Kakeibo Explained: The Japanese Art of Saving
There’s an abundance of apps, books, and services available that promise to help you save. But with the latest statistics showing that a third of Brits have less than £600 in savings, it’s clear that the resources available aren’t helping everyone. Enter Kakeibo, the Japanese money saving system now trending in the West. Read on to find out what this century-old art is all about, and how to reap the benefits.
What is Kakeibo?
The Japanese concept of Kakeibo is a proven method of saving money. Based on the idea of careful and purposeful spending, Kakeibo is a practical approach to saving. It’s estimated that using Kakeibo, you can save up to 35% a month on expenses.
Pronounced “kah-keh-boh”, Kakeibo translates to “household account book” and aims to record a person’s financial habits in a physical budgeting journal. You begin by setting savings goals and answering simple financial questions. Then you record your expenses, sort your purchases into categories, and review your activity at the end of each month.
Ultimately, Kakeibo involves analysing your own spending and saving habits and making conscious decisions to meet your targets.
The history of Kakeibo
Kakeibo was first mentioned in 1904 in a Japanese women’s interest magazine. There, journalist Hani Motoko detailed her Kakeibo accounting system which enticed her readers, mostly made up of Japanese housewives who ran their own household budgets.
Since appealing to an early 20th-century audience, Kakeibo has become a common practice in Japan. It ties in with the cultural importance the Japanese place on saving money, as cash tends to play a ceremonial role.
Though Kakeibo has been commonplace in Japan for more than 100 years, the art spread overseas after Fumiko Chiba published Kakeibo: The Japanese Art of Saving Money in 2018.
The benefits of Kakeibo
Paying for an expenses plan or digital tools such as apps can seem counterproductive when the goal is to save. The most obvious benefit of Kakeibo is that it’s totally free, other than the pen and paper that you’ll need to record with.
As Kakeibo doesn’t use technology, you won’t be dependent on digital factors like Wi-Fi, memory, or battery power to use it. Handwriting your expenses rather than typing them may also help you to internalise and stick to your goals, due to the connection between handwriting and memory. While it seems easier to use an app that automatically records your spending, the automation process can detach you from your financial habits. This might make it more difficult to stick to the goals you set.
Manually chronicling your expenses and savings encourages more self-awareness. As you track your financial habits, you’ll naturally reflect on your relationship with money and why you’re making that purchase. Thinking carefully about every purchase and arranging them into categories is likely to eliminate impulse buying.
In addition to being simple, practical and free, Kakeibo is also completely customisable. You can set your own money-saving goals that are realistic. It’s up to you how slight or significant they are.
How to save money with Kakeibo
The traditional Kakeibo practice uses specific Kakeibo journals, which are now available in English. However, you don’t necessarily need an official journal to start saving this way. Any notebook will work well.
Begin by calculating your total monthly revenue. Then deduct any certain, fixed expenses you might have, such as vehicle tax, phone bills, insurance, mortgage, or utilities.
After you’ve subtracted your fixed expenses from your total income, the amount you have left over will guide you towards your ideal savings goal for the month. You’ll have an idea of how much money you have left to spend on non-necessary purchases, or to save. Set a savings target that works for you.
Next, create four spending categories to sort your future purchases into:
Needs: essential purchases, eg: groceries or student loans
Wants: non-essential comforts, eg: a new handbag or dinners out
Culture: cultural activities, eg: art gallery tickets or books
Unexpected: sudden unavoidable expenses, eg: car repairs or vet bills
Track every single expense in your journal, placing them all into one of the four categories.
At the end of every month, spend some time in self-reflection regarding your financial habits. Write in your journal:
How much money do I have?
How much money would I like to save?
How much money am I spending?
How can I improve?
Be honest and think carefully, especially about the last question. Improvement might mean cutting unnecessary costs, or it might be spending more on what you enjoy and less on purchases that you regretted in the last month.
Keep up the practice of Kakeibo each month to continue refining your spending habits and increase your savings.
With no technology required, no hidden costs, and a simple method that encourages self-awareness, Kakeibo is a money-saving practice that’s accessible to everyone.
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