"Having holes in your pockets", "throwing money out the window", "money burning a hole in your hands".... it's not always easy to manage your spending and savings — whether you're a spendthrift or not, in the end.
In Japan, some households are in the habit of setting up a method that lets them get a better view of their budget and thus save money. It's the kakeibo, which we'll tell you about right now.
The precision of the kakeibo
If we had to find an equivalent to what a kakeibo is, we could say it's similar to the account book we might keep. In Japan, this type of responsibility often falls to the lady of the house, who scrupulously notes every daily expense in it to ensure precise tracking and a long-term view of money coming in and going out.
One of the secrets of the kakeibo for clearer spending is to divide it into 4 main categories, which are meant to cover most of a household's costs.
- Essential expenses
These are all the expenses that let you live day to day, whether vital or functional. So they include food shopping as much as transport passes, by way of pharmacy costs, for example.
- "Pleasure" expenses
Because yes, it's important — even essential — to grant yourself a few extras to treat yourself: shopping, dining out, streaming subscriptions, decoration, etc.
- Cultural and leisure expenses
These notably represent the spending done in your free time. Museum visits, gym memberships, buying books or music, concerts, etc., will be taken into account.
- Exceptional expenses
Since we're not safe from a mishap, we may as well anticipate and account for the exceptional costs we might face. These are naturally expenses that can be health-related (medical visits, hospital stays...) but also for equipment, such as repairs to your roof or your vehicle, for example.
Setting up your kakeibo
The advantage of this method is that it doesn't require any specific equipment. A simple notebook and pencil will do. You can, however, find many templates — free or paid, more or less detailed — directly downloadable on the Internet.
At the start of each month, prepare the new pages of your notebook. Write all your income at the very top: salaries, benefits, pensions, allowances, etc. Everything that constitutes monthly money coming in.
In the same vein, then list all your fixed expenses. These are the expenses you have to honour every month. Among them you'll probably find your rent, your water and electricity contracts, your insurance, your phone and Internet subscriptions, etc.
Yes, the principle of the kakeibo is also to let you save money, as simply as possible. To do this, there's nothing better than setting yourself a goal at the start of the month. Be careful not to aim too high — that could discourage you. Start with smaller, achievable goals, and grow them in the months to come if it seems possible to you.
By subtracting your fixed expenses and your savings goal from your income, you'll get the amount available for your costs during the month.
Now that you've determined what you'll be able to spend during the month, you just have to keep precise track of all your costs. Note absolutely every outflow of money, assigning it to one of the 4 categories set out above.
If you follow the kakeibo method to the letter, you'll devote a moment to this task every day, to be sure not to miss anything. Of course, keep your receipts as proof for better control.
At the end of each month, do an analysis of everything that happened during it. Add up the totals of spending by category. If you're more visual, you can represent these amounts as charts or pie charts, letting you have a more concrete view of the share of each category.
Ask yourself questions to see how to change the situation:
- Did I reach my savings goal?
- Can I save more?
- Which expenses were excessive?
- How can I adjust my next expenses?
- How can I improve?
Yes, it can be a slightly painful moment because it means facing reality and analysing our mistakes... if there are any. This review should be monthly but also annual, to see how your spending evolves.
So, is it an effective method?
Even if it demands a lot of self-discipline, so as not to skew the results, the kakeibo method remains generally very effective.
Relatively simple to set up and maintain, it lets us see our consumption habits more precisely and reconsider some of our spending. Presenting all these results in writing also has more impact. You can also find a "challenging" aspect to it, where you want to do better than the previous month — but be careful not to fall into excess.
If you have a longer-term project, the kakeibo method can also let you build a spending plan, giving you the chance to save the desired amount within a set time.
Shall we give it a try?
