Everyone wants an easy way to track their finances. There are hundreds of phone apps, websites, and journals made to “simplify” your saving. As much as technology has helped, sometimes the right move is to look to the past. Kakeibo is an age-old Japanese budgeting system built to make you more aware of your spending. With just a few evaluations of your spending, and a clean organizational structure, you can achieve all of your saving goals. With that said, here is how to get started with your first Kakeibo budget!
Basics
The first 4 questions that the Kakeibo budget requires you to ask are as follows:
- How much money do you have?
- How much do you want to save?
- How much are you spending?
- How can you do better?
Answer these questions, and write them down. These are the core elements of this system, and will be your guide as you move forward.
Organization
Here is the fun part: You get to write everything you spend down and organize it into a list. I know, sounds awesome. Despite the stress this may bring initially, it will make it easier for you to recognize when your Kakeibo budget is improving. First, write down the four categories under which you will be breaking down spending:
- Needs: Necessities like food, bills, and transit.
- Wants: Extras like going out to eat, electronics, etc.
- Culture: Educational or culturally enriching things like books or trips to the museum.
- Unexpected: Emergency needs you couldn’t foresee.
Under each category, write down what you spend. Make sure you are honest and responsible with where you put each expense. Your Netflix subscription probably isn’t a “need.”
Implementation
As you continue to answer your basic four questions, make sure you track any changes to ensure you’re moving in the right direction. The categories are there to assist you in deciding where you’re spending too much. After you add up totals for a month, you’ll get a good idea of your habits. The obvious first thing to go are wants. The small ones that chip away slowly are a good place to start. Cook instead of going out, order one less drink when you do go out, etc. and so on. You can even use free/cheap culture category things like the library or a museum visit to replace pricier wants. Find a balance that works for you, and make sure you’re setting ambitious savings goals.
In Summary
This is just a start to becoming a more responsible spender. At the end of the day, you can answer these questions and categorize all you’d like; if you aren’t actually making changes, you are just wasting your time making lists. Use this as a framework to better yourself, and make sure that you come up with substantial ways to answer question #4 every month. You get out of it what you put into it, just like anything else.
Trey LaRocca is a freelance writer, financial sales worker, and tech guy. When he isn’t out and about or at work, he’s usually at home enjoying some video games and a beer. Currently residing in Newport Beach, this California Kid can be found at the beach on any given weekend. Trey has years of experience in day/swing trading, financial analytics, and sales.