1904 was a big year in history. In the US, Rolls-Royce released its first car and the beloved author Dr Seuss was born. In London, Houdini first performed the mirror handcuff challenge. In Japan, the Russo-Japanese war erupted when negotiations over Korea went sour.
Often left unmentioned in the 1904 history books is the invention of a no-nonsense household ledger by a female Japanese journalist named Hani Motoko.
Kakeibo, pronounced “Kah-keh-boh” and translated into “household finance ledger” was first published in a magazine targeting Japanese housewives, but its simplicity and effectiveness as a financial tool led the method to endure for more than 100 years.
Similar to bullet journals, Kakeibo is a pen-to-paper antidote for people struggling with overspending. It emphasises writing down your finances so that tracking money is as much more mindful, tactile and engaging process. It’s far more fun and meditative than balancing a checkbook, and requires a to be in the moment.
Just take a look at some Amazon UK reviews for some of the many Kekeibo pre-templated books and journals:
“Bought this book to save money each month and it was brilliant. It made me see what I was spending each day and I then thought twice before buying random items. At the end of the first month i'd saved the exact amount I wanted too [sic]. Its now month two so i'm looking forward to continuing the entries each day. I keep all receipts each day and enter them in the book each evening. Great little book.” [SOURCE]
“It’s nearly December and I have tracked my spending to the nearest penny for 11 months now. Next year I aim to use this year’s kakebo [sic] to help me further reduce my unneeded spending, because if there is one thing this book will highlight it is exactly that!”
“I like the way you HAVE to note all your outgoings and can put them into categories of spending, within the first month I am admitting to myself where I spend and it makes you look at reasons why and how you can improve and reduce spending.”
Hani Motoko, creator of Kakeibo, the Japanese method of saving money and saviour of many wallets.
How does the Kakeibo Japanese budget method work?
The Kakeibo journal method wants you to confront your mindset and motivations at the point of purchase (or would-be purchase) so you can cut out those that only give a temporary boost of happiness. Effectively, it reduces wasteful spending behaviours and better positions you to redirect that money towards paying off debt or building savings and investments.
To do this, you must ask yourself several questions before purchasing non-essentials.
A decision tree model can be used: Firstly, should I buy it? Yes or No? If yes: Can you afford it? If yes: Do you feel you need it? If yes: Do you feel positive about the purchase? If yes: Is there something you need more than this? And so on.
Until ultimately, with each purchase you have addressed affordability, long-term value, the emotional state in which you are purchasing it, and how you could better be spending your money.
All purchases are logged in a journal, which is also used for budgeting and monthly or even weekly reviews to mark progress. There’s no hiding from your decisions, and the confrontation can help you make even better future choices.
Many books and journals with Kakeibo templates are available online, as are free PDF versions for printing or copying in any old notebook.
The digital backup
There are many studied benefits to tracking finances by hand. But accuracy is not really one of them. Supplementing hand-written ledgers with a digital option like Money Dashboard will not only help you to double check your spending and savings, it can also alert you to unexpected expenses, and helps you to more strategically organise and plan your budget which you can then copy down as a goal in a Kakeibo journal. Think of them as complementary resources to reach your saving and spending goals.