Japan is a land where both old and new converge.
Samurai, sumo wrestlers, and geisha appear in the nation’s anime and manga industries. Wood or paper and traditional designs are incorporated into modern architecture, including in Kengo Kuma’s renowned Japan National Stadium.
These highlight how one can turn to age-old wisdom and apply it in new ways.
Japan’s decades-old budgeting method, called kakeibo, is something one can adopt in a personalized and updated fashion.
The kakeibo way
Kakeibo, translated as “household financial ledger,” was reportedly developed by journalist Hani Matoko in 1904.
It’s a simple method that involves writing down one’s income, essential and planned expenses, and savings targets for the month ahead.
To those new to budgeting, there’s no fixed rule when setting up a spending and savings plan. Some suggest the 50-30-20 method, which allocates 50% of one’s income to needs, 30% to wants, and 20% to savings and investments. If faced with limited funds, one can consider the 70-20-10 ratio.
For kakeibo, daily spending is typically recorded in a notebook. Expenses are sorted into needs, wants, cultural activities, and unplanned or emergency spending.
What makes kakeibo different is that at the end of the month, one’s spending is summarized in the ledger and reflected upon.
Being mindful
Mindfulness is a big part of kakeibo. It isn’t about simply tracking finances. It’s more about reflection.
When crafting a budget, one asks, “Can I live without this?” When reviewing finances at the end of each month, one reflects, “How can I improve?” Intentionality is a cornerstone of this method.
Being mindful is something Earnest Learning promotes. Good money habits are built on being intentional and having a “live within your means” attitude.
Here, we discuss how being intentional is applied in money management, such as the “save without missing out” or the SWOMO method.
Back to the future
One can take kakeibo’s best practices and bring them to modern times. Instead of a physical notebook, one can use applications or a mobile phone’s notepad to list daily spending.
Budget trackers—typically Excel sheets made available online—can be tweaked to one’s liking, such as by adding columns where reflections are entered. Earnest Learning has a budget tracker here!
Traditionally, kakeibo is also cash-based, adding a layer of intentionality. One physically sees and feels cash leaving one’s palm.
Nowadays, debit cards and electronic—or mobile money transfers—can also work, as these offer digital ways to track spending.
What’s important with kakeibo is recording and reflecting on your finances.
Remember, mindfulness, goal-based budgeting, and saving provide a solid foundation for better money management. If you are starting a financial journey, the kakeibo method is a time-tested way to begin developing healthy money habits.
We talk more about budgeting in Chapter 3 of the Earnest e-book.
Disclaimer: This article is for general information purposes and does not constitute formal financial advice. Always do further research before making financial decisions.