Kakeibo: 4 Questions To Help You Stop Overspending During Sale Season5 min read
Use this century-old Japanese budgeting method, Kakeibo, to help you spend mindfully and save more.
Online shopping has become our way of life now, and we’re bombarded with an endless stream of sales from 10.10, 11.11, 12.12 to Black Friday and seasonal sales. It’s easy to get sucked into a huge spending spree, and I’ve lost count of the times I’ve suffered from buyer’s remorse after spending too much on an item that I barely use. Expensive longboard sitting in the corner, I’m looking at you!
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So how do we curb the temptation to overspend, with great deals always around the corner? Recently, a friend introduced me to the concept of Kakeibo – a century-old budgeting method from Japan that teaches a mindful approach to spending and saving. Simply put, it’s about taking time to think about each purchase before you click that “checkout” button. Here’s how it works!
All you need is pen and paper
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Created in the 1900s, Kakeibo translates to “household financial ledger”. It’s essentially a physical budgeting journal, which you can commonly find in Japanese department and stationery stores.
The Kakeibo method involves writing down your savings goals and answering some financial questions. Users will track their expenses, categorise their spending, and do a review at the end of each month.
This entire process is designed to help you think mindfully about your relationship to money and why you’re making each purchase. When it’s all too easy to spend hundreds of dollars in a single click these days, it’s a great way to remind yourself to pause and think.
Step 1: Get a ledger
There are specially designed Kakeibo journals you can buy, but any paper notebook will do just fine.
Step 2: Calculate your monthly income and deduct fixed expenses
Income is your money inflow every month (salary, side hustles, investment income etc.) and expenses are what you spend to upkeep your life (utilities, groceries, telco bills etc.). There are many online calculators you can use for this, like the one here.
Step 3: Set a monthly savings goal
Based on the sum left after deducting expenses from income in the step above, decide how much you aim to save for each month.
Step 4: List your spending into 4 pillars
Kakeibo specifies that you should categorise your spending into the following pillars:
- Needs: essentials like housing, groceries, transport, loans etc.
- Wants: Things you enjoy but are not totally necessary (food delivery, hobbies, entertainment).
- Culture: Any spending on cultural activities – these include books, museum visits, concert tickets, video streaming subscriptions, etc.
- Unexpected: Other expenses that might crop up, like medical bills or home repairs.
Record every single purchase you make under the appropriate pillar and include the amount you spent. This sorting process forces you to give thought to each purchase and really think about where you are spending your money. Personally, I found it really difficult to separate my needs from my wants!
It might even give you some insights into yourself – for example, it was quite a shocker to see how much I’ve been spending on new clothes every month! Even though each individual piece doesn’t cost that much, it all adds up to quite a hefty sum in total.
Step 5: Answer 4 reflection questions at the end of the month
According to the Kakeibo method, you should write down your answers to these 4 questions every month:
- How much money do you have?
- How much money would you like to save?
- How much money are you spending?
- How can you improve?
These questions help you to reflect on your relationship with money and how you spend it. For instance, you might be inclined to splurge on a nice pair of shoes as a “reward” for yourself after a month of hard work. Instead of spending money as a “treat”, you may consider other ways of incentivising yourself that are more cost-effective, e.g. setting aside more time for the hobbies you enjoy.
Think before your splurge
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These questions that Kakeibo makes you answer can also be adapted to help you decide whether you should buy that online sale item or not. Let’s say you’ve been eyeing a bag that’s now on 20% off. Ask yourself:
- Is this bag a need or a want?
- How much budget do I have left for this month?
- Can I meet my monthly savings goal if I buy this bag?
- Should I be spending this money on something more important?
Running through these questions gives you a chance to stop and think about your spending, and whether it truly reflects your values and priorities. Often, I found myself making smarter and more informed choices when I chose to purchase something in the “wants” or “culture” categories.
Spend mindfully to save more
As consumers on social media and e-commerce sites, algorithms create ads tailored to our purchasing patterns to nudge us towards making a purchase. Being conscious of what triggers our spending can help us make better decisions with our money. Kakeibo is a simple and easy-to-do method that lets you take charge of spending, giving you more confidence and control in your budgeting.
Use this handy template to start your Kakeibo journey!
A Millennial who practically lives on Instagram. Digitally savvy, this uni-undergrad has shopped in almost every possible online shopping site from A to Z. But her street-smartness is not matched by her laziness. She knows a lot, and keeps her pulse on the hood.