Kakeibo: The Japanese Budget Makeover You Never Knew You Needed

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Asian man writing in his kakeibo: the japanese budget journal

Set and follow a budget, live within your means, and save money. These are all common suggestions for how to improve your finances.

But actually making these changes, and making them stick, can be a lifelong challenge. It’s even more frustrating if you’ve tried to budget, only to fall on your face.

If this sounds like you, it might be time to try the pen-and-paper method of “kakeibo” (pronounced kah-keh-boh), a Japanese word that means “household ledger.” A kakeibo budget provides a simple and flexible structure to money management.

4 questions to create a kakeibo budget

Kakeibo is an analog method of budgeting that’s been used in Japanese households for over 100 years. It combines elements of keeping a money journal, a planner, and a ledger all in one. This creates a system that helps you set, track, and achieve savings goals.

To get started with a kakeibo budget, you’ll need a notebook or journal. You can start with a blank notebook, or you can find a kakeibo journal such as “Kakeibo: The Japanese Art of Saving Money” by Fumiko Chiba.

Once you have your kakeibo journal, you’ll use the following four questions to guide your budgeting each month.

1. How much money is available?

The first question is how much money you have available. To figure this out, you’ll need to list these amounts in your kakeibo journal:

  • Monthly net income: Get your most recent pay stubs to find out how much money you take home each month.

  • Monthly fixed expenses: Next, review all your expenses and record the monthly amount of each fixed and recurring cost, from rent to your Netflix subscription.

Once you know your income, you can subtract your fixed expenses to find the money available to spend or save, also called your discretionary income.

2. How much do you want to save?

Now that you have the bare bones of your kakeibo budget, you can start fleshing it out. For this step, you’ll need to decide how much of your discretionary income to save.

It can be tempting to try to save 100% of your discretionary income, but it’s not usually realistic. Decide on a savings goal that’s reasonable given your usual spending. It’s also best to shoot for a concrete amount, such as a dollar amount or percentage of your discretionary income.

Besides setting a savings target, try attaching it to a bigger goal or reason to save. Are you carving these funds out of your budget to make extra payments on student debt? Will they help fund a small getaway in six months? Writing down why you’re saving will help you stay motivated as you follow the kakeibo method.

3. How much are you spending?

Another important part of keeping a kakeibo budget is recording every dollar you spend. Every time you hand over cash or swipe a card, you should write the expense down to the cent in your kakeibo.

The kakeibo method also includes some categories that can be helpful to identify needs versus wants:

  • Survival: These are usually expenses that are nonoptional but can fluctuate from month to month. This category would include your grocery budget, gas, utilities, and similar costs.

  • Extra: What about those one-off costs, such as holiday spending or a repair for your home or car? These expenses would be grouped here.

  • Optional: These are your “wants” — purchases that are nice to make but could be cut back if needed.

  • Culture: Most of these would also be considered wants, not needs. But the kakeibo method has a category specifically for purchases that enrich you and your life, such as hobbies and interests.

The simple act of reaching for your kakeibo notebook and recording an expense can make you more mindful with your money. And this increased awareness of your spending will help you get a firmer grasp on where your money is going, for better or worse.

4. How can you improve?

The final question prompts you to consider more that you could be doing to improve your finances. Besides following the general kakeibo budget, identify a small and realistic money goal you can make.

If you already have a starting point, you can commit to change in the first month. You might choose to cancel one or two outdated subscriptions to avoid the monthly fees. Or you could decide to cut back on going out for lunch or lattes. Starting small and simple is key.

As you get going, you can also use your spending records to identify new areas for improvement. You can reflect on your wins, note any slips, and decide what to try each month to save a little extra.

If you’re intrigued by the kakeibo method, give it a try. It’s a low-cost, low-commitment budgeting method. And you can use it to work toward almost any money goal, from paying off debt to saving more for retirement.

With your new kakeibo notebook in hand, you’ll build healthy money habits and take control of your finances.

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.