With the introduction of online payments, the habit of spending without having control over the budget has increased, often leading to a lack of attention.
Originating in Japan, the Kakeibo method is a budgeting system that involves manual tracking of expenses to give us control over our money through the reflective practice of recording in a journal (paper and pen, therefore), making us more aware of our spending habits to help us discover areas where we can save.
Kakeibo revolves around four key questions:
- How much money do I have available?
- How much would I like to save?
- How much am I spending?
- How can I improve?
These questions are then applied to four categories:
- Needs – Necessities that we need to live, such as groceries, housing, and utilities.
- Wants – Things we like and enjoy but don’t necessarily need, such as dining out, new clothes, or entertainment.
- Culture – Things we do to nourish our minds and immerse ourselves in culture, such as museum visits, music events, and books.
- Unexpected – Unforeseen expenses that we didn’t plan for, such as medical expenses, car repairs, or seasonal vacations.
Dividing income into these four categories in a Kakeibo journal will help us be more mindful of expenses and clarify which type of spending is not in line with our goals. Some of the benefits of the Kakeibo budget include:
- Simplicity: This budget format simplifies spending into four fixed categories that are easy to manage.
- Realism: It provides a realistic view of our expenses and encourages monthly savings goals.
- Reflective: By looking at the past, present, and future, this budget offers a holistic view of our finances and allows us to reflect on our spending habits.
- Encouraging: It encourages saving small amounts every day rather than occasional large sums.
- Celebratory: It celebrates small successes, motivating us to save more.
