Managing routine monthly expenses to meet all basic needs, from food and drink and accommodation to monthly household expenses, definitely requires a wise strategy. Everyone may have a different way of managing their monthly expenses. Well, there is a Japanese-style method of managing finances called Kakeibo.
Introduction to Kakeibo
The Kakeibo method basically invites us to record every detail of the expenses we make each month. This technique was first introduced by a journalist from Japan named Hani Motoko in 1904. This method has been widely practiced by housewives in Japan since ancient times who played the role of treasurer in managing household finances.
Kakeibo became popular again after the successful release of a book titled Kakeibo: The Japanese Art of Saving Money, written by Fumiko Chiba, a Japanese writer.
Benefits of Kakeibo
Kakeibo, a Japanese budgeting and saving method, offers several key benefits. It helps increase awareness of spending habits and patterns, which leads to a better understanding of personal finances. Kakeibo encourages financial discipline and discourages impulse purchases, making it easier to achieve financial goals. The method can also reduce financial stress and promote mindfulness, leading to a more intentional and thoughtful approach to money management. By following Kakeibo, individuals can create a clear and achievable budget and build up savings over time, ultimately leading to a sense of financial peace and security.
How to Set Up a Kakeibo Journal
Let’s take a look at the tips for managing finances the Japanese way using the Kakeibo method below:
1. Recording All Monthly Income and Expenditures
The first step is to record all the income we receive each month, whether from active income (work results), passive income (results from investing), or the results of certain productive assets that can be an alternative to additional revenue.
2. Set Money Out for Emergency Funds and Cold Funds
An emergency fund is a savings fund we set aside regularly every month from an early age as a precaution if we lose our primary source of income one day. Suppose there is a natural disaster/disaster, layoffs, or a business that is owned goes bankrupt, then we can still “make a living” from this emergency fund. As the saying goes, “prepare an umbrella before it rains” before an emergency occurs, prepare an emergency fund early on. After the emergency fund is safe, the next thing that is no less important is setting aside cold funds to start investing! Because only some of the income we receive can make everything we want to come true. Moreover, from time to time, basic needs continue to rise due to inflation. Therefore, it is essential from an early age to start being aware of routinely investing with cold funds.
3. Planning Expenses for the Next Month
After emergency and cold funds have been safely set aside, we must carefully plan what needs to be spent for the next month. We need to group expenses into several segments as follows:
- The need for survival is a primary expenditure that is mandatory to be fulfilled, such as eating and drinking daily, paying for housing/house installments, paying for electricity, health, children’s education costs, and so on.
- Desire needs, this secondary expenditure is not mandatory and can be postponed at any time. For example, buying new clothes or gadgets, trying to eat at restaurants recommended by influencers on social media, or hanging out with friends over a cup of modern coffee at our favorite cafe.
- Cultural needs, namely spending that is relaxing in nature but can also generate added value (value added) to be more productive in the future. For example, occasionally self-rewards wisely, namely by appreciating the achievements that have been achieved while driving away fatigue from the hustle and bustle while working. This is important so that the body-soul-mind becomes fresh again to start and carry out the following routine. In addition, we can also take self-development training or specific training to increase the ability (skills) to support work while adding new experiences and insights. It could also create opportunities for entrepreneurship.
- Additional (extra) needs, this post is a cost that cannot be planned routinely. For example, expenses to buy wedding gifts for friends/relatives, renovating houses, repairing vehicles if they are damaged, and others.
Conclusion
Being wise in prioritizing your monthly plan is the smart way! Because the income we receive may only be able to fulfill some of what we plan. Spend less, Save more! If excess funds are left over from income, save the money for more useful purposes in the future or increase the allocation of cold funds as capital to invest in stocks regularly from an early age with CGS-CIMB Sekuritas Indonesia.
