Finance

The Japanese Art of Saving Money – Kakeibo

Art of Saving Money
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Overspending? Running out of savings? Resonating much?

 Yes, this is for you!

If you are someone who is into overspending or has a habit of retail therapy that you might have been suffering to save money.

So many people go for retail therapy, which often occurs when one is feeling vulnerable or just for the sake of making one feel better that only leads to a disaster. It might have a positive effect on your psychological well-being but it is not a cure for long term therapy.

He who buys what he does not need, steals from himself. -Swedish Proverb.

100 years ago, Japan was the most traditional agricultural country not how we know them now, no robots at all.

But How did they manage to be the most developed economy and a tech-savvy country with such high living standards?

They use kakeibo, which makes them save 35% of their incomes. Sounds exciting? Here’s how:

This old Japanese habit taught us the art of simply journaling our finances to keep a track of all our spendings. This is one of the reasons; they are experts and very confident about their finances.
Kakeibo translated into household notebooks long before where there were no advanced long budgeting systems or apps. Their idea of a savings tool is to track how much you earn and spend more, no apps, no accounts and no tricky formulas for your spreadsheets. The final goal is to increase your savings.

With Kakeibo by your side, you rule up everything that’s not necessary and focus on your habits. It appeared in 1904 and became popular thanks to the first journalist in japan that sold out to wide audiences, Hani Motoko. Dozens of books and articles are still covering the tool.


It encourages us to maintain a journal where we mention all of our expenses by utilizing four pillars rather than an advanced method of spreadsheets to calculate everything.

How do you practice this?

All you need for this practice is a pen and a notebook (don’t forget you should maintain a single notebook throughout the year that’s how it will be easier to compare). Kakeibo focuses on 4 questions:

  1. How much do you have?
  2. How much do you like to save?
  3. How much do you spend?
  4. How can you make things better?

You just make a note every time you spend money…

 Each month start by writing how much you are going to receive (your payslip or business revenues). Then start dividing …

A Monthly Income Plan

It can be done as a table or bolded list. You will need to track all the money you get as incomes, advance payments, salary, debt return money you get by selling a second-hand laptop etc. At the beginning of the month you get the income you know you will get for sure and add into the table, you can get notes about the extra money in different colours or in block letters.

A monthly savings plan

You’d like to note how much money you’d like to put in the savings account, it’s important to decide this before you take action on planning to track your expenses.


A monthly expenses plan

Here you note your mobile bills, utility bills, apartment rents, plan the money and internet bills. All your expenses should be divided into four categories:

  1. Survival: The bills one has to pay for the shelter, food, medical, electricity and rent are a part of this category
  2. Optional: Consider these things as what you want but don’t need to. Take examples for eating out, buying new clothes or household items that you want to replace because they are too old now. Such things that bring you joy.
  3. Cultural or Education: Anything that falls under the ‘just for entertainment purpose. Such as buying tickets, new flower pots for the spring season, sweets for traditional events. Anything you may deem for entertainment is here.
  4. Extras: Such as buying someone a gift, meeting friends or going on a trip or a new mobile phone. You would be tracking expenses at this level to analyse that if you have this option left or not.

It’s up to you to decide the ratio between the four categories if you plan wisely it won’t be difficult to stay within the limits. At the end of the month, you will analyse if you manage to follow the plan and save or spend extra money. It will allow you to drop a more exact budget for the second month and see what expenses need to be corrected. Even if you don’t have a big plan to save much, conclusions will be granted. You might spend too much on food. How can you spend less? You would think about skipping dinner or cooking at home. You will be amazed at how much you can save on tips like this. If shopping sprees are your favourite hobby you will have to face the figures when you write down everything you buy. Half of the joy goes away when you have to record your bills. 

Here are some more tricks and tips you’d want to fill your savings box:

  1. In the evening put all the odd money that you’ve got in your pockets into a savings box which seems like a handful of coins but it will become a good figure at the end of the month.
  2. Put all the return debt into the money box. In fact, it’s not an income, you just got back money that was taken away from you before. After all, you have managed to live without this after all this time.
  3. When changing money you can put a small amount in the box or £2 pounds is enough. Later they will turn into a bigger sum.
  4. Every time you buy something, round the sum up, let’s say if you have a £26 pound bill you sum it up into £30 and take out the extra £4 pounds in the money box. It’s a great tool to save more and spend less.
  5. A system of penalties can also be a great tool to save more. For example, note your bad habits like every time you fight with your partner, take your frustration out on your children, smoke or perform any adverse habit, you put down a pound in the money box that’s beneficial in two ways. You counter your habits and start working on deducting them from your life and add another penny to your savings as well. So you punish yourself financially for your bad habit if a pence is not enough, let it be a £10 pound, in this way either you will get rich or make you disappointed but don’t be too hard on yourself.
  6. Divide the money you will be spending throughout the month into four parts. After a week of tracking, any money that’s left also gets into the money box.
  7. Put off any non-urgent purchases of the month, if you still wanna buy it, go ahead. This way you will stop impulsive shopping which can destroy any budget lists.
  8. Always make a shopping list every time you go out. Who even follows it. Well, this advice might be as old as a hill but kakeibo fans still follow it.

Research says we always remember something we write down. This way, Kakiebo can make you more focused on your financial goals and take them very seriously. As every time you write down your spendings, it will stay in your mind. So you don’t distract yourself from another impulsive spending and constantly redirect your thoughts to your savings box to your next trip to Bali or the Maldives.

What to do when you have already overspent?

Stay Calm

Remember when you are budgeting your finances you should stay as calm as air because it has everything or anything to do with your mental state. Worrying about your lack of resources will only cause you more stress and make a mess out of your financial plan. Hence, focus more on what’s already on your plate and the best you can make out of it.

Stop Overspending

The horrors you may cause by disregarding the situation and digging a deeper hole, you are only going to trap yourself inside. Be kind to yourself by cutting your unnecessary spendings and save it for when needed.

Find Your Shortcomings

Evaluate your finances and take a deep look at your transactions and where you go wrong? Were you dining out a bit more frequently? Or was it something out of your control like bills?

If it was because the budgeting went out of sight you should return unneeded items and start maintaining a debt-free life again OR if it is something you can’t control then understand it’s only for a short period of time.

Pay Within the Due Call

If you lack resources to pay the full bill, at least pay what you can, you stay debt-free, this way you will always have relaxation and not overburden for the next month’s payment.

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