit score is incredibly valuable. Many people overlook their credit when managing their finances because they don’t see it every day. However, it’s essential to keep track of your credit and include it in your overall financial plan.

You should know your credit health, including where it stands and how to improve it. Check out credit monitoring tools and order a free credit report to get started. Carefully review your credit score to catch any errors that might hurt your score. If you find any mistakes, you can request a correction.

Your credit health has a significant impact on your overall financial well-being and future plans. To achieve your goals, it’s essential to understand what a credit score is and how it works. For example, if you want to upgrade your home, knowing the required credit score to buy a house can help you live comfortably now and in retirement. Additionally, understanding how to manage your credit cards and how soft and hard inquiries affect your score can give you a better idea of what’s worth applying for.

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Evaluate Your Personal Money Habits

Knowing your money habits can help you feel confident about organizing your finances and becoming more frugal. Do you know your attitude, perception and habits when it comes to money? Having a healthy relationship with money is key, and you shouldn’t feel intimidated by personal finance or how to manage it.

Take a moment to reflect on your feelings about money. Do you get anxious about saving and your financial situation and then splurge to cope? Are your emotions causing you to overspend or struggle financially? If so, don’t ignore your financial needs or put off dealing with them.

Think about what matters most to you. You might find that spending money on a personal trainer or a monthly book subscription is a better use of your funds than buying a coffee at the drive-thru every day before work. This doesn’t mean you can’t enjoy yourself, but consider saving money by brewing your own coffee instead of buying it pre-made. It’s all about knowing what to prioritize and how that will improve your financial situation now and set you up for a successful future.

Frugality isn’t about missing out on opportunities or saying no to everything. Instead, it’s about being smart with your spending and getting the most value from your money. For those who want to have fun without overspending, there are many enjoyable and affordable hobbies to explore.

Discover and Commit to Tools That Work for You

To declutter your finances, you need the right tools. Are your bills piling up, and do you know where your money is going? Maybe you have autopay subscriptions you forgot about and no longer use. These small things add up each month, and before you know it, you’ve wasted money unnecessarily.

Consider using some tools to help you monitor, track and organize your money. Depending on your budgeting style, a ledger and balance sheet can help you get things in order. If you prefer digital tools and online banking, avoid putting everything on autopsy and falling prey to “out of sight, out of mind.” Instead, set up folders and personal spreadsheets to help you balance your books. You can also try using an app or online service to improve your money management skills.

Start Planning and Set Money Goals

Having clear financial goals helps you take your money more seriously and appreciate the dollars you’ve worked hard for. If you’re unsure where to start, just think of financial goals like other personal goals you set for yourself, your career or self-improvement.

Start small at first. For example, aim to set aside X dollars from your weekly paycheck to reach your monthly savings goal, which will help you achieve your yearly target. Once you’ve mastered these small steps, planning for bigger, long-term goals like a major purchase or retirement is easier.

Start by getting a financial journal to write down your thoughts. This will help you stay disciplined and focused on your financial well-being. Write down what you want to achieve and list steps to follow to get there.

For instance, paying off debt can feel overwhelming. Break your payments into smaller, manageable amounts that fit your current spending habits. This way, you can avoid going further into debt in other areas of your life by trying to pay off too much debt simultaneously.

Create Spending and Saving Bucket Categories

Organizing your finances is like organizing a closet. Having a place for each item makes seeing and finding what you have easy. Think of your spending in the same way.

Create categories for your spending and savings, like buckets to track your cash flow. Divide them into groups like housing, medical, food, transportation, travel, and leisure. Set a limit for how much you’ll spend in each category so you’ll know when your “bucket” is full. This will help you understand your spending obligations and prevent you from going over budget.

The same applies to saving. Create categories for your savings goals, like saving for a bigger home or a family trip. Start building your savings in each category to reach your goals.

Have a Space That Inspires Your Money Mindset

Decluttering your finances takes time and effort, so it’s essential to create an environment that helps you stay organized. Don’t let receipts, bills and subscription reminders pile up; give them a designated home.

To avoid forgetting to file important documents, create a checklist of essential financial statements. If you prefer paper statements, invest in a document organizer or a rolling filing cabinet to keep everything in one place. File as you go so you’re not stressed when you need a document. This will also make tax season easier, as you’ll have everything ready when the time comes. If you prefer e-statements, keep them organized, too. Download copies to your phone or computer and store them in a single folder for easy access.

Getting your finances organized might seem like a chore, but it can actually be rewarding and fun. Decluttering your finances can bring you happiness and fulfillment. Since you work hard for your money, you deserve to make the most of it.

Reviewed January 2025

About the Author

Andrea Norris-McKnight took over as the editor of The Dollar Stretcher and After 50 Finances after working under the site founder and previous editor for almost 15 years. She has also written for Money.com, GOBankingRates.com, HavenLife.com and The Sacramento Bee.