The Mindful Japanese Budgeting System
The Japanese tradition of using a kakeibo, which translates to “household finance ledger,” offers an easy solution to mindless spending habits. This budgeting system combines tracking purchases with the habit of mindfulness to reign in unnecessary spending and help you achieve savings goals.
What Is Kakeibo?
Kakeibo was invented in 1904 by Hani Motoko, Japan’s first female journalist. It is an accounting system originally designed for housewives—but it can be adapted and used by almost anyone. It’s designed to give you control of your budget and make you aware of spending habits. The simple system asks users to answer four questions:
- How much money do you have available?
- How much would you like to save?
- How much are you spending?
- How can you improve?
Although a kakeibo is a simple ledger, it can be a powerful tool, especially for people accustomed to keeping up with finances on computers and phones. Kakeibo requires you to write down everything you buy and streamline your budget by grouping purchases into four categories:
- Things you can’t live without, like food, toilet paper, and shampoo.
- Purchases you enjoy but don’t need, like a takeout meal or a pair of new shoes.
- Things like books and museum visits.
- Expenses you weren’t anticipating, like a doctor’s visit or car repair.
The four-category system helps kakeibo users become more mindful of their spending habits and avoid wasting money on things that don’t align with their goals.
Benefits of Kakeibo
A kakeibo is an excellent tool for those who are interested in minimalism. Its special attention to mindfulness separates it from other budgeting system, making it a good match for those who want to ensure their money goes toward the things that bring joy to their lives.
There are many related benefits to using kakeibo:
- It simplifies finances by grouping spending into four distinct categories.
- It encourages realistic monthly savings goals.
- It pays attention to present, past, and future.
- It encourages saving small amounts daily rather than occasional big sums.
- It celebrates small achievements.
How to Use Kakeibo
Kakeibo combines planning, journaling, and keeping a ledger to bring mindfulness and intention to your spending habits. Here’s a step-by-step guide to using your kakeibo.
1. Establish your budget.
At the beginning of the month, set your budget. Write down your monthly income and fixed expenses. Don’t forget about any debt you’re trying to pay down. Subtract your expenses from your income to determine how much you have for all other monthly spending.
2. Set your savings goal for the month.
Savings goals are an important part of kakeibo. The method encourages setting realistic monthly goals and jotting down what you’re saving for. Once you’ve decided your goal, set aside your savings by deducting your goal amount from your available spending money.
3. Keep track of your spending.
Each week, as you make purchases, jot them down in your ledger. Similar to the recent trend of bullet journaling, kakeibo requires you to track your spending in real time, with pen and paper, which helps you slow down, pay attention to the present moment, and think about the future impact of your spending.
4. Calculate money spent in each category.
At the end of the month, determine how much money you spent on needs, wants, unexpected expenses, and cultural purchases.
5. Calculate money spent and saved.
Add up all your purchases and deduct the amount from your total budget from step 1. This number is the amount you saved. Compare it to your savings goal amount.
6. Assess your performance.
Another component that separates kakeibo from other budgeting methods is its mindful approach to reflecting on your performance. Did you meet your goals? If so, jot down what went well this month and how you can carry your success forward. If not, write down the reasons you didn’t meet your goals and how you can improve the next month.
Tag me on Instagram if you start using Kakeibo for your yearly budget!