Kakeibo — Handle and Save Money using this Technique
How did the Japanese do it ?!!
Swipe — Scan — Tap. That’s the era we live in.
As much as schools are persistent in teaching us Algebra, regrettably, they failed to educate us on how to save money or do taxes per se.
Nowadays keeping track of your spending habits is no walk in the park. It is effortless to spend money with a click but maintaining a money-saving habit is not so easy.
However, I come bearing good news.
Kakeibo — This Japanese money-saving method will help you handle your finances and create an efficient budget plan.
What is Kakeibo?
The Japanese term literally translates to “Household ledger” or “Household account book”.
In this ancient approach, you must jolt down every penny you spend on a notebook for one month. Simple as that.
In a way, it is similar to the envelope budgeting method.
Why is Kakeibo?
Kakeibo is like the cruel aunt or stepmother in every Disney movie. Though their intentions are pure deep down, the method they apply to show it is merciless.
Same as that, Kakeibo is merciless. Still, at the end of every month, you get to see the fruit.
I started using this six months ago and believe me when I say, I saved more than I ever did in the last 3 years.
Things you need:
>> A big notebook — To write your monthly budget plan.
Also, there are Kakeibo journals available online that you can use if you wish. Any journal or notebook would work.
>> A small notebook — To keep it with you everywhere you go note down everything you buy or spend money on.
Or you could cheat like me and use one note or sticky note which comes in handy considering you take your phone everywhere you go.
>> A saving jar or a piggy bank — I’ll tell you later why.
That’s it, no fancy apps or arduous calculations. We are going old school, baby!
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Let’s face the Million-dollar question.
How to do Kakeibo? Or How Kakeibo works ?
It is based on 4 important questions you should ask yourself
- How much money do you have?
- How much do you like to save?
- How much do you spend?
- How can you improve?
The answer to the above questions is the Budgeting Plan that follows. Grab that big notebook and your pen, and let’s get down to work.
It includes 3 major parts,
A monthly income plan
It Sums up every income you receive at the start of the month. Your salary, debt returns, monthly bonus, and cashback. Everything comes under here.
A monthly savings plan
Now that we calculated what we have, it’s time to set aside the money you want to save.
Save it for rainy days as my grandma used to say.
A small tip is to do this before you start planning the expenses or spending your money. Otherwise, you’ll end up setting aside whatever is left.
A monthly expense plan
As a priority, allocate money for the common recurring expenditures like Rent, EMI, and every other bill. Once that’s done, the remaining money should be divided into 4 categories.
→ Expenses on living — Food, groceries
→ Culture & Education -Books, Online courses
→ Entertainment — Movies, shopping, takeouts, short trips, outing with friends
→ Others — Everything else that doesn’t fall under the above three
You can separate these four with a table, a bulletin, or sticky notes however you want to decorate it in the big notebook.
Mine vaguely looks like this.
Set a limit on how much you want to spend under each category. It is up to you to choose the proportion among them.
In this way, you can keep track of your budget and it will be useful to plan next month’s allocations for each category. Also, it will be easy to spot the black sheep that is eating up all your money.
When you record your allowances, you have to face the figures at the end of every month. And trust me when I say it’s bitter. Through this, you can focus on reducing the factors that cause your unwanted expenses.
For example, Instead of going out to a restaurant, you can try cooking at home. In my opinion, it is a great stress buster. Or deciding against buying that extra pair of boots which will only add to the clutter on your shoe stand.
Kakeibo will point this stuff which is right under your nose and drying up your bank account.
Furthermore, here are some financial tips and money-saving tricks I’ve learned and benefited from,
- Make a shopping list before you go barging into the store. This will prevent you from surfing into irrelevant aisles and keep you focused.
- Divide the money you are gonna spend into 4 parts (of weeks) or 3 parts (of 10 days). Then keep your purchases within that boundary.
- Keep a money jar, like in that UP movie. You can put some coins, the change you make, or the remaining you have from every weekly budget in that.
- The money left from the allocated amount in every expense will go into this jar too.
It might look silly and small but it will sum up to a decent amount before you know. In case you are not comfortable with a jar of money around your house you can use your other bank account to do so.
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Last but not least, I have a bonus step for ya.
Give generously
This might not be part of Kakeibo, but a much-needed one. Especially in times like this.
I get it, you work hard, and you earn every penny you have, so sometimes giving back, especially without a return benefit is hard.
But putting a smile on someone’s face is priceless.
“Whoever is kind to the poor lends to the LORD, and he will reward them for what they have done.”
Proverbs 19:17 (NIV)
The fact these words were written by a King who had abundant riches may be arguable. Yet the point is you don’t have to be rich to be kind or charitable. Those two acts are not directly proportional.
You give what you have or you desire to give. It’s not about the amount or the quantity. It’s the thought that counts.
When I say help others I am not asking you to go fund an orphanage or be a million-dollar donor. You can if you want to but you can exercise this through simple endeavors.
Leave a generous tip for someone who is working on a holiday. Buy a pair of clothes for that homeless person. You know what, if you have the heart opportunities will come knocking.
Don’t cut it thin, offer with a cheerful heart. You might not gain a penny from this but the satisfaction that fills your heart is euphoric.
To summarize,
Writing down things with a pen on a notepad may sound extinct but this is more effective than typing on any spreadsheet or using advanced financial apps.
Why? As my social teacher used to say, when you write down things with your hands it goes straight to your brain.
In this way, you get to face your worst financial demons and find a way to tame them before they do the same to you.
Perhaps you are interested in learning more about Kakeibo, there is a whole book on this called — “What is Kakeibo, The Japanese Art of saving money”.
Fumiko Chiba, the author, speaks in detail about this ancient yet practical approach in her book. To improve your spending habits and manage money this might be useful.
This technique gave Japanese women, especially housewives financial freedom. It acts as a proficient finance planner while offering better control over your money and worry-free month ends.
Everyone who used and benefited from Kakeibo will agree with that.
Still in doubt? Go give it a try and see for yourself.
Happy budgeting!
Do you find this useful? Let me know in the comments.
What are some tricks you use to manage your expenses? Let me know that in the comments too.
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