How the Chinese ‘4-Column Method’ Can Help You Save Your First $10K, According to Humphrey Yang

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Only about half of United States adults (51%) have enough money in savings to cover an expense up to $2,000, as per recent Federal Reserve data. Considering this, the thought of saving $10,000 might seem like a stretch.

But in a new YouTube video, money expert Humphrey Yang shared that it’s possible to save that amount using the four-column method. This ancient Chinese money principle not only changed the way he saves money, but it helped him save more than $10,000.

Here’s how it works and how you might be able to do it, too.

How the ‘4-Column Accounting Method’ Works

Humphrey Yang shared a savings technique that he’s been using for years, but that also existed back in the Tang Dynasty, which took place between A.D. 618 and 907. That’s well over a thousand years ago.

This technique is called the “four-column accounting method.” For this formula, create four simple columns:

• Column one (beginning balance): Take your savings balance at the beginning of the month.
• Column two (increases): Add any increases from full-time income and side hustles.
• Column three (decreases): Subtract any decreases (like expenses or debt payments).
• Column four (ending balance): This will be the ending balance.

As Yang points out, this is similar to the “zero-based budgeting system.” This is where you list out your income and expenses for the coming month before it starts. You’re essentially planning how you’re going to spend every dollar in advance.

But the four-column accounting method requires you to account for every dollar you spent in the previous month. It also makes you take an honest look at where your money went via accurate tracking. Once you have this data, you can use it to get a clearer idea of future months’ spending.

Example of This Savings Method

Here’s a simple example of how the four-column accounting method looks in practice:

If desired, break down your “decreases” further by listing your “needs” and “wants” into smaller categories — like “food” and “transport” and “credit card.”

Note: You can start this method at any point, though it might be easier to begin once a month at around the same time.

How To Use This Strategy To Save $10,000

Besides forcing you to take a good hard look at your finances each month, this strategy is also effective at helping you save money when you combine the following behaviors:

• Understand that you don’t need to keep up with the Joneses. When you no longer feel like you need to show off what you have, you can cut down on how much you spend unnecessarily. That extra money can go toward building your savings.
• Learn to live below your means. Just because you earn more than you need doesn’t mean you have to spend it. If you can live on a smaller percentage than you earn, you can save the extra and build toward that $10,000.
• Become a value-based spender. This means finding ways to get the most value for your money. Rather than buy something just because you can, or because it’s there, consider its worth. If it’s more expensive than it’s worth and you don’t need it, skip it.

As with any budgeting or savings method, the four-column accounting method takes time and persistence. You might need to keep at it for a few months before you get a clear understanding of your spending habits.

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