Compare Personal Loans

Shop and Compare

Get Started Now

Kakeibo: Can This Japanese Budgeting Method Change Your Life?

A budget is one of the most basic personal financial tools you can use for managing your money. And while there are many different budgeting methods you can try, there’s one you may not have heard of.

It’s called kakeibo, which translates to “household financial ledger”. This Japanese budgeting system combines money management with mindfulness to help you cut out frivolous spending so you can start saving instead.

What Is Kakeibo?

The concept of kakeibo (pronounced kah-keh-boh) was first introduced in 1904 by Japanese journalist Hani Motoko. At the core of this budgeting system is an emphasis on making meaningful connections with your money to understand why you spend the way you do. This is meant to reflect Japanese cultural beliefs surrounding money and saving.  

Kakeibo doesn’t rely on spreadsheets or apps to work; all you need to get started with this budgeting system is a pencil and paper. Its simplicity, if followed correctly, is intended to allow its users to save as much as 35% on their household finances. 

RELATED: 7 Budgeting Mistakes You Can’t Afford to Make

How to Budget Using the Kakeibo Method

Budgeting with Kakeibo begins with asking yourself four specific questions:

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

Your answers to these questions are meant to help you become more intentional with your money and how you spend or save it. 

The first step in using kakeibo is creating a basic budget. To do this, you simply add up all your expenses for the month, then subtract them from your income. This tells you how much money you have available. 

If you know how much money you have available after your expenses are paid, you can move on to setting a savings goal. This should be a realistic goal, based on what you have available. 

RELATED: How To Know If You Have Too Much Debt

If you know how much money you have available after your expenses are paid, you can move on to setting a savings goal. This should be a realistic goal, based on what you have available. 

Tracking your expenses is the third step. Implementing the kakeibo system for budgeting revolves around the use of a simple ledger. You record everything you spend in the ledger, categorizing expenses into one of four categories:

  • Needs. The needs category includes expenses that are essential to everyday living, such as housing or groceries. 
  • Wants. This category represents the “extras” you spend money on, such as dining out or hobbies. 
  • Culture. Kakeibo includes a distinct category for cultural expenses, such as books, movie tickets or museum passes. 
  • Unexpected. This category is where you record any expenses you weren’t anticipating, such as a car repair or doctor bill. 

You then calculate how much money you spent in each category for the month. You’d compare this number to the total amount of money you saved, then use that to evaluate how you did for the month and plan ahead.

For example, if you didn’t achieve your savings goal for the month, the kakeibo method can help you analyze why at a glance. You can look at the amounts spent in each category to see where the bulk of your money went, then use that as a guide to adapt your spending for the next month. 

RELATED: How to Prioritize Household Debt Payments

What’s Good About the Kakeibo Budgeting System

Kakeibo is all about being mindful and intentional with your money. 

By writing your expenses and budget out by hand in a ledger, you can make a stronger connection with your finances. If you’re using a budgeting app that syncs with your bank account to track your expenses, you may not feel as connected or tuned in to where your money’s going. 

The emphasis on setting a savings goal each month can help with reinforcing the savings habit if that’s something you’ve struggled with. You may only be saving in small amounts but if you’re doing that consistently over time, those savings can add up. 

RELATED: 5 Ways to Boost Your Credit Score Quickly

Should You Try Kakeibo?

The kakeibo method could be a good budgeting fit if you:

  • Struggle with saving money
  • Have a hard time sticking to a monthly budget
  • Have never budgeted before
  • Want to use a budgeting method that’s simple and uncomplicated

It can also be helpful if you have trouble with overspending and debt. By increasing awareness of how you use the money you have, kakeibo could help you to cut out wasteful spending. That could help you reduce the amount of debt you accumulate if you’re using credit cards for purchases. And it could free up more money in your budget to apply toward debt repayment. 

You could take things one step further by consolidating your debts with a personal loan and temporarily swearing off credit cards while you’re using the kakeibo method. Getting a low interest rate personal loan to combine credit card debts could help you pay off the debt faster. Once your debt is gone, you can continue using the kakeibo method to increase your monthly savings goals and get one step closer to financial freedom.

How to Use Personal Loans

What to know about personal loans, credit scores, and they can help you to pay off debt and more.

Rebecca Lake

Rebecca Lake is a freelance writer specializing in personal finance, credit and debt. She’s a contributor to U.S. News and World Report, Forbes Advisor and The Balance and her work has appeared online at, MyBankTracker, and dozens of other top publications.

Our Articles:

Recent Articles:

Compare Personal Loans

Find the personal loan that is right for you based on your credit score and a few other factors.

Get Started Now
2021-03-15T13:15:27-07:00November 25th, 2020|Money Management|
Go to Top