How to Save Money the Japanese Way?

In this modern-day world where spending money was as easy as just a click to pay or just one tap of our card, spending becomes effortless and saving money becomes a challenge for most of us.

Have you ever been to the shop to get a couple of items and went back home with two bags in your hand, even forgot what you went there for? It happens to me. And it always happens if I let my husband do the shopping alone.

Shops did a very good job to make us buy something impulsively. They know where to put an item to catch our attention and for you to buy them without thinking. Hence, overspending becomes our issue.

Do you struggle to manage your finances?

Let me show you this Japanese method of saving money which is very simple and doable. Anyone can start this simple trick to save!

Kakeibo

Kakeibo comes from the Japanese term meaning "Household Financial Ledger". It was invented in 1904 by a woman named Hani Motoko -Japan's first female journalist.

This Kakeibo method is a solution to our mindless spending habits. This budgeting system combines tracking our spending with the habit of being mindful of our purchases to cut unnecessary spending and help us achieve our savings goals.

You don't need much, no technology involved, just a notebook and a pen and this will be your budgeting journal. First, you have to ask yourself these questions and set your financial goals:

1. How much money do you have?

2. How much would you like to save?

3. How much do you spend?

4. How can you improve?

This method includes tracking your expenses, put them in categories and review your expenses at the end of every month.

Kakeibo requires us to write down everything we buy and to simplify our budget by grouping our purchases into four categories: 

• Needs. The essentials, things we can live without like food, groceries, bill payments.

• Wants. Purchases we enjoy but unnecessary like-new clothes, takeout food, entertainment.

• Culture. These are the spending on cultural activities such as books, going to pictures or museums.

• Unexpected. These are other expenses that we were not expecting like medical bills or home repairs.

The four-category system can help us become more mindful of our spending habits and avoid wasting money on things that don’t align with our goals.

Why Use Kakeibo

Kakeibo is a great tool we can use to save money because it teaches us to be mindful of our purchases making sure that our hard-earned money goes to where it should be with less regrets of unnecessary purchases at the end. Our purpose is to save money and as the research says, kakeibo can make you 35% richer overtime.

Did you know the benefits of writing our finances by hand helps us to be more present and aware. It helps us to become completely honest about our needs and wants. Therefore, it helps us to become self-aware instead of being image-conscious.

Some benefits of kakeibo are: 

• It simplifies our finances by grouping spending into four distinct categories.

• It encourages realistic monthly savings goals.

• It pays attention to the present, past and future.

• It encourages saving small amounts daily rather than occasional big sums.

• It celebrates small achievements.

How to use Kakeibo

1. Establish your Budget.

Write down your monthly income and your fixed expenses. Then take away your expenses from your income to determine how much money you have left to work out for your monthly spending.

1. Set your saving goal for the month.

You have to set a goal. How much do you want to save? Make a realistic saving goal as this is an important part of kakeibo. Once you’ve decided your goal, set aside that money by deducting your goal amount from your available spending money. 

1. Keep Track of Your Spending.

Using the Kakeibo method, before purchasing non-essential items or things you want but not necessarily needed, you must ask yourself these questions:

• Can I live without this item?

• Can I afford it?

• Will I use it?

• Do I have space for it?

• How did I come across it? (While window shopping?)

• How do I feel about buying it and how do I feel before buying it?

1. Calculate the money spent in each category.

How much money did you spend on needs, wants, cultural and unexpected expenses? Keep track, write it down, compute.

1. Calculate the money spent and saved.

Now you have to add it all up, all the purchases and deduct it from your budget. The amount left is the money you save. Now compare it to your desired goal.

1. Assess your performance.

Did you meet your goal? If yes, well done if not, cheer up and work it out the next month.

To master this saving method, you have to remember to be mindful. You have to pay close attention to your spending. You must write down your spendings as you go. Remember that this is your journal to be updated from time to time. And make sure at the end of the month after assessing your performance to embrace setbacks if you didn't meet your goal for that month. Reflect on what had happened and move forward.

This takes time to master, if you keep doing kakeibo, it will be a habit.

Let's go save money the Japanese way!

Thank you so much for reading.