Modern payment technologies like debit cards, Google Pay and one-click checkout have made the physical act of spending money effortless. We no longer have to pay such close attention to our spending, as in the days of cash transactions and balancing checkbooks. But while modern technology is convenient, it can also lead to mindless spending, making saving difficult.
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 in order to reign in unnecessary spending and help you achieve savings goals.
What Is Kakeibo?
Kakeibo, pronounced “kah-keh-boh,” translates as “household financial ledger.” Invented in 1904 by a woman named Hani Motoko (notable for being Japan’s first female journalist), kakeibo is a simple, no-frills approach to managing your finances.
Some people don’t struggle with overspending and can live a satisfying life with just essentials. I was never one of those people. Instead, I had a habit of shopping when I felt bored, stressed, or unhappy about something. I also shopped when I was in a good or celebratory mood, with a tendency to go beyond my means.
As many people would agree, changing bad financial habits isn’t easy to do — partly because our spending habits are deeply cemented into our daily routine, and the act of spending also includes an emotional aspect that is difficult to detach from.
Luckily, for the past 116 years, kakeibo has been effective in helping people make smarter financial decisions.
Kakeibo is designed to give you control of your budget and make you aware of spending habits. It’s a simple system that 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?
Why Use Kakeibo?
A kakeibo is an excellent tool for those who are interested in minimalism à la Marie Kondo. Its special attention to mindfulness separates it from other budgeting systems, making it a good match for those who want to ensure their money goes toward the things that bring joy to their lives.
Some benefits of kakeibo are:
- 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.
According to the kakeibo method, you must ask yourself the following questions before purchasing any non-essential items — or the things you buy on impulse, but might not necessarily need:
- 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? (Calm? Stressed? Celebratory? Feeling bad about myself?)
- How do I feel about buying it? (Happy? Excited? Indifferent? And how long will this feeling last?)
If saving money and sticking to a budget has been a challenge for you in the past, kakeibo could be a great fit. The analog method of recording your purchases encourages you to pay closer attention to your spending than is required with digital methods. Kakeibo also stands out from other budgeting systems by emphasizing mindfulness and prompting you to both plan in advance and think about your past performance.