The Japanese budgeting system that will change your life

There are a great deal of budgeting apps to select from today, including Mint, EveryDollar, YNAB, and PocketGuard, just to name a few. Even though they offer convenience and immediacy, it's easy to feel detached once a computer system handles your money for you.

Instead of relying on modern technology to assist you with your personal spending, the old Japanese budgeting process of kakeibo (translated to "household finance ledger") is a great way to live, since all you need for it is a pencil, a piece of paper, and a few minutes out of your day.

The power of the pen

Have you ever gone into a car dealership and asked a salesman to write down a price you'd pay on a sheet of paper? Maybe you only wanted a drive around in a Mustang convertible. But once you put that number down, you decided to give in to your commitment. You sealed a contract with yourself.

Researchers have long studied the phenomenon that occurs when someone commits words and numbers to paper using their own hand. One study published in Psychological Science found that students who took handwritten notes on paper outperformed their peers who took notes using a laptop in a large-scale philosophical test.

Writing is a meditative and mindful act, making you not only think more deeply about the written subject but also hold yourself to your own standards. Which is why bullet journaling and mindfulness journaling have become more popular in recent years, with the latter being linked to improved mental health and well-being.

How kakeibo can help with budgeting

Let's go back to 1904. Kakeibo was created in 1904 by Japan's first female newspaper publisher as a means to help housewives monitor their households' personal finances.

The method is unique because it places a heavy emphasis on mindfulness through the process of writing, using journaling and innovative questions to help you not only keep an eye on your spending but understand why you may be spending the way you do.

Asking four simple questions and jotting down their answers is the principle behind daily journaling.

• How much money do you have to spend?
• How much would you like to save?
• How much are you spending?
• How can you improve next month?

You'll also be categorizing your spending into four different categories.

Needs These are the things you can't live without, such as groceries or gas. Loves Purchases you enjoy, like take-out or a new pair of sunglasses. Culture Enriching or entertaining experiences, like museum visits or TV subscriptions. Unexpected Expenses you weren't anticipating, like a doctor's visit or car repairs.

By looking at your expenses from a bird's eye perspective, you'll see where your spending is lacking, which will enable you to put more money aside so you can save more.

Journaling your way into financial health

To start kakeibo, first write down how much money you have to spend according to your monthly income and recurring expenses. Simply subtract your recurring expenses from your income, and the remainder will be your spending money. Then determine how much money you'd like to put into savings every month. (Pro tip Including savings as a fixed expense can help you avoid overspending).

Next up is the fun or tedious part, depending on your personality type Brief everything you buy (ideally, while buying this is happening). It is meticulous work, and it can get discouraging after the first week or so. If you stick with it, though, it will become second nature and you will discover the numerous advantages of budgeting.

The Netflix show Tidying Up with Marie Kondo employs the same concept for decluttering households as kakeibo does, as it asks itself whether the ownership brings joy. When it comes to your spending, discovering a bargain on a transaction may not always make you happy in the long term.

You should be spending each and every one of your hard-earned money only on items that will bring you lasting happiness.

Assessing your performance

After each month, you ll record your purchases in each category, as well as total money spent and saved. Then you’ll ask yourself further questions. Did you meet your goals? What conscious decisions did you make to achieve them? If, for some reason, you didn t achieve them, what prevented you from doing so? What can you do to improve your performance in March? It's important to stay on track without beating yourself up over missed goals.

Mindfulness is the foundation of kakeibo, which is why you should devote a considerable amount of time to this process.

Not all budgeting tools provide immediate results; nevertheless, they can use continuous improvement to your personal finances over time. If you re one of the budgeting applications that haven't worked in the past, it is beneficial to give this financial management method a try.