Kakeibo: The Japanese Budgeting System That Would Change Your Financial Game

The Japanese method of budgeting, Kakeibo, helps you save more by answering just four simple questions. In 1904, Hani Mokoto, a Japanese journalist came up with a budgeting system called kakeibo. Kakeibo, translated in English as the “household financial ledger”. The budgeting system combines tracking your purchases in an attempt to control unnecessary spending that ultimately helps you to achieve your financial goals. Here is a step by step guide to use the kakeibo system while budgeting.

Establish The Budget

The first step is to list down your month’s income and mandatory expenses at the beginning of the month. Now, subtract the fixed expense from your month’s total income to find out how much you have left for the rest of the monthly expenses.

Set Your Monthly Saving Goal

This is an important step as kakeibo encourages you to set realistic financial goals. Once you have set a monthly financial goal, deduct the goal amount from the available money kept for spending.

Track Your Spending

Keep a ledger with you and as you spend your money every week, record the amount spent in it at the end of each week. Kakeibo follows the system of tracking your expenses in real time and with a pen and paper. This helps you pay attention and concentrate on the impact of your expenditures.

Calculate Money Spent Categorically

Determine how much money you have spent in each category once you have reached the end of the month, Calculating this will help you realise how much money you have spent on your needs, your wants, cultural purchases as well as the unnecessary and unexpected expenses.

Calculate The Money You Have Spent In Total

Add up all the money you have spent in total through the month. This should include your fixed expenses, you temporary expenses as well as your whimsical expenses.

Calculate The Money You Have Saved

Once you have added up the amount of money you have spent through the month, deduct that amount from the amount of money you had set as your month’s budget in the first step. This result amount is the amount of money you have saved.

Asses Your Performance

Compare the amount of money you have save with the amount you had set as you month’s financial goal. Write down what were the good expenses and what were the bad and how you can improve in the following month.