Japanese Budgeting Method: Kakeibo

Japanese Budgeting Method: Kakeibo

Many people believe that budgets are for those who have difficulty managing their finances. Well, the majority of the time, that isn’t actually the case. A budget is what keeps your finances in order. People without a budget are more likely to lose their money.

It can be not easy to create and stick to a budget. You might not be able to imagine the benefits you could enjoy if you did. Kakeibo, an age-old Japanese way of saving money, could revolutionize saving.

Continue reading to find out more about Kakeibo’s working methods.

What is Kakeibo exactly?

Hani Motoko, Japan’s first female journalist, invented the kakeibo to aid busy women in managing their finances. Kakeibo’s name comes from the Japanese term “household financial leader.”

It’s not easy to change bad financial habits. Partly because our spending habits are deeply ingrained in our daily life, and partly because the act of spending has an emotional component that is difficult to remove.

Kakeibo refers to a financial philosophy that promotes conscious, deliberate spending and saves. It combines the practice of mindfulness with tracking purchases to reduce waste and increase savings.

Kakeibo, more importantly, is designed to help people think about their relationship to money and understand the reasons they make each purchase. It’s amazing how you can spend hundreds just by clicking a few buttons at Amazon.

How to use the Kakeibo technique?

Before we jump into the practical implementation of the technique, let’s understand the basis of Kakeibo. Here are a few questions that can help you understand your relationship with money in a better light:

  •  Can I live without this item?
  • Based on my financial situation, can I afford it?
  • Will I actually use it?
  • Do I have the space for it?
  • How did I come across this item in the first place? (Could be a magazine, an online banner ad, a gift shop, on a casual shopping spree, etc.)
  • What is my emotional state in general today? (Peaceful? Worked up? Celebratory? Feeling good/bad about myself?)
  • How do I feel about buying it? (Delighted? Excited? Indifferent? Are these feelings volatile? How long might they last?)

Here’s how you can incorporate Kakeibo into your financial life

Get a ledger: Keep a pen, paper and pencil handy. Kakeibo is true to its roots in early 20th-century Japan. It requires handwriting. Bullet journals are good, but any notebook (or handwritten) will do.

Do some number crunching: Calculate your monthly income, then subtract fixed expenses. You can also use a calculator if you’re running short on time.

Establish a monthly savings goal: Ideally, this amount comes from income left over after fixed expenses such as rent, mortgage, and utilities.

List your spending categories: Kakeibo lists four categories or “pillars” of spending.

  • Be ready to help others: Essentials like housing, groceries or student loans.
  • You are looking for: Enjoyable, but not absolutely necessary purchases (takeout food and hobbies, entertainment).
  • Culture: Any spending on cultural activities, such as books, museum fees, concert tickets, and TV streaming services.
  • Unexpected: Other expenses like home repairs and medical bills.

You should categorize all your purchases: All purchases should be recorded under the appropriate “pillar” and the purchase amount. The most valuable part of kakeibo was, for me, the sorting process. You give more thought to a task like sorting something into a category. Separating your needs from your wants can be more perplexing than you think.

Answer four reflection questions at week’s end

It would be best if you wrote down your answers every now and again — weekly, monthly — to these questions.

  • How much money are you able to spend?
  • How much would you love to save?
  • How much are you spending?
  • What are your options for improvement?


Although habits take time to form, they can be hard to break once you’ve established the right practices. You may need to manage financial anxiety while you improve your money management skills. It would be best if you were careful about how much you spend.

It is possible to make small financial changes that will improve your financial decision making. However, without good financial habits, it can be challenging to reach financial success. Each person has their desires and aspirations. However, you may not be able to fulfil each one of our desires, and aspirations will not be met. Your priorities will need to be set. Prioritize your needs over your wants. You can save early and more often, use tax savings programs, and invest in building a financial foundation.