All about ‘kakeibo’, the Japanese technique to manage your money better

What Is Kakeibo?

Kakeibo (meaning “household finance ledger”) was introduced in 1904 by Hani Motoko, Japan’s first female journalist. The system encourages individuals to write down their income and expenses manually, promoting a deep awareness of spending habits. Unlike modern budgeting apps, Kakeibo is traditionally practiced with pen and paper, fostering a personal connection to money management.

At its core, Kakeibo involves asking yourself four key questions every month:

1. How much money do I have? (Income)
2. How much would I like to save? (Savings goal)
3. How much am I spending? (Expenses tracking)
4. How can I improve? (Reflection & adjustments)

By analysing spending patterns and setting realistic goals, Kakeibo helps you make intentional financial decisions rather than falling into mindless consumption.

By integrating Kakeibo into your financial routine, you can cultivate better money habits, reduce unnecessary expenses, and achieve long-term financial stability. (Source: Freepik)

How Kakeibo helps you save money

1. Mindful Spending
   Unlike automated budget trackers, Kakeibo requires you to physically write down expenses. This act of recording creates an emotional connection to your spending, making you more mindful about where your money is going.

2. Categorisation of Expenses
   Expenses are divided into four categories:

   • Survival (rent, groceries, bills)
   • Optional (entertainment, dining out, shopping)
   • Culture (books, music, art)
   • Unexpected (emergency repairs, medical expenses)
     This simple classification helps identify unnecessary expenditures and areas where you can cut back.

3. Eliminating Emotional Spending
   Kakeibo encourages financial introspection. Instead of buying something impulsively, it asks you to consider whether the purchase aligns with your financial goals. Over time, this awareness leads to better spending habits.

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4. Focus on Saving First
   A unique aspect of Kakeibo is its emphasis on saving before spending. Instead of saving what’s left after expenses, you allocate savings first, making financial security a priority.

Unlike restrictive budgeting methods, Kakeibo is flexible and sustainable. It doesn’t rely on apps or complex spreadsheets—just a notebook and a commitment to mindful spending. By integrating Kakeibo into your financial routine, you can cultivate better money habits, reduce unnecessary expenses, and achieve long-term financial stability.