How to practise the Japanese art of saving

The Kakeibo method will change the way you look at your finances and make you more money-savvy

BUDGETING – you know you should do it but somehow you just never get around to it. Kakeibo may help you get a grip on your finances. It’s an old Japanese method that’s enjoying a resurgence in popularity and is more about mindful spending than slavishly sticking to a budget. The goal is to create better spending and saving habits in the long term. Here’s what you need to know.

1 WHAT YOU NEED

● A journal or notebook and a pen No apps, no budgeting programme and not even a spread sheet.

● The self-discipline to make time for it, just a few minutes throughout the week (or every day, whichever works best for you) and at month-end.

● Honesty You don’t need to feel guilty about poor decisions. Instead, observe your spending habits and commit to doing better next month.

2 HOW IT WORKS

It’s simple. In your notebook, write down all your income – be it a single salary or earnings throughout the month.

Your expenses go into four different spending categories: essentials, wants, culture and unexpected extras.

The process of writing everything down encourages you to really think about your spending habits, and being more mindful about your spending might help you save more.

You can make it fun, for instance draw in your journal and paste tickets to events or the labels of purchases that have brought you joy.

At the end of the month, ask yourself four questions about your income and expenses (see number 4).

3 THE FOUR CATEGORIES

All your expenses should fit into these groups.

● Essentials These are things you can’t do without, like food, rent, school fees, healthcare and transport. While necessities can’t be cut out, what you spend on some of them could probably be cut down if you want to save money.

Debt is also in this category as you need to honour your financial commitments.

● Wants These are purchases you enjoy or like but which aren’t essential, such as travel, certain clothing, having your nails done, games and dining out.

According to the Kakeibo method, you should question yourself before buying nonessentials and definitely avoid purchasing them on impulse.

Ask yourself: Can I live without it? Can I afford it? Will I really use it? Do I have the space for it? How will I feel about this tomorrow?

● Culture This includes tickets for movies, concerts and theatre and entertainment such as streaming platforms and books.

Do a regular check-in to see if all of these things are bringing real enjoyment.

● Unexpected extras These are those unforeseen expenses that crop up during the month such as medical bills, home maintenance or car repairs.

4 THE FOUR QUESTIONS

At the end of your budgeting period, ask yourself the following questions:

● How much money do I have to spend? You should have a good idea how much you earn and what ends up in your bank account each month. Even if you earn a fixed salary, you should still answer this question every month.

● How much would I like to save? Contemplate where you can spend less to save or earn more to save and what you want to save for. Add your savings to the essential category, so it becomes a habit.

● How much money am I spending? Go through your spending in all the categories. Thinking about where your money went will help you to get a better sense of your priorities.

● How can I improve next month? This could entail identifying purchases that didn’t add value to your life or cutting down on unnecessary spending.

5 THE BENEFITS

● Being more aware of your income and expenditure.

● It can help you avoid overspending and create better habits in the long term.

● Kakeibo is an easy budgeting approach – there’s no pressure to create an intricate spreadsheet.

6 THE DISADVANTAGES

It can be more time-consuming than using a spreadsheet but the idea behind it is to slow down and think.

If you really can’t see yourself with pen and paper, you can search for an app that allows you to sort your spending into the four categories. But still take the time to reflect and answer the questions.

7 PUTTING YOU IN CHARGE

It’s an especially good option for people who are afraid to budget because they think they’re not good at money management.

Kakeibo puts you in charge of your own spending, which will give you more money confidence.