Try Kakeibo to manage money, achieve financial goals

What is the Kaikebo method of budgeting? Is it an effective method to follow?

- V Satya Vasu, Hyderabad

Kaikebo, the hundred-year-old Japanese budgeting tool, is a simple and effective way to get your spending under control. Kakeibo's budgeting method is nothing about tracking, correcting and balancing the finances. The core purpose of Kakeibo is to highlight the relationship with money. Born in a Samurai, a Japanese aristocratic warrior's family, Hani Motoko began working for a Japanese-language daily newspaper 'Ho chi Shinbun' and, became the first woman journalist in Japan in 1896.

Personal problems in her life, such as divorce and her daughter's death, forced her to resign from her job. This has affected her financial condition and budgetary regimen for household expenses. In order to combat adverse situations, Hani shifted her focus to financial discipline and strictness. She invented a household financial ledger called 'Kakeibo' in 1904. Kakeibo helps you monitor your spending and saving habits to the monetary plans you have set to achieve your financial goals and manage your finances. Hani Motoko initially created 'Kakeibo' as an uncomplicated and straightforward budgetary tool for women to manage household finances.

'Kakeibo' helps to journal household income and expenses, or a ledger of all main heads that are incoming and outgoing. It is easier to do in an old-fashioned way, using paper and pen instead of using the latest technology like budgetary apps, software, tools and spreadsheets. Kakeibo also accentuates and emphasises the significance of writing down in a notebook, as psychologically proven that writing on physical paper can lead to more brain activity and long-term memory.

Overall, people will gain more control over their money, feel better about where to put their income, and know enough to save every month. One may also start journaling in spreadsheets or apps in order to be on top of your finances. Eventually, writing down expenses in a notebook is similar to any other budgeting method available in digital form. One must divide expenses into several categories. Wants and needs, essentials and non-essentials, fixed and variable, general and leisure, unforeseen and emergency expenses. Under these heads, they can have sub-heads like grocery, vegetables and fruits, communication, repair and maintenance, educational, entertaining, shopping, grooming etc.

These categories are a bit fluid. For somebody, Netflix membership or sports may be an essential expense, and for others, it may be unessential. We need to track the income and expenses to know where the money is going and which income has not been credited to the bank. At the beginning of each month, one must ask a series of tough questions to ownself and answer: Can I survive without buying this item? What is my monthly income, and what are my financial goals?

Am I saving enough to meet my financial goals? Which expenditure should be avoided and where to curtail to improve financial position? Once you start journaling your expenses, your expenditure may take a continuous southward journey, and savings can grow faster than ever imagined. Because Kakeibo or spreadsheet entries help you make wiser decisions about how to spend and where to spend. One can set realistic financial goals once you have an idea of where one is spending money during a month.