Productivity Look to This Japanese Method for a New Boost to Your Budget

by Lauren Tucker | August 12, 2020

Blogs and books can be found in abundance on how to simplify and streamline everything — from routines and daily diets to your possessions. The main driving forces behind this movement are mindfulness, appreciation and intentionality.

But what about personal finances?

Enter kakeibo — a refreshingly low-tech approach to budgeting, devised in Japan over a century ago. The method is focused on simplifying how you track spending and saving, and encourages you to reflect on and evolve your money habits. And it’s that emphasis on a simplified view and making reflection a routine that sets kakeibo apart from other techniques.

What is kakeibo?

Kakeibo (pronounced kah-keh-boh) was created by Japan’s first female newspaper reporter and the founder of a popular women’s magazine. Kakeibo translates to “household family ledger” and was devised between 1903 and 1904 as a way for housewives to stay on top of their family’s finances.

The concepts of kakeibo are simple, and that’s what makes this method so timeless. It requires four basic steps:

  1. Set a monthly budget (income and fixed expenses).

  2. Decide how much you want to save (and for what).

  3. Track all of your expenses.

  4. Take time at the end of the month to review the balance sheet and reflect on spending.

As far as materials, you just need a dedicated notebook for keeping track of your budget. Similar to budget journaling, this method allows you to identify what worked and seeks to reward you for that. Alternatively, it reveals what didn’t work during the month and urges you to consider ways to improve moving forward.

A metaphorical illustration with a person in the center, visualizing the various "buckets" of expenses that are part of Kakeibo, in order to help define the question, What is Kakeibo. The "buckets" are: Wants, Needs, Culture and Unexpected.

How to create a kakeibo-based budget

Working on setting up a monthly budget is pretty straightforward. First, identify and write down all sources of income for the upcoming month and find your total. Then, write down your fixed expenses (known monthly expenses: rent/mortgage, insurance) and find that total.

The next step in the kakeibo method is to write down your goals and forecast for future expenses. What are you willing to cut to save money? How will you reach your savings goals?
You then enter how much you are hoping to save during the month.

Finally, take your income, deduct the fixed expenses and forecasted savings and you’ll be left with a total for available cash. This available cash determines what you have for variable spending (expenses that change: personal care, takeout dining). Kakeibo sets aside your income, fixed expenses and savings goals and focuses on tracking your variable spending.

Grab a notebook or a specific kakeibo planner. To help you start on this path, I’ve designed a super easy printable.

I’ve taken the basics of kakeibo and added some additional space to help you reach your goals. Work to mindfully record and separate your daily spending into four distinct categories:  

  1. Essential expenses (needs): Expenses that are essential (groceries, gas, etc.)

  2. Optional expenses (wants): Dispensable expenses that you could cut

  3. Entertainment and leisure (cultural): Books, takeout, art

  4. Unforeseen circumstances (unexpected): Unexpected gifts, repairs, health care

Write down every purchase you make and decide what category it falls into. Unlike other budgeting systems, which might have dedicated lines for “restaurants” or “clothing,” kakeibo buckets expenses into broader categories.

Wondering how this budgeting method takes debt (student loans, car loan) into consideration? When dealing with debt, enter your monthly repayment for each specific debt in the “fixed” expenses category. Any additional debt repayment would either fall before the savings goals or after, depending on your debt repayment journey.

A metaphorical illustration depicting the concept of how to create a budget using Kakeibo methodologies. The visual consists of a scale that balances expenses: Wants, Needs, Culture and Unexpected.

Ways to reflect on your budget

Taking time to reflect on your budget is a step that sets kakeibo apart. At the end of each month, find somewhere quiet where you can add up the totals from each week to tally up your balance sheet (end-of-month worksheet). Maybe pour yourself a coffee or tea, light a candle — set the mood so you can focus and be intentional as you review the expenses of the past month.

Ask yourself difficult questions, identify habits that no longer serve you and review purchases that have a negative impact on your budget. Decide on and commit to changes you can implement in the next month.

Whether you are new to this technique or already a kakeibo user, here are tips to help you on your budgeting journey:

  • Be honest about how much you make and how much you spend — this is key to improving and sticking with any budgeting method.

  • Review past bank statements to identify your spending habits and recurring costs.

  • Have debt? Figure out exactly how much you’re paying each month to the interest and principal. Ensure that the monthly payment for each debt is met as much as possible.

  • Do you have a fixed amount you want to save each month for education, retirement or a future purchase? I suggest including that cost in your “fixed” expenses list. The amount you want to save at the end of the month should be AFTER the usual savings you are putting aside.

  • Need some visual inspiration? Check out hashtags associated with kakeibo (sometimes spelled kakebo) on social media.

A metaphorical illustration meant to visualize a woman reflecting on her budget. She sits with her legs crossed and there is a bonsai tree, credit cards, a calendar, a light bulb, a house and money floating around her.

The key to taking control of your finances is to find a tracking method that works for you. And if you’re looking for a tech-free way to shed light on your spending habits that helps you identify — and meet — future goals, kakeibo could be right for you.

Budgeting Debt Mindfulness
Lauren Tucker

is the woman behind An Organized Life. Originally from Toronto, Canada, Lauren traded in her figure skates for sunscreen and now resides outside San Francisco. She can usually be found caffeinated and budgeting.

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.