Are You A Spendthrift? Save Money With Kakeibo

It’s that time of the year when you start thinking about how to make your pounds stretch that little bit further. Whether you are a ‘shopaholic’ or a frugal lady you need to do some maths. But how to keep track of your expenses and how can you revitalise your spending habits? A solution might come from a clever Japanese method called Kakeibo: a revolutionary bullet-style journal that promises to tidy up your finances.

In 1905 Motoko Hani, the first Japanese female journalist had a great intuition. As she believed that financial stability is crucial for happiness and wanted to help households take control of their spending, she published in a women’s magazine the first-ever Kakeibo: a tangible means of accounting combined with a financial journal that includes encouraging proverbs, beautifully designed spreadsheets and questions about the way you spend.

Using nothing more than pen and paper, the method still helps thousands of people around the world to take stock of their budget, to understand their spending habits and to save money.

How does Kakeibo work?

The key is to write down everything, a clever way of remembering and staying accountable to yourself, and to reflect on it throughout the month. In fact, the Japanese believe that mindfully saving, spending and monitoring will lead to balance and calm in all areas of life.

At the beginning of each month you sit down with your Kakeibo and think mindfully about how much you would like to save and what you will need to do in order to reach your goal –Fumiko Chiba author of ‘Kakeibo: the Japenese Art Of Budgeting and Saving Money‘- .There is space to jot down your weekly spending and reflect on the month just gone. The simple act of completing your kakeibo ensures that saving is a part of your everyday life, while also giving you the opportunity to reflect and improve every month.

A multi-step process

Filling in this Japanese spending diary is a practical exercise. If you want to set and reach any sort of financial goal, you need to know what’s going on with your money. You can’t just get your paychecks each month, spend away, and hope for the best.

Basically, you should set a target for how much you want to save. Then split the rest of your spending into four different categories: general (food, transport), leisure (eating out, cinema tickets), culture (exhibitions, reading materials, theatre) and unexpected extras. At the end of the month, be prepared to review your spending to see if you’ve stuck to your original targets. Why? Because stopping, reflecting and remembering objectives can help to achieve your saving goals.

In particular, Kakeibo revolves around four key questions:

• How much money do you have?

  At the beginning of the month, write down your monthly income and fixed expenses. Subtract your expenses from your income to determine how much you have for all other monthly spendings.

• How much money would you like to save?

  Once you’ve decided your goal, set aside your savings by deducting your goal amount from your available spending money

• How much are you actually spending?

  Keep track of your spending. Each week, as you make purchases, jot them down in your ledger. At the end of the month, determine how much money you spent on needs, want, unexpected expenses and cultural purchases.

• How can you improve on that?

  Once you have calculated the money spent and saved, add up all of your purchases and deduct the amount from your total budget (step 1). This number is the amount you saved. Compare it to your savings goal amount. Did you meet your goals? If not, write down the reasons you didn’t meet your goals and how you can improve the next month.

Mindful Saving

Using a Kakeibo is also a kind of mindfulness exercise. It is well-known that writing by hand improves memory and recall, so by jotting down your spending as you go along, you will find that you have a much better understanding of what you have spent and that there are no surprises at the end of the month.

Our world is now so fast that everything can be bought and paid for very quickly – Chiba explains-. A Kakeibo helps us slow down and really consider what we buy in a calm, measured way. It is easy to forget how the ease with which we can now access our money, while rarely physically seeing it, has changed our relationship with spending. When you carry a bank card, the limit on how much you can spend is only limited by how much you have on your card. In Japan, bank cards are much less prevalent than in the West -he says- and it is very much a cash society. So in contrast, when physically carrying your spending money for the day, you are more likely to self-impose a spending limit by not taking more than you need to get by.

Of course, the Kakeibo works best when you’re consistent about it. It forces users to think ahead, be conscious of their spending and use the lessons they learn each month to save even more as months go on. In the end, it’s all about removing fear and turning budgeting into something that you can enjoy.