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A Budgeting Method to Help You Be More Mindful With Money

Budgeting

A Budgeting Method to Help You Be More Mindful With Money

It’s easy to feel disconnected from your finances when you spend with the swipe of a card or the tap of a button on your smartphone.

But when you’re mindful of where your money goes, you can cut down on unnecessary spending and put more cash toward your savings goals.

Kakeibo, a long-standing Japanese budgeting method, attempts to help people become more cognizant of their spending habits and improve the way they manage money.

Here’s how it works.

What Is Kakeibo?

Kakeibo — pronounced “kah-keh-boh” and sometimes spelled “kakebo” — is a money management style that has been around since the early 1900s. The word translates to “household financial ledger.” Hani Motoko, who is known to be Japan’s first female journalist, helped bring kakeibo to the public eye, making it popular among housewives who manage their family’s finances.

Though this budgeting method has been around for over a century, it has seen a resurgence in popularity — particularly in the Western world — in the last couple of years as more people embrace minimalism, mindfulness and KonMari organization. 

Budgeters looking to straighten out their financial lives the way Marie Kondo taught us to tidy up our living spaces need to look no further than kakeibo.

How to Manage Your Money With Kakeibo

Kakeibo stands apart from other budgeting methods by combining reflection and journaling with common money management practices like categorizing expenses and tracking spending.

One thing that’s important to mention about kakeibo is that it’s intended to be done on pen and paper — hence the “household ledger” translation. Physically writing down your spending gives you a more tangible sense of where your money’s going rather than using an app that records your expenses for you.

While several kakeibo budgeting journals have been published in the last few years — like Fumiko Chiba’s “Kakeibo: The Japanese Art of Saving Money” — you don’t need to buy a guided journal to get started. A plain notebook can serve the same purpose.

If you’re setting up your own kakeibo journal, start each month off by reflecting on the following four questions:

  1. How much money do you have available?

  2. How much would you like to save?

  3. How much are you spending?

  4. How can you improve?

Jot down income you’ll have coming in during the month and subtract fixed expenses that you’re obligated to pay — like your rent or mortgage, utilities and minimum debt payments. The money you’re left with is your available funds for the month.

From that amount, decide how much you want to put aside for savings. Think about what you’re saving for and why you’ve set that goal. Are you on track to reaching your desired amount or do you need to find ways to reduce your expenses or bring in more income?

After putting aside money for savings, log your spending in your journal as it occurs. Using the kakeibo method, you’ll keep track of the type of expenses using four broad budget categories:

  1. Needs: This would include groceries, clothing and medicine.

  2. Wants: Factor in expenses like gym memberships, dining out and spa services.

  3. Culture: Buying books and attending festivals would fall under this category.

  4. Unexpected or extra expenses: This could be things like car repairs or an emergency vet visit.

As you record your spending, write about why you made each purchase and how you felt. Were you feeling rushed or stressed as you were shopping? Were you giving into retail therapy because you were having a bad day? Did you buy something just because it was on sale, even though you have no room for it at home? Did you feel glad that you bought something you’ve been waiting weeks to buy?

In a way, you can treat your kakeibo journal like a diary. Exploring your feelings about spending money can help you get to the root cause behind poor habits — like overspending when you’re pressed for time or when you’re out with friends you want to impress. Ideally, you want to feel happy about the way you spend your hard-earned cash.

At the end of the month, you’ll total up your spending in each of the four categories and reflect on how you’ve managed your money. You might want to do mini check-ins at the end of each week. 

Ask yourself: Did your actions align with your financial goals? What were your successes and failures? Think about how you can improve going into the month ahead.

Benefits of Kakeibo

If you want more control over your spending, kakeibo is a great budgeting style to try.

You don’t have to follow set budget percentages. How you spend your money is truly a reflection of your unique financial goals.

You don’t have to stress about organizing your spending into rigid budget categories. Kakeibo’s four categories are pretty broad, but they paint a good overall picture of where your money’s going. 

Using pen and paper also helps you stay aware of how much cash you have available to spend at all times. And knowing you have to record your spending at the end of the day may make you think twice before giving into an impulse purchase

Embracing mindfulness in your financial life through kakeibo can help you reduce your spending and save more. Ultimately, it’ll set you on the right path to reaching your money goals.

Feeling overwhelmed? Create a budget that works for you with our budgeting bootcamp!

Nicole Dow is a senior writer at Codetic.

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