Exploring how the Japanese budgeting system Kakeibo can assist you in maximizing your savings this 2022 offers insights into global investment management strategies for achieving your financial goals.
Japanese Budgeting System—We now live in a world where almost everything can be mechanized. You may sign up for grocery delivery and have fresh food delivered to your house every week without having to make a list or go to the market. You may programme your home’s heating and cooling systems to turn on and off at predetermined times, as well as your outdoor lighting. You can download an app on your phone that tracks every purchase you make and alerts you when you’ve over your budget.
Automation has the potential to make life easier. However, it also isolates you from the rest of the world. That separation might be especially troubling if you’re having issues managing your finances, such as sticking to a budget or meeting savings objectives.
It can be beneficial to go old school and keep track of your expenses manually rather than relying on a budgeting tool to do so for you. Then there’s Kakeibo.
“Kakeibo” is a Japanese word that means “home account book.” It is pronounced “kah-keh-boh.” Although a few English-language kakeibo journals have lately been released, there’s no need to run out and buy one if you already have a blank notebook. Everything you need to know about putting kakeibo to work for you is right here.
What Exactly Is the Japanese Budgeting System Kakeibo
Kakeibo is a method of manually managing your finances in order to help you stay to a budget and save money. According to The Journal of Japanese Studies, the notion of kakeibo may be traced back to Hani Makoto, Japan’s first female journalist, who produced “Fujin No Tomo,” one of the earliest publications aimed at housewives, in 1908.
Makoto pushed her readers to create household schedules and procedures in the pages of her magazine. She also emphasised the importance of homemakers managing household finances and encouraged them to save for their families.
Kakeibo Is Centred On Four Key Questions
How much cash do you have on hand?
How much money would you like to save?
What is your monthly budget?
What can you do to improve?
You may modify your financial habits and achieve your goals by taking a critical look at what you’re doing with your money and asking yourself in-depth, introspective questions.
Why Should You Budget
Imagine attempting to lose weight without paying attention to what you eat or periodically going on the scale. You may lose a few pounds, but there’s no way of knowing for sure or determining what changed to cause your weight loss.
When it comes to money, the same is true. You need to know what’s going on with your money if you want to establish and achieve any kind of financial goal. You can’t just grab your paychecks, spend them, and hope for the best every month.
Sitting down at the beginning of each month and taking a thorough look at your finances, then taking the time to write down everything that comes in and goes out, may seem tedious, but it’s necessary if you want to tame the money beast once and for all.
Another advantage of keeping track of your costs, income, and savings objectives by hand is that it promotes mindfulness. You must examine your finances closely and keep yourself accountable for your spending. If you know you want to save $100 in a month, for example, you’re more likely to think twice about spending some of your limited disposable income on something you don’t actually need or desire.
Why Do You Need To Keep Track Of Your Money By Hand
Although using an automatic budgeting tool can be convenient, you’re more likely to process the information you record when you do it by hand.
Students who took notes in class using longhand were better able to answer in-depth conceptual questions on a subject than students who took notes on their computers, according to a study published in Psychological Science. Students who took handwritten notes paraphrased and altered what they heard, taking the time to analyse the material as they recorded it.
Manually noting your objectives, including your financial objectives, can also help you attain them. You build an easily accessible record of that precise goal when you spend a few minutes each month thinking about and writing down what you intend to preserve.
The act of writing things down can help to solidify an idea in your mind. As you put out your objective of saving $100, you evaluate it and begin to consider how you may accomplish it. This could be the catalyst for you to take the steps necessary to achieve your objective.
How To Make The Most Of Kakeibo
You’ve bought a kakeibo book or are keeping track of your information in a blank journal or notebook. So, what’s next?
It takes several steps to use kakeibo. Some of the steps are taken at the beginning of the year, some at the beginning of each month, and yet others are taken throughout the month. You spend some time at the end of each month reviewing your spending and goals.
The process gives you a big-picture view of your finances as well as an in-depth, detailed look at how you spend on a daily basis. This is how it goes.
