Kakeibo - the importance of the Japanese art of saving money
Nia Bennett | Nov, 27 2019
There is nothing more useful than learning about a good saving hack. Sometimes a few easy and simple steps are all that’s needed for major financial breakthroughs. Saving money could mean different things for different people and the Japanese Kakeibo method is realistic and practical enough to implement. After taking the world by storm with the Japanese decluttering technique by Marie Kondo, this is another method that is definitely worth considering.
What is Kakeibo
Pronounced kah-keh-boh, this traditional method of financial planning comes from the traditional Japanese way of living and money management. Kakeibo translated means ‘ household financial ledger’. It is a good way to track expenses and target some saving goals and work towards them.
Importance of Kakeibo
The reason why Kakeibo is so good is because of its practical nature. This means anyone can have a go at it and make this a part of their everyday routine. Maybe you already financially savvy but don’t have a clear approach - this is where Kakeibo helps.
To get going, all you need is your Kekibo and start writing four things and stick to it:
1. Evaluate your income
Write down your monthly incomings, this could mean your salary or writing down an average your earn through different income streams. Now write down your fixed expenses by going through your bank statement.
2. Think about how much you would like to save
Once you have identified your fixed income, set a realistic goal of how much you can or would like to save monthly. This would become the new saving goal that can help you go on a dream holiday, pay for your car, house downpayment etc.
3. Identify what you are spending on
Once you have identified your fixed expenses, make a list of all the extras and unnecessary expenses like paying for unnecessary subscriptions, buying lunch etc. This method helps you identify where you spend all your money, this could be a leisurely activity like going to the cinema, gigs or eating out 5-6 times a month. This extra money could go towards your savings or help you understand where you are spending all your hard-earned money.
4. Plan ways to improve
Finally, think about how you could improve money management. You don’t have to deny yourself everything but maybe once you have identified your highest expenses, try and reduce it so you save a bit more each month. So instead of eating out six times a month, make it two or three and give yourself a spending limit.
Try these methods for a month, at best it will give you some financial structure, at worst you realise this structured method is not for you but it’s still given you a chance to audit your finances and become more conscious about money. This is the first step towards budgeting and saving money.