What is Kakeibo? And how can it help you save money?

Learn how to save money in the UK with this Japanese budgeting and money-saving technique

Concept picture about growing and investing money

Learning how to start saving money is up there with one of the most difficult things to do when managing your finances.

Whether you’re saving for a deposit on a new house, a down payment on a new car or even a new pair of trainers, it isn’t always as easy as ‘putting money away for a rainy day’ (especially in the UK).

There are a number of methods out there which can help you save money – some more complicated than others – but kakeibo is just about as simple as it gets. Here’s how it works…

What is Kakeibo? The Japanese art of saving money

Kakeibo (pronounced kah-keh-boh) is a Japanese money-saving technique which translates back to ‘household financial ledger’.

It is a simple-but-effective way of saving money which involves carefully assessing your finances and figuring out how much you’re spending, how much you’d like to save and how you can improve.

There are four main questions you must ask yourself when attempting the kakeibo method of money-saving – these are:

  • INCOME – How much money do you have available to spend?
  • SAVING – How much money would you like to put away?
  • SPENDING – How much money are you currently spending?
  • IMPROVEMENTS - How can you manage your finances more effectively?
The four questions of Kakeibo

Changing your financial habits doesn’t have to take a lifetime. By asking yourself these four simple questions, you can begin your journey to saving money today.

How does Kakeibo work?

When we say that Kakeibo strips things back to basics, we really mean it – the first step of the Japanese money-saving technique (and one of the most important) is to write things down.

Not typing, not speaking into your smart speaker – writing.

Kakeibo doesn’t require any fancy spreadsheets or budgeting software and simply places emphasis on writing down your spending habits into a notebook or journal. Not only will this give you the chance to keep track of your spending, but taking the time to actually sit down and write out these habits will give you more time to learn and observe where you’re going wrong (or right!).

>>> Learn more with the Kakeibo book <<<

With so many of us accustomed to making notes on our phones, tablets and laptops, writing in a physical notebook or journal is an ingenious way of highlighting our financial woes.

When taking notes in your new Kakeibo journal, you should begin to notice a few reoccurring trends in your spending. Perhaps you buy coffee every few days, are paying for a gym membership which you no longer use or have a habit of spending excessively on designer goods or expensive tech.

The Kakeibo method will help to eradicate these unwanted habits, encouraging you to ask yourself:

  • Can I afford this item?
  • Do I need this item?
  • Would I use this item?
  • Do I have room for this item at home?
  • How did I find this item? (Was it actively sold to me through a magazine or advert on social media?)
  • How am I feeling today? (Am I feeling bad about myself? Stressed? Or even celebratory?)
  • How do I feel about the item? (Am I excited? Indifferent? Apprehensive about the purchase?)

On a basic level, the Kakeibo method of budgeting streamlines your spending requirements, focusing on four core groups:

  • NEEDS – The basic necessities such as food, shampoo and toilet paper.
  • WANTS – The things you enjoy, but don’t need such as takeaways and designer clothes.
  • CULTURE – Things like books or going to the cinema/theatre.
  • UNEXPECTED – Spending that you could not have anticipated, such as a car repair.
The four different types of spending - needs, wants, culture and unexpected.

Who should use Kakeibo?

Kakeibo can be used by absolutely anybody, but is particularly helpful to those looking for a more minimalist lifestyle. Its connections to mindfulness make Kakeibo stand out from the crowd, helping to take the stress away from money management.

Kakeibo is the perfect saving technique for anybody looking to focus on saving small amounts of money on a daily basis. By taking particular control over your financial habits, the Kakeibo money-saving method can help to make sure that all of your hard-earned cash goes towards the things you truly enjoy.

As well as helping you to save money, Kakeibo can encourage savers to:

  • Simplify finances – money can be complicated, so grouping your spending into four basic categories can help to simplify things.
  • Create realistic goals – seamlessly save small amounts of money every day, week, month and year.
  • Focus on the past, present and future – work out where you’ve gone wrong, how you can change it and what you can save for.
  • Celebrate small achievements – you don’t have to save thousands, even £1 a day is a saving worth celebrating.

>> Pick up your Kakeibo budget book here <<<

How to use Kakeibo

Like with any method of money saving, kakeibo can be difficult to begin with – but you’ll soon get the hang of it once you realise how much you can save.

There are 6 simple steps to begin your kakeibo saving journey:

1) Define a budget

Choose a month that you want to start saving. At the beginning of that month, take note of your monthly income and guaranteed expenses (such as rent, mortgage payments, mobile phone contracts, etc.). Subtract these expenses from your income to work out how much you have left to spend for the rest of the month.

2) Define a savings goal

Once you know how much you have left to spend, you’ll be in a good position to know how much you can save. Once you’ve decided how much you want to put aside each month, subtract this amount from your available spending money.

3) Watch your spending

At the end of each day, make a note of each and every purchase you make. Whether it’s a bottle of water or a new laptop, this is the most important aspect of kakeibo – pay attention to how much you’re spending now to realise how it could impact you in the future. Categorise these spends into needs, wants, cultural purchases and unexpected expenses.

4) Calculate how much you’ve spent in each category

At the end of each month, work out the total amount spent in each category.

5) Calculate how much you’ve saved

Subtract your total purchase amount from your initial budget (set in step 1). How much money have you saved? Did you reach your savings goal? Use these questions to work out where you can improve in the next month.

Save money with Bobatoo

If the Kakeibo method isn’t up your street, that doesn’t mean you can’t start saving money today.

Bobatoo has a range of helpful and informative blogs and guides to help you make the most of your finances – why not check them out?

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