The Japanese budgeting system that will change your life
The Japanese budgeting system that will change your life
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The Japanese budgeting system that will change your life

There are dozens of budgeting apps out there these days: Mint, EveryDollar, YNAB, and PocketGuard, just to name a few. While they provide convenience and immediacy, it’s hard not to feel detached when a machine is managing your money for you.

For all the modern technology that helps us live our lives easier today, a tried and true Japanese budgeting technique from 1904 works because it involves no technology. Just a pencil, a piece of paper, and time out of your day devoted to thinking about your personal finances. It's called kakeibo (translated to “household finance ledger”), and it’s a surprisingly simple idea that can help you budget better. Especially if those apps aren’t cutting it.

The power of the pen


Have you ever been car shopping and had the salesman ask you to write the price you’d be willing to pay down on a piece of paper? Maybe you just wanted to go for a joy ride in a convertible Mustang. But once you put that number down, you felt a commitment to buy. Like you created a contract with yourself.

Researchers have long studied the phenomenon that happens when a person commits words and numbers to paper with their own hand. One study published in Psychological Science discovered that students who took notes on paper performed better on in-depth conceptual questions compared to students in the same class who took notes on their laptops.

Writing is a meditative and mindful act, forcing you to not only think more deeply about the written subject but also hold yourself accountable to what you wrote. That’s why bullet journaling and mindfulness journaling have become more popular in recent years, with the latter being linked to better mental and physical health.

How kakeibo can help with budgeting


Let’s get back to 1904. Kakeibo was created by Hani Motoko, Japan’s first female journalist, as a way for housewives to manage their households’ finances using a thorough ledger.

The method is unique because it places a heavy emphasis on mindfulness through the act of writing, using journaling and insightful questions to help you not just keep an eye on your spending but understand why you may be spending the way you do in the first place.

It involves asking yourself four basic questions and, of course, writing down answers in a journal (kakeibo planners are available online but you could always use a plain notebook):


  • How much money do you have to spend?

  • How much would you like to save?

  • How much are you spending?

  • How can you improve next month?

You’ll also be categorizing your spending into one of four categories:


  • Needs: These are the things you can’t live without, like groceries or gas.

  • Wants: Purchases you enjoy but don’t need, like takeout or a new pair of sunglasses.

  • Culture: Enriching or entertaining experiences, like museum visits or TV subscriptions.

  • Unexpected: Expenses you weren’t anticipating, like a doctor’s visit or car repairs.

This will help you get a bird’s eye view of your spending. If putting more money in savings is important to you, you’ll be able to easily see areas of your budget that are preventing you from doing that.


Journaling your way into financial health

To get started with kakeibo, you’ll first write down how much you have to spend based on your monthly income and fixed expenses. Simply subtract your fixed expenses from your income, and the amount left will be your spending money. Then determine how much money you’d like to put into savings every month. (#Protip: Including savings as a fixed expense can help you avoid overspending and reach your goal!)

Next comes the tedious or fun part, depending on your personality type: writing down every single thing you purchase (ideally as you're in the act of purchasing it). It’s painstaking work and by the end of the first week, those budgeting apps might be looking tempting. If you stick with it over time, though, it should become habit and you'll begin to understand the reasons behind your spending.

The Netflix show “Tidying Up with Marie Kondo” employs the same type of philosophy as kakeibo for decluttering households by asking if it brings the owner joy. When it comes to your spending, it can be eye-opening to realize that many of the things you buy may lead to a momentary rush and then eventual crash when you’re stressing about money. Your hard-earned money should, for the most part, only be spent on things that will bring you lasting happiness.

Sarah Harvey, a contributor for CNBC, asked herself these questions before she made purchases while practicing kakeibo (read her story of mindful spending here):


  • Can I live without this item?

  • Based on my financial situation, can I afford it?

  • Will I actually use it?

  • Do I have the space for it?

  • How did I come across it in the first place? (Did I see it in a magazine? Did I come across it after wandering into a gift shop out of boredom?)

  • What is my emotional state in general today?

  • How do I feel about buying it, and how long will this feeling last? 

Assessing your performance

After each month of documenting your every purchase, you’ll calculate the money spent in each category, as well as total money spent and saved. Then you’ll ask yourself more questions. Did you meet your goals? What conscious decisions did you make to achieve them? If you didn’t achieve them, what prevented you from doing so? How can you do better next month? It’s important to be honest during your assessment without beating yourself up over missed goals.

Mindfulness is the most important part of kakeibo, so it’s worth spending a good chunk of time on this part of the process.

Kakeibo may not provide immediate results, but it can improve the way you think about and manage your finances over time. If you’re someone that budgeting apps haven’t worked for, it would be worth it to give this financial management method a try.

Have you tried kakeibo? Tweet us @Kasasa to tell us your story!

Tags: My finances, Student finances, Banking

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