Kakeibo (pronounced ka-ke-bo) is a Japanese word that translates to “business book” or “home economics textbook.” It actually simplifies the proven method of controlling your budget with pen and paper. The accounting method with Kakeibo was created by Japanese journalist Hani Motoko in 1904 with the goal of helping other women control their personal finances.Then the Kakeibo system became available in English, and gradually Japanese secrets became known throughout the world.
The essence of the Kakeibo method
The Kakeibo method reduces monthly budget analysis to 4 questions:
- How much money is there?
- How much would you like to save?
- How much money is spent?
- What can be improved?
The fourth question is open to stimulate the process of reflection. However, the combined focus of the four questions should make us think about saving money without inevitable restrictions. Due to the fact that you have to answer the same questions every month, you can adapt to a shortage of something instead of necessarily following the data of a morally outdated spreadsheet.
Laconic budget with four expense categories
Just looking at the table, you can instantly get acquainted with the goal set for a month in advance to save money. The Kakeibo system offers only four categories for tracking running costs over fixed costs. Here they are:
- For life: essentials that can change in price, from foodstuffs to gas and utility bills.
- Emergency: one-time repair costs or gifts.
- Additional: interesting things that you can refuse to purchase.
- The cost of cultural events, such as going to the theater or buying books for professional development and self-awareness (Kakeibo has a whole category for book lovers).
It all seems pretty simple, right? However, having only 4 categories, one should take a responsible approach to the assessment and justification of operating expenses. As you track daily expenses for a month, you have to choose a category for each cost item and take stock of their accounting in this way.
Cost book does not have to be beautiful
The modest appearance requirements of Kakeibo mean that both simple tables, for example, Excel, and ordinary notebooks or diaries can act as a scheduler. It is not at all necessary to spend money on complex organizers for such notes; it is enough to purchase a notebook in an office supply store with two or four columns and a footnote field.
You should not focus on the look of Kakeibo, the main thing is to systematically fill them in and take into account all income, expenses and savings. Ideally, a notebook or spreadsheet should have an aesthetic appearance so that there is no desire to forget about filling them out.
Kakeibo System Fundamentals
- Focusing on spending instead of saving. Money is earned in order to enjoy life. When savings turn into total deprivation and self-prohibition, saving money becomes a chore. Instead, one should learn to think of it as a way of saving money for acquiring the joys of life.
- Control through paper and pen. During recording with the pen of all expenses, closer contact with current expenses occurs. Written cost accounting allows you to quietly and calmly monitor your own habits.
- Identification of "required" spending as opposed to "desired".The things you need to have have little to do with the things you want to have. Maintaining a journal of fixed costs helps to better understand and understand this.
- Cash withdrawal from bank cards. According to Kakeibo, paying for goods and services in cash rather than by credit cards allows you to become more responsible. Another tip: withdraw a certain amount of cash and distribute it depending on the cost categories for mail envelopes. And to spend while shopping only the money that is available in a particular envelope.
- Monthly comprehension. The last principle of Kakeibo is the reverse monthly analysis of costs and savings. This helps to find out your weaknesses and feel pride in personal achievements.