Get 35% Richer by Simply Asking Yourself These Four Questions
Kakeibo: Learn and apply this century-old Japanese budgeting technique.
In 1904, the first Japanese female journalist Matoko Hani published something amazing in a women’s magazine. She wrote about a budgeting method to help people save money by up to 35%.
The method was incredibly simple and easy to apply. So, it became popular among the readers, especially Japanese housewives struggling to maintain their monthly budget. It was known as Kakeibo. In Japanese, Kakeibo means ‘household ledger.’
Time went by and the method gained popularity all over Japan. Eventually, it became a part of Japanese culture.
Later, in 2018, Japanese writer Fumiko Chiba published a guide titled “Kakeibo: The Japanese Art of Saving Money” through which the whole world came to know the magic of this lovely method.
Kakeibo is a simple money management plan. It helps you save a lot of money that you never imagined possible. And how does it do that? By only transforming your poor purchasing habit into a mindful one.
Since it originated in the early twentieth century, the method requires no apps or fancy gadgets. All it needs is a pen or pencil and a notebook. And then, you have to ask yourself a few questions and take note of them.
Many a time, people do shopping just because their friends or neighbors have something and they don’t. Sometimes, they purchase things that just popped out in front of them online.
Even, people tend to visit shopping malls or online shopping sites when they feel depressed or find nothing to do.
The kakeibo method questions those terrible habits.
The magic of kakeibo is that — after every week or month, you must analyze your spending habits by asking yourself the following four questions —
- How much money do I have?
- How much do I like to save?
- How much do I spend?
- How can I make things better?
The above simple questions keep your spending habit in check and help you achieve your monthly saving goal.
Asking questions like “How much do I like to save?” or “How can I make things better?” inspire you to be more cautious and innovative when it comes to spending. So when you want to buy any non-essential item, you start to ask more questions to fully understand whether the item is for you or not.
You ask questions like —
- Can I live without it?
- Can I afford it?
- Will I actually use it?
- How did I come across it in the first place?
- What is my emotional state in general today?
- How do I feel about buying it and how long will that feeling last?
Before making any purchase, ask yourself those questions and save yourself from wasting your hard-earned money. It also saves you from impulse shopping and keeps you on the right track.
Thus, you understand yourself and your needs better — and improve your purchasing decisions.
This is how you can apply the kakeibo method to your daily life —
Step 01: Get a pen and a notebook
Unlike other saving methods that involve apps or gadgets, you need only a pen or pencil and a notebook. And all the records about your income and expenses must be handwritten.
Why handwritten?
Because writing on paper improves your memory. It is also a reflective process. You will become more aware of what you are doing with your money while writing it down on paper.
Step 02: Monthly income — Fixed expenses
Calculate how much you earn in one month and write it down in the notebook. Now, subtract the fixed expenses from your monthly income.
Your fixed expenses are those that you cannot avoid such as house rent, food expenses, mortgages, etc. As you cannot avoid your fixed expenses, your savings will entirely depend on the money left after the fixed expenses.
Step 03: Set a monthly saving goal
Decide and write down how much you want to save this month. Set a realistic monthly saving goal.
Step 04: Categorize and list your spending
Write down each and every purchase you make under the right category. All your spending must be listed in the below categories —
- Needs: The things you cannot go without. Things that are absolutely necessary for you. Example — house rent, groceries, loans, etc.
- Wants: These are the things you want to do. Example — shopping, eating out, bars, etc.
- Entertainment/Culture: Spending on entertainment or cultural activities such as books, movies, music, etc.
- Unexpected: These are the things that come out of nowhere. For example — accidents, medical bills, repairs, gifts, etc.
This categorizing helps you visualize where you spend most of your money. It also reveals the actual scenario of your spending habit so that you can take corrective measures and reach your monthly saving goal smoothly.
For example, if you see that you spend too much money in the Wants category, you can analyze your present condition and minimize your spending. For instance, you may reduce your visits to bars, restaurants, or shopping centers.
Most of the time, we hardly realize where our money is going.
In the first week of the month, we purchase a lot without thinking about anything, and then struggle comes in the last week. Because we find nothing left in our pocket to survive.
But if you adopt the kakeibo method in your daily life and write each of your expenses down, you can pinpoint every spending and ultimately, become more mindful about money. Moreover, you can save a lot of money and get richer with time.
So, grab your pen and paper and start asking yourself those four key questions.
Thank you for reading.
Sources: CNBC News, Mirror, MoneyUnder30, Wikipedia, Bright Side
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