In my last post, I talked about saving money with no spend days and I thought it would be nice to also talk about the method that helped me to become mindful of how I spend my money.
Last year in March, I decided that I needed to take action towards becoming more mindful of my spending habits and I also wanted to know where my money went the most. I heard about budgeting before, but I am really bad at managing my finances, so I researched ways of saving money on the Internet. This is how I discovered the Kakeibo method.
Kakeibo (pronounced kakebo) is a Japanese method of saving money and organizing one’s finances. It was created in 1904 by the Japanese female journalist Hani Motoko and appeared for the first time in an article in a women’s magazine. The translation of the word kakeibo is “household ledger”, so its purpose was that of helping housewives (they were the ones who would take care of the internal affairs of the household) to keep track of how the finances of the household were used.
When I found about this method, I really liked how practical the concept of Kakeibo was and I gave it a try. I found several templates for how a kakeibo could look like, but I chose to keep it as minimal as possible. With that in mind, I bought an A6 notebook and started filling it. Now let me tell you what I write in my kakeibo journal every month.
I. I will start every month writing the following details:
1. Income
2. What goes out (here I put the utilities and bills that come in every month: rent, electricity, gas, phone, water, Internet, Netflix and Spotify)
3. How much is available? – here I will subtract the amount of the monthly utilities from the overall income.
4. Monthly saving goal: I decide the amount based on what needs I have for the month, like dentist or beauty salon etc. However, my goal is to try saving 20% of my income every month.
5. How much is left to spend? – here I will write the amount that is left after subtracting the amount I want to save from what is available. (Step 4 minus step 3).
II. 1. The next step is to prepare a page for every week of the month. I prepare 4 pages, even if the last week is a bit longer than the others. But you can also have a fifth week even if it has only 3 days for example.
2. Then I will split the page of each week in 4 columns with the following categories: Needs, Wants, Unplanned and Self. ( The original says Culture instead of Self, but I thought it was more accurate to name it Self in my case. However, I decided to remove the category Self from this month on, and keep only 3 categories: Needs, Wants and Unplanned, because I believe that Wants category incorporates Self, Culture, hobbies and whatever else I want to do for myself).
3. At the beginning of a new week I will calculate the amount for every category, and then the total amount for the week before. I will repeat the process every week until the month is over.
4. I like to also add what I call a monthly overview where I write the total for every week and then the total amount for the month. This is so I can have an overview of the situation for the month and for every week, to observe where I overspent, if I succeeded to save any money and what I can do to improve the next month.
The process is repeated every month and I personally find it very helpful because I am more mindful of my spendings. I couldn’t say that it helped me specifically to save money. Instead I feel like when I go back to check the monthly situation, I have better control of my financial choices. Kakeibo is used with the No spend days technique in order to ensure balance and mindful spending. For me this is already a big step into becoming more financially organized, but I will try my best to expand these knowledge and methods into even better usage.
I hope this method inspires you to start your own budgeting journey, that if you are not yet in the process of doing it.
Sources:
https://en.m.wikipedia.org/wiki/Kakeibo
https://www.nextavenue.org/kakeibo-the-japanese-art-of-budgeting
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