I was recently researching the Japanese concept of Kaizen for an article when I came across another Japanese word I was unfamiliar with: Kakeibo. I dug a little deeper, and ended up in possession of the first-ever English translation of the Japanese ‘household budgeting book’, Kakeibo, by Fumiko Chiba.
What is Kakeibo?
The kakeibo was originally developed back in 1904 by Hani Motoko, Japan’s first female journalist. It was a household accounts journal to help busy women organize their finances, and align their lifestyle with their budget.
In a traditional Asian society, it was a concept ahead of its time, but what’s surprising is that many modern-day women, Japanese and Western, are still embracing the concept, well into the 21stCentury.
The English language version has now been released, though the design and marketing are decidedly gender-neutral. This is fair enough, as a kakeibo will work for most people, regardless of gender.
Here are some of the concepts you’ll need to embrace if you’re thinking of using a kakeibo to save money.
Minimalism Is Key
If you’re a fan of other aspects of Japanese lifestyle that are emerging as a part of Western pop culture (such as Marie Kondo’s Tidying Up) you may already associate minimalism with Japan. While you don’t have to be a minimalist to use this system, it certainly helps. It embraces the Japanese art of mindful and minimalist living, rather than the mindless consumerism common in Western societies.
You’ll be encouraged to think hard about spending and saving, needs and wants, where your money goes and why. And the aim appears to be to simplify your finances and develop ‘money mindfulness’ as much as anything.
Like many simple processes, there is some set-up that can seem complicated, as you calculate and categorize your monthly expenses. To be honest, however, that is all stuff we should be doing anyway.
The journal simply lays out a framework for it. There is also something deliciously minimalist in actually having a journal to handwrite in. I love my finance apps and online accounting systems as much as the next 21st-century citizen. It turns out, however, that I love the simplicity of a finance journal as well.
Spending Is Fine
It can be a real problem when money management strategies imply that spending money is the root of all evil. Spending is an inevitable and normal part of money management and life.
What’s more, even unnecessary spending is (sort of) necessary. I’ve written before about how important it is to include some fun money in your budget. Without it, your budget will become unsustainable over time, even if you’re really good at having free fun.
Using your kakeibo, you’ll learn that there is virtue in ‘spending well’. In fact, we must all learn to spend well in order to save well, and vice versa.
Good money management is about planning our spending, being mindful of it and knowing what we are spending our money on and why. Arguably, we learn to respect and manage money better than ever when we are mindful of just what we can buy with it, that will enhance our life, and the lives of others.
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Recordkeeping Is Essential
Keeping a kakeibo or any type of spending journal is all about recording where your money is going. You’ll categorize your spending, record exactly what is spent in each category, and reflect on whether you are making good use of your money or not.
The very fact that this is a paper journal, where you physically write down all your expenses, makes the whole process different from how most of us live our lives these days. Writing down how much money you’ll have to work with each month, slowly and deliberately, gets you ‘in tune’ with your money.
On this note, it’s important to note that the layout of the kakeibo may not work for everyone. You do need to sit down on the first of the month and work ahead in to the coming month. This means predicting how much your income will be, which can be hard for freelancers and other business owners.
I manage to make it work as my money for the month ahead is usually the direct result of the freelance work I’ve done the previous month. But there are always a few surprises. You may need to adapt things a little to suit your circumstances.
Honesty Is Required
Using your kakeibo may be uncomfortable at first. Absolute honesty is essential. You’ll need to get honest about things like:
- How much you have coming in
- How much you’re spending
- What you’re spending it on
- Are you spending it on ‘musts’ or ‘wants’
That last one requires yet more mindful and honest assessment, not just of your finances, but also of how you’re living your life. As Chiba puts it:
“To realize your ‘musts’, write down things that would go wrong if you did not spend money on them.”
That includes things like paying for food, healthcare, and other essentials, but it will exclude a lot of things you generally consider ‘must-haves’ that really aren’t. It’s an extremely interesting exercise in itself.
Expect the odd lightbulb moment. Such as when you realize that not only would nothing go wrong if you stopped spending on a particular expense, but that it would actually improve your life or health if you cut it out.
Reflection Is Non-negotiable
This strategy isn’t just about organizing your finances. It’s about de-cluttering, streamlining and, simplifying them as well. It won’t work if you focus on efficiency over the all-important aspect of mindfulness.
You should finish each month by reflecting on your finances and your progress. At the end of the month, you take some time to scrutinize your month’s spending and saving. You’ll acknowledge your progress, and celebrate what went well. You’ll also examine what went wrong, and why, as a basis for setting goals for the coming month.
This end-of-month reflecting is perhaps the most important part of this concept, and skipping or rushing it is counter-productive. The review process keeps you reminded of the progress you’re making towards your savings goals. It also helps you ‘spend better’ as you reflect on which types of spending enhance your life, and which types are not only unnecessary but even harmful or destructive.
The Bottom Line
Using your kakeibo properly is about more than recordkeeping and budgeting. It’s even about more than finance. Used consistently, this, or any kind of financial journal, will help you align your life, your goals, and your finances. In turn, this will enable you to use money the ‘right’ way. The end result? You’ll feel happier, calmer and more in control of your life.
Other articles you may enjoy:
- The Best and Worst Ways to Use Your Credit Cards
- What is a Financial Coach (and How to Find the Right One for You)
Frequently Asked Questions
What are the four kakeibo spending categories?
Kakeibo sorts spending into four broad categories: needs or general essentials such as rent, groceries and bills; wants, such as dining out or shopping; culture, such as books, museums and classes; and unexpected or extra costs, such as repairs or medical bills. Grouping expenses this way makes it easier to see how much goes to things you value versus things you could cut back on.
What questions does the kakeibo method ask?
Kakeibo is built around four questions: How much money do you have available? How much would you like to save? How much are you actually spending? How can you improve? You answer the first two when you set up your journal at the start of the month, track the third as you go, and use the fourth in your month-end reflection to set goals for the next month.
Who invented kakeibo?
Kakeibo was created in 1904 by Hani Motoko, who is widely described as Japan’s first female journalist. She designed the household accounts journal to help women manage family finances and keep spending in line with a budget. The method has stayed popular in Japan for more than a century and gained a wider English-speaking audience through Fumiko Chiba’s book on kakeibo.
Can you do kakeibo in an app or spreadsheet instead of a notebook?
You can, and many people do, though traditional kakeibo is handwritten. Writing each expense by hand is meant to slow you down and make you more aware of your spending, which is the heart of the method. Whatever format you choose, the key habits are the same: set a plan at the start of the month, include some fun money, record honestly and reflect at the end of the month.
About the author
Contributing Writer, Wealthtender
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine.
Karen provides copy editing and proofreading services, as well as content creation services, at her website KarenBanes.com.