Kakeibo (家計 簿, kakeibo) is a way of manually tracking your finances to help you stick to a budget and reach your savings goals. The idea of the method is to track how much you earn and spend, and the ultimate goal is to increase your savings. Yes, it sounds ridiculously simple, but it works. There are no applications, technologies or tricky mathematical calculations. But this is the point: by eliminating all that is superfluous, you focus on your habits and the right decisions.
What is Kakeibo?
This is what Fumiko Chiba, author of Kakeibo: The Japanese Art of Saving Money, says (actually this is a one-year magazine to fill in with a little instruction at the very beginning).
Kakeibo appeared back in 1904 and gained popularity thanks to the efforts of the first Japanese woman journalist, Motoko Hani, who popularized it as a budget management method. Chiba writes:
“Although in many ways Japan remains a traditional country, somehow it has liberated women and provided them with control over all financial decisions.”
The Kakeibo method is still popular in Japan (dozens of books, magazines and articles devoted to this art of budget management are published annually in the country).
Kakeibo fans know that prudent cost management saves you money. Instead of thinking about things that you cannot afford to buy, turn your attention to what is really important and what you can spend money on.
The Kakeibo method is based on four basic questions:
- How much money do you have?
- How much would you like to set aside?
- How much do you spend?
- How can the situation be improved?
By taking a close look at what you’re doing with your money and asking yourself in-depth, reflective questions, you can change your financial habits and reach your goals.
Ultimately, the Japanese system is like any other budgeting method. Whether you track expenses with the help of applications, enter numbers in a spreadsheet or write in a notebook, it always comes down to spending less than you earn.
Of the four questions, the most important is the last:
How can the situation be improved?
At the end of the month, you are recommended to think about the costs and answer the following questions:
- Have you reached your savings goal?
- What methods of saving money did you apply?
- Why did you spend too much money?
- What can be changed next month?
Why Track Your Money Manually?
It’s hard to say how much manual expense recording is better than a special app. According to Chiba, kakeibo helps focus on financial goals. Indeed, research shows that we better remember information by writing it manually, rather than typing on the keyboard. Perhaps this is due to the fact that in the first case we “pass it through ourselves”.
The process of writing something down can also cement the idea in your brain. As you write down that goal to save $100, you analyze it and begin to think of ways to achieve it. This can be what kickstarts the actions you take to reach that goal.
Manually recording your financial goals can also make you more likely to achieve them. When you spend a few minutes each month thinking about and writing down what you want to save, you create an easily accessible record of that specific goal.