Adulting is hard, and making money is harder—especially when it’s your own and not your parents. My Two Cents is here to break down everything you need to know about finance, business, and entrepreneurship. We’ll tackle all the basics, from how to get a business permit to how to invest in stocks, to educate the fledgling adults on how to not go broke.
Welcome to the idiot’s guide to money. Lesson No. 24: Kakeibo, the Japanese art of saving.
Kakeibo might very well be the secret to financial success in Japan. Developed by Hani Makoto, the first female journalist in Japan, in 1904, Kakeibo roughly translates to “household finance” ledger. It’s basically what its name implies—a straightforward budgeting system adopted by many Japanese households.
Consider it the Marie Kondo of finances, without having to say “thank you” to your money. Kakeibo puts a name on a system of saving, something many people have been doing for years, but it adds its own touch of Japanese philosophy to the mix, which is the key ingredient to its success.
How does it work?
Like most budgeting systems, Kakeibo follows the typical equation: Income minus bills equals available money for spending. Kakeibo then categorizes each expense into categories, which can be anything like cultural activities (Netflix, books), options/wants (eating out, clothes), necessities (soap, food), and extras (unplanned expenses).
A popular part of this method is the use of envelopes for these added expenses to limit your spending. You also need to log all your expenses per category over the course of the month like any ledger. This added step makes you see for yourself what expenses you prioritize, what is important to you, and what isn’t necessary.
This takes us to the most important part of Kakeibo: mindfulness.
What makes it work?
Kakeibo works because it asks deep questions that suddenly put more weight on our expenses. It demands that you practice mindfulness, a deep-rooted element of Japanese culture.
According to Kakeibo: The Japanese Art of Saving Money by Fumiko Chiba, the art of saving lies in being mindful of goals, actions, and consequences.
Now, when you’re just about to buy a video game or eat at an expensive restaurant, the last thing you want to be is “mindful.” But if you want to make that car downpayment or pay for grad school, it might just pay to follow the Kakeibo way.
The Japanese art of saving focuses mainly on four main questions: How much money do you have available? How much do you want to save? How much money are you spending? How can you improve? The thought-out answers to these questions should shape your finances for a month or a year.
And before making random purchases, Kakeibo will ask you: Can I live without this item? How do I feel buying it?
It’s all about spending mindfully, adopting a Yoda-like mentality even when it comes to doing your groceries. Channel your inner Marie Kondo and avoid sales like the plague. Unfollow influencers and personalities with lifestyles you can only dream of. And while it might be a blow to your pride, check your bank account religiously.
Why does it work?
The short answer would be because it’s Japanese. Mindfulness is part of everyday life, and Kakeibo is just a manifestation of this mindfulness adopted in finances.
But the real reason it works is because it inspires and motivates you to stay on top of your finances. Kakeibo lets you see the big picture with a mindful perspective, giving meaning to each and every purchase so you don’t fall into the trap of capitalism.
On the practical side of things, the fact that Kakeibo encourages you to write down your finances instead of using an app or spreadsheet makes spending more personal and more real.
In Japan, kids are taught to handle their personal finances at a young age, so they grow up knowing the importance of money and saving. It’s not a bad practice, so if you happen to have kids in your distant future, add Kakeibo to their baby vocabulary and start ‘em young.
This article was originally published on esquiremag.ph/money. Minors edits have been made.