You will agree that changing a bad financial habit is no easy feat. This is particularly true because we all pick up harmful financial habits from parents, friends and some are formed out of bouts of boredom.
Thanks to easy-spending apps, many people are now impulsive spenders with a horrible saving culture. With ease comes the temptation to indulge.
Are you looking for a way to control your spending habits or up your savings culture? Perhaps you are looking for that one mantra that will keep you from blowing the next paycheck. You are in the right palace.
Ever heard of the word Kakeibo? Put all your worries to rest because it is the answer to your prayers.
Kakeibo, pronounced as Ka–Keh–boh, was popularised in 1904 by the Japanese journalist Hani Motoko. It’s an accounting system for housewives designed to help curb mindless spending, cultivate a savings culture and a healthy relationship with money.
It is an ingenious method for many non-Asians especially young people who are accustomed to keeping up with their finances on their computer.
The Kakeibo method requires you to write down everything you purchase. The essence of this tracking method is to inculcate discipline with your finances.
It centres on budgeting which is pretty much similar to dieting; helps to restrict excessive spending. Kakeibo teaches you sacrifice, self-denial and a long term investment perspective. Simply, put, you’re mastering your finances while becoming a better person on the inside.
If you have tried sticking to a diet before, you will understand how mentally challenging this can be. However, this does not mean that we cannot delay gratification for more worthy outcomes. Joy Lui, a trainer at The Financial Gym posits “Even if you are failing at it, you are still trying”.
We live in an era where splurges and shopping sprees are glorified. With so many apps, you’re a few clicks away from anything you want. And so we purchase items we seldom need.
Frugality is gradually becoming old-fashioned and people are gradually becoming wasteful, unconsciously. This is where Kakeibo comes to the rescue, making us rethink where our money goes.
Kakeibo is to our finances what dieting is to our mind and body. This saving habit entails journaling or documenting your income and spending. Since Kakeibo predates Smartphones and computers, it solely relies on the age-long method of recording; paper and pen.
More than spending or budgeting apps, Kakeibo offers a deeper connection between you and your money through meditative journaling.
Studies have proven the numerous benefits of writing by hand. It helps you make positive changes and encourages you to be more present and aware as you appraise your financial life. When using the Kakeibo method, you must ask yourself the following questions:
- Can I live without this item?
- Based on my financial situation, can I afford it?
- Will I actually use it?
- Do I have space for it?
- How did I encounter this item in the first place? Did I spot it on TV or in a magazine? Did I come across it after wandering into a gift shop out of boredom?
- What is my emotional state today (Calm? Stressed? Celebratory? Feeling bad about myself?)
Here a few strategies to help you spend mindfully and not impulsively:
- Give it 24 hours: This shows whether you are purchasing the item on impulse or necessity. When 24 hours elapse and you are still thinking about the item then you might consider purchasing it.
- Check your bank balance regularly: This exercise helps you to feel more in control of your financial status.
- Spend in cash: Paying for items in physical cash rather than card or USSD payments makes budgeting easier.
- Stay away from environments and situations that trigger spending: If surfing the internet and other social media platforms trigger unhealthy spending habits then by all means stay away. Better still, unfollow or unsubscribe.
This will help you avoid buying stuff with transient significance. Now, let’s get to the real gist!
How to use a Kakeibo
Before diving, a short guide on how to use the Kaikebo might help. If you’re like most people, this concept is new to you. Kaikebo requires some processes that are easy to grasp.
It gives you a mental picture of your finances and an intensively detailed look at your daily spending. Here’s how it works:
- Conduct an annual review: The commercial Kakeibo journal is available as a yearly planner. It helps you to start your ledger with an idea of your income and expenses for the coming year. This section requires you to record your major expenses for the year ahead. Are you going to be purchasing a house, an expensive gadget or a car? Find out the estimated price and stick it there.
- Create a monthly spending plan: Before you make this budget, ask:
- How much money will be coming in?
- How much money will I save?
- How much will I spend?
- Determine how much you spend weekly: Determine your weekly spending, break it down into the following:
- Survival: Food, rent, data and cloth
- Wants: Some optional spending you might want to indulge in.
- Culture: Trips, seminar and courses, religious giving and if you have dependents, factor black tax.
- Extra: These are things you did not necessarily plan for but they must crop and are still important. Things like purchasing wedding gifts, birthday gifts, fixing your phone or car, etc.
5 reasons to start using Kakeibo Now
If you have been battling with budgeting and impulsive spending, Kakeibo is your best shot. Using this old-fashioned method will give your life a sense of order.
Traditional budgeting can be such a pain when you’re expected to list out all your expenses and income and focus on saving money. It helps you to understand how much money will be spent every month and how much must go to savings no matters how little.
It helps you prepare for the future
Kakeibo is designed for long term financial planning. Like any good budgeting system, it helps you prepare for the future without feeling deprived or stressed in the present.
Its unique attention to financial mindfulness separates it from other budgeting apps or tools; making it a good match for those who want to spend money on stuff that add joy and value to their lives.
Fearful or Reluctant Budgeters
Kakeibo is good at banishing that negative self-talk, “I’m terrible with money”. The old-fashioned method puts you in charge of your spending; giving you more control and confidence. This will eventually spur confidence in other areas of your life.
The Compound Effect
Saving in bits may not make a hugely significant difference from the onset but over time, it adds up. In essence, Kakeibo encourages helps you save small amounts daily rather than occasional big sums, therefore, setting you up for financial independence.
Unlike other modern-day apps that do not give room for reflection and in-depth appraisal, the Kakeibo method helps you to monitor your performance. With Kakeibo, you can ask questions such as; did I meet my goals?
If the answer is positive, jot down how the process went and how you can carry your success forward. However, if your answer is negative, write down the reasons you did not meet your goals and how you can work towards achieving these goals in the next month.
Living within your means is awesome. It makes sure you are setting yourself up for a future anchored on financial independence. This will happen only when you take up the challenge to revamp your finances using the Kakeibo method.