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Dublin: 2 °C Wednesday 11 December, 2019

4 simple and clean lessons from the kakeibo, the Japanese art of smart spending

The Life-Changing Magic of Tidying Up for your finances.

Image: Unsplash

WHILE WE WERE waking up bleary-eyed on the first day of 2019, Netflix was busy unveiling Tidying Up with Marie Kondo. In terms of self-improvement, 2019 has become the year of organisation. And six months in, it’s worth checking in on how we’re doing.

The series instantly brought her revolutionary approach to decluttering (and best-selling book) to a worldwide audience. It also served as further evidence that when it comes to organisation, the Japanese often get it very right.

So, what can we learn from their approach to finance? Enter the kakeibo -  Japanese for household finance ledger. It allowed housewives to take control of the household’s financial decisions – and most importantly, to be smart about their money.

While it may not be new (it was first popularised in 1904 by the first female journalist Motoko Hani), it’s powered multiple generations of Japanese to better their finances for well over a century now. And for the first time, a version has been published in English by Fumiko Chiba.

So how does it work? Technically all you need is a paper, a pen and these tips below.

Lesson 1: Knowing your disposable income is essential

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It’s recommended that you sit down with your kakeibo at the start and end of the month, and ideally each week to check in on how you’re doing. At the very start of the month (or if you prefer, the week that you’re paid), Fumiko Chiba recommends finding your disposable income. And it’s simple enough to work out how much you can save.

This is worked out by deducting all of your fixed expenditure (rent, bills, travel) from your monthly take-home pay. Don’t forget to include any subscriptions within this, such as Netflix and Spotify (and to check up that you recognise every direct debit leaving your account). Now, the most important part we often forget…

Lesson 2: Don’t spend a cent until your savings are taken out

shutterstock_587320589 Source: Shutterstock

According to the ancient Japanese tradition of the kakeibo, one of the most important budgeting steps is to set yourself a savings target and to subtract this from your disposable income figure – i.e. for all intents and purposes, pretend that it doesn’t exist (and for some, throw it into a savings account).

Chiba advises to: “think mindfully about how much you would like to save and what you will need to do in order to reach your goal”. Originally the kakeibo would be filled with illustrations of the ‘savings pig’ and the ‘expenses wolf’. Each month, they battle each other and the hope is that with your help, the pig will beat the wolf every time.

Lesson 3: Categorising allows you to see where to cut back

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Here comes the hard bit – keeping track of everything you purchase for the month. Each should go into a category to highlight exactly how much each ‘pillar’ costs and where you can cut back. There are four pillars - survival (food, rent, transport), optional (eating out, shopping), culture (books, movies) and extra (gifts, repairs, holidays).

For some, this process can often show that ‘extravagances’ like regular coffees (or in this case, green teas), aren’t that bad. At least that was the case for journalist JR Thorpe, who tried it out. Describing her experience in Bustle, she wrote:

 I work from cafes rather than in an office, and like to drink nice green tea to keep myself sane. I’d feared that this would add up to extravagant sums, but it actually doesn’t.

Lesson 4: Checking in regularly allows you to spot bad habits

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Lastly, the kakeibo works best when you’re consistent about it. Reflecting the popular world of mindfulness, the kakeibo forces users to think ahead, be conscious of their spending and to use the lessons they learn each month to save even more as months go on. Ideally you should sit down for a few minutes each week to check in.

If you get a shudder every time you log into your bank app, fear not, Chiba previously told ”So many of us have a moment of dread before looking at our bank balance either because we don’t know what to expert or because we know that we won’t like what we see”. Chiba explained that if this rings a bell, the kakeibo is worth trying:

The people who say they’re ‘bad with money’ will benefit the most. A kakeibo is about removing fear and turning budgeting into something that you can enjoy. 

Sound like something you’d be willing to try out? If you’ve given it a go, let us know in the comments.

Ready to streamline your finances? Lodge €2000 per month and get free day to day banking with a KBC Extra Current Account. No need to maintain a minimum balance either. See here for more.

Terms and conditions apply. KBC Bank Ireland plc is regulated by the Central Bank of Ireland.

Read more: ‘Delete your shopping apps’: 6 people share smart solutions to their money mistakes

‘I use top-ups to stop impulse buying’: 8 people share the small changes that helped tidy up their finances

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