It is widely believed that the Japanese are role models in this regard Financial literacy. One of the techniques used in Japanese culture is Kakeibo. The term means “domestic financial ledger” in Japanese and consists of the daily recording of expenses and income received. Unlike modern apps that promise to organize users' financial lives, this technique only requires pen and paper.
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Anyone who decides to use Kakeibo must answer a series of financial questions, set savings goals and keep track of their expenses. This means you have a clear overview of your finances at the end of each month. Additionally, expenses should be broken down into pillar categories such as needs, wants, culture, and unexpected.
The method was developed in 1904 by journalist Habi Motoko and became increasingly popular among Japanese housewives. Kakeibo enabled them to effectively manage their household budget, reflecting cultural beliefs about the importance of saving money.
How is Kakeibo different from other financial methods?
What sets Kakeibo apart is that it takes into account the motivation behind the spending. By asking consumers to manually track their spending and answer reflection questions at the end of each period, the method promotes awareness of one's personal relationship with money.
Because hand practice is required, a more reflective approach is encouraged compared to automated methods where this data can be automatically entered into spreadsheets. By writing down every expense on paper, consumers become more aware of what they have done with their money.
In a world full of technological solutions, Kakeibo draws consumers' attention to simplicity and full attention in their financial decisions. While spreadsheets only aim to organize expenses and income, Kakeibo aims to change the mentality around money and improve the consumer's perception of expenses and needs.