Raise your hand if you have cash in your wallet.
What is a wallet you ask?
I jest. I know you know what a wallet is. (I hope.) But, sometimes I wonder if cash will go the way of the rotary phone. Seems most folks I know use debit cards, Venmo or their phones to pay for things nowadays.
Ever notice when you go to the store and have a debit or (worse) a credit card at your disposal, your plan to spend $20 ends up more like $50-$100. For example, anyone who shops at Target knows that when they ask you at the checkout, “Did you find everything you needed,” the answer is “ugh… Yes, and then some.”
Living in a plastic economy has made us less cognizant of how we spend money. But, leave it to the Japanese to have a system for putting the thought into buying. It’s called Kakeibo (pronounced kah-ke-boh) and it translates to “household finance ledger” and it’s something most Japanese folks learn to use from the time they are wee children.
The system began in 1904 and was “invented” by a woman name Hana Motoko (also known as Japan’s first female journalist), according to an article on MSNBC. The system is a no-frills way of approaching finances, whether personal or business.
Now, some folks are great at keeping a budget and knowing where the money is going. My mom, for example was the best bookkeeper. Unfortunately, her skills with money didn’t pass down to me. So, I actually purchased a Kakeibo book to try and get my finances in better shape.
You don’t need some special book (save your money), though you can find lots of resources online, including these downloadable forms, but in actuality all you need is a notebook (preferably one to take with you) and a pen. No Technology Required.
If you have been spending money and not knowing where it is going, then it’s going to take some work to change your habits around money.
In her article on MSNBC, Sarah Harvey says what makes Kakeibo different than using an Excel spreadsheet or budget software is the act of physically writing purchases down – it becomes a meditative way of processing spending habits. “Our spending habits are deeply cemented into our daily routine, and the act of spending also includes an emotional aspect that is difficult to detach from,” Harvey says.
As a business owner or entrepreneur, it is also easy to get sucked into believing you have to have new technology, systems and bells and whistles that maybe you don’t need – just yet. Spending goals for a business, just like a personal budget, are important if you plan to stay on track and not lose sight of where your money is going. Lord knows the money flies out the door when starting any new project.
Based on the Kakeibo system, there are some key questions to ask before buying anything that is nonessential (whether for your home or business):
- Can I live without this item?
- Can I afford it? (Based on my finances)
- Will I actually use it?
- Do I have space for it?
- How did I find the item in the first place? (Did I see it in an IG feed? Did I come across it after wandering into a store, am I bored?)
- What is my emotional state today? (Calm? Stressed? Celebratory? Feeling bad about myself?)
- How do I feel about buying it? (Happy? Excited? Indifferent? And how long will this feeling last?)
For Harvey, who learned about Kakeibo while living in Japan, using the system forced her to think more about why she was making purchases. And, she says it doesn’t mean you should cut out the joy of buying, just possibly making better choices when needing retail therapy on a crappy day. She found the small changes she was making were having a positive impact on her savings.
How to be more mindful when spending:
- See something you like, wait 24 hours before buying. Still need it?
- Don’t be a sucker for sales.
- Check your bank balance often. Can you afford what you’re buying?
- Use cash. It’s a different feeling having that money in your hand and letting it go.
- Put reminders in your wallet. What are your goals? Big trip. Then, do you really need new headphones, a bigger TV, a new iPhone, etc.
- Pay attention to what causes you to spend. Are you ordering every monthly service because of some Instagram influencer or, because of some marketing you get online. Change your habits, change your life.
Using the Kakeibo system of a notepad and pen or a Kakeibo book for the process can help you identify goals you have for the week, month and year and allow you to stay on track. Remember, cash is still king.
This story was first published here in January of 2020.