Could the Japanese art of “kakeibo” help you to be more mindful with your money?

You may have heard the old saying regarding the values of saving and budgeting: “If you take care of the pennies, the pounds will look after themselves.” But have you ever heard of the Japanese spending philosophy “kakeibo”?

The art of kakeibo was developed by the Japanese journalist Motoko Hani. Considered one of the first female journalists in Japan, Motoko Hani wrote about kakeibo in a women’s magazine in 1904.

Kakeibo roughly translates to “household financial ledger”. It is a simple but effective method of monitoring your savings and questioning your expenditure according to your values and principles.

So, 100 years after it was first developed, can the Japanese art of kakeibo still offer guidance and help you to be more mindful with your money?

Kakeibo is a Japanese budgeting philosophy based on 4 key questions

The power of kakeibo lies in the simplicity of its approach and the profundity of its impact.

The method is based on four key questions:

  • How much income do you have?
  • How much do you spend?
  • How much money do you need to save to achieve your goals?
  • How can you improve to ensure you meet your saving goals?

Determining your income may be straightforward, albeit subject to minor fluctuations month to month. However, kakeibo offers additional guidance on addressing the remaining three questions.

Break your expenses down into 4 groups

Kakeibo groups expenses into four key categories:

  • Essentials. This includes food, rent, household bills, transport necessary for work, your phone contract, petrol, and anything else you would struggle to live a regular life without.
  • Non-essentials or leisure. This might include eating out, weekend drinks, taxis or travel not related to your work, non-essential clothes, and more.
  • Cultural. This can include anything you spend on culturally enriching yourself, such as cinema or theatre tickets, music, streaming platform subscriptions, evening classes, or books.
  • Unexpected. Unexpected costs might include medicine or health-related costs, or emergency travel.

When beginning your kakeibo journey, try tracking your expenditure for at least a month to get a clearer picture of where it all goes.

You can do this in the traditional kakeibo method of jotting your receipts down in a journal, or you can use your banking app to categorise any purchases you make, which is a feature many banks now have.

Set your goals based on your values and principles

Like financial planning, kakeibo recommends that you thoughtfully set goals in alignment with your values and principles. This guides you with intention and purpose toward objectives that are important to you.

Consider what truly matters to you and what you feel you need to be fulfilled and satisfied.

Perhaps, upon reflection, you would rather prioritise putting a bit more away to secure a comfortable retirement over a new car. Or maybe you want to be more mindful with your spending so you can save for the family holiday you’ve always dreamed of.

Whatever your goals are, try to consider:

  • What really matter to you in life
  • How much money you would need to achieve them
  • The areas where spending a bit less is feasible.

Financial planning adopts a similar approach and encourages you to set up your finances to help support and create a life based on goals and objectives that are meaningful to you.

Find areas where you can improve your savings and reduce your outgoings

Once you are clear on your income, expenses, and goals, kakeibo recommends that you find areas where you can improve your savings and reduce your outgoings.

Before making any purchases, you might consider asking yourself:

  • Do I need this, or is it just fulfilling a temporary desire that will return soon?
  • Do I have the space for this, either physically or mentally?
  • Can I afford this in relation to my income and saving goals?
  • How do I feel about buying this?
  • How do I feel overall today?

Of course, many of your expenses likely fall into the essentials category, but kakeibo also invites you to examine things in life that may seem essential, but you could do without. And to observe the things in life that really matter to you but that you do not currently have because of your expenditure on other non-essentials.

Assess your progress after a few weeks of practising kakeibo and see if there are still areas you could improve. Try not to berate yourself if you don’t reach your monthly saving target, just strive to improve in the next month.

Kakeibo emphasises the importance of budgeting, reflection, and gratitude

Kakeibo is primarily a budgeting philosophy that encourages you to save for the things that matter rather than spending on non-essentials that keep you from your goals.

But in doing so, kakeibo asks that you reflect on who you are, what you value, and how your finances represent that. This may mean that you make some small but significant changes to your life as you begin your journey of creating a financial plan that reflects who you really are.

Kakeibo also encourages you to practise gratitude along the way and be grateful for what you have and what you may come to have. Even if things aren’t where you want them to be just yet, with the right mindset and a good plan, you could be there in no time.

Get in touch

Using a financial plan alongside practising kakeibo could provide a helpful framework for managing your finances effectively, achieving your long-term financial goals, and living a life based on the things you value.

To speak to a financial planner, get in touch.

Email or call us on 01189 876655.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.