SSG_Pack 10 months ago : Finance

Kakeibo: Saving money the Japanese way

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Modern day technologies like credit cards, apple/google pay, and contactless payment methods have made the act of spending so effortless that it has lead to mindless spending.  While modern technology is very convenient, it has made saving difficult.  Back in the days of cash transactions, people used to pay very close attention to their spending.

Kakeibo is a Japanese method of controlling mindless spending and helping you achieve your savings goal.  Kakeibo means "household finance ledger", and was invented by Japan's first female journalist, Hani Motoko, in 1904.

In the world of budgeting software, user-friendly mobile apps or excel sheets, kakeibo lays emphasis on physically writing down things on paper.  Research has shown that writing by hand encourages you to be more aware of what you are writing and emotionally absorb the writings.

In the kakeibo method, you begin by answering a few questions
1. At the start of the month, how much money do you have in hand and what are your fixed expenditures?
2. How much money is left and how much would you like to save?
3. During the month, on what am I spending?
4. How can I save more?

The kakeibo method requires you to group your purchases into categories and understand where your money is going. An exampe is a category for carryout or dining out.  Once you have categorized, you need to separate your wants from your needs.  In the above example, eating is a need, but eating out is a want.

If you plan on using the kakeibo method to save money, use this step-by-step guide
1. Write down your income, fixed expenditure and the amount remaining after fixed expenditure.
2. Set a target on how much you want to save from the remaining money (could be in single figures, start small)
3. Track your spending in categories
4. Analyze money spent in each category
5. Calculate money spent and saved
6. Measure your performance
7. Remember to celebrate your wins

Some suggestions for avoiding mindless spending
1. Allow a cooling period of 24 hours, to really understand if you need the item
2. Use cash to pay instead of using your card.  This helps you stay in control of your money, as you will think twice before spending.
3. Don't let the Black Friday deals tempt you
4. Check your bank balance very often

To read more on ways to save, visit simplesavingsguide.com
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Money saver who loves to write about Financial Wellness