Conduct An Annual Assessment
A yearly planner is included in the commercial kakeibo journals accessible in English, and it asks you to start your ledger with a broad concept of your income and expenses for the coming year. You can record expenses that occur only once a year in this column, such as paying for a vacation or auto insurance. You can also keep track of your holiday spending intentions in this section.
Examine your spending from the previous year to obtain a sense of what to include in your annual evaluation. Consider what you want to accomplish in the following 12 months as well as what bills will be due on a regular basis.
Make A Monthly Budgeting Plan
You’ll answer two questions at the start of this section:
What is the estimated amount of money that will be received? Identify each source of revenue for the month, including salary, freelance income, and side hustle income, as well as when you expect the money. Add the totals together.
What is the estimated amount of money that will be spent? Monthly fixed expenses, such as rent, utility bills, health insurance, and debt payments, should be recorded.
To answer kakeibo’s first question, “How much money do you have available?” subtract your fixed expenses from your income.
After that, consider your monthly savings goals. What are you saving for, and how much would you like to save? Keep track of both the amount and the objective of your savings goals. Subtract this amount from the total amount available. Your savings goal should not be the entirety of your available funds.
You’ve covered your fixed expenses, but you haven’t accounted for miscellaneous costs like groceries, personal care, or occasional enjoyable activities. That is the purpose of the next phase.
Calculate Your Weekly Budget
It’s time to focus on your weekly spending after you’ve figured out your big-picture annual and monthly spending. To figure out how much you have to spend each month, deduct your savings target from the amount of money you have available. Then double that figure by the number of weeks in a month, keeping in mind that some months have five. The figure you receive represents how much you can spend each week.
Keep track of your weekly expenses as they occur. You may categorise your weekly spending to keep track of what’s going where and where you might be able to save money. It’s better to keep your categories as straightforward as possible. Some kakeibo planners, for example, suggest using the following categories:
Survival. Food and soap are examples of non-fixed expenses that you can’t live without.
Necessities. Extra clothing or a restaurant meal are examples of items you can go without.
Extra. These are sporadic costs that you can’t always account for during your annual assessment. Extras could include a wedding gift from a friend, a car repair bill, or medical expenditures.
Cultural. Cultural expenditures, such as books, museum visits, or your Hulu membership, may be lumped under the “optional/wants” area, although some kakeibo books have a separate category for culture-related expenses.
You can color-code your categories to know where your money is going at a glance. Use a blue pen for necessities, a red pen for wants/optional, and a green pen for extras, for example.
Review And Analyse Your Data On A Monthly Basis
Take a few minutes at the end of each month to examine your spending and saving for the month. This examination will assist you in answering the question, “How can you improve?”
Make a list of how much you needed to spend, how much you spent, and how much you saved. Ask yourself the following questions to help you find ways to improve:
Have you met your savings target?
What steps did you take to achieve your objective?
Did you overspend in some categories?
What can you do better next month?
After you’ve asked yourself each question, jot down your answers in your diary so you’ll have something to go to next month when you’re budgeting or about to make a purchase you don’t need.
Kakeibo’s Drawbacks
The most significant disadvantage of using kakeibo is that you must remember to use it. When you use an automated budgeting tool, the system gathers data from your bank or credit cards to keep track of your expenditures. You’re in charge of keeping track of everything and holding yourself accountable for your spending using kakeibo.
That might not be a significant deal for other folks. You could appreciate the chance to get in and get a better handle on your finances. However, if you don’t want to carry a journal with you wherever you go, or if you don’t trust yourself to remember to write your expenses after the fact, kakeibo may be a difficult task for you.
- Final Thought
Give kakeibo a try if you’ve had trouble making and sticking to a budget. You may discover that physically tracking everything helps you get your finances in order.
Kakeibo also goes above and beyond most budgeting strategies by asking you to examine how you spend your money and think about how you might better. Many budgeting systems lack a big-picture, thoughtful view of your finances, and that vision may be just what you need to set yourself up for financial success.
Have you tried kakeibo or keeping track of your finances by hand? How did it go for you?
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
