How to Manage Your Money With Kakeibo

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.

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.

Setting up your own kakeibo journal, start each month, start 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 medical visits.

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.

According to the kakeibo method, you must ask yourself the following questions before purchasing any non-essential items — or the things you buy on impulse, but might not necessarily need:

• Can I live without this item?
• Based on my financial situation, can I afford it?
• Will I actually use it?
• Do I have the space for it?
• How did I come across it in the first place? (Did I see it in a magazine? Did I come across it after wandering into a gift shop out of boredom?)
• What is my emotional state in general today? (Calm? Stressed? Celebratory? Feeling bad about myself?)
• How do I feel about buying it? (Happy? Excited? Indifferent? And how long will this feeling last?)

Research has proven again and again the numerous benefits of writing by hand: It can help you make positive changes by encouraging you to be more present and aware, while also acknowledging the triggers behind your bad habits.