The $5.34 Rule: The Japanese Art of Saving Money (Kakeibo)
Picture this: an ancient Japanese tradition meets modern spending habits and offers a refreshing perspective on saving money.
Enter Kakeibo (pronounced “kah-keh-boh”) — Japan’s secret to mindful money management and the key to unlocking a savings mindset.
Understanding Kakeibo: A Century-Old Financial Guru
Rooted in Japan’s rich cultural tapestry, Kakeibo translates to “household financial ledger”. Its inception can be traced back to 1904, pioneered by Hani Motoko, an icon for being Japan’s premier female journalist. Instead of employing the latest finance apps or software, Kakeibo stands out in its commitment to pen and paper, advocating for a hands-on approach to budgeting.
How to Do It
The best way to do this, according to YouTube finance personality Erika Kullberg from the video ‘The Secret Money Saving Rule — Learned in Japan‘, is to start out getting a Kakeibo ledger (or just any old random notebook/notepad) and, as Erika says, “write down how much you want to save for the month, and what you need to do to make this a reality”. You can then write down your weekly spending, calculating each week to attempt to reach your goal.
Kakeibo is all about discipline. Kullberg continues in the video, stating, “I used to mindlessly buy a snack at a convenience store, like I was on auto-pilot. As I started writing these purchases down daily, I realized I would spend about $2 on these snacks, leading to a $64 a month snacking habit, the same price I could be using for the month on gas or groceries.”
Why $5.34?
Erika Kullberg also notes in her video, “This is where $5.34 comes in, it’s not about setting aside $5.34 daily or weekly, but instead writing down your purchases, and making savings a priority that can save you around $5.34 a day.” The $5.34 rule is about the representation of recognizing small, seemingly inconsequential amounts and realizing their potential over time. In essence, saving as little as $5.34 a day can accumulate, and alongside the Kakeibo method, it can lead to significant savings overtime.
Embracing The Questions That Count
Sarah Harvey, author of “Kaizen: The Japanese Secret to Lasting Change” wrote for CNBC about Kakiebo stating, “In order to see significant results in your savings, it’s important to stay committed in asking the right questions before making any non-essential purchases.” Here are some questions to ask yourself by Sarah and inspired by Sarah from CNBC, that encourages helping you decide if that little treat is really worth it in the long-run:
- Do I truly need this?
- Is it financially wise to get it?
- When will I use it?
- Do I have a place for it?
- What sparked my interest in it?
- What’s my emotional state right now?
- How will buying it make me feel, and for how long?
Strategies Inspired by Kakeibo:
Sarah Harvey states further with CNBC, on the strategies important to Kakiebo, writing, “In order to see significant results in your savings, it’s important to stay committed in asking the right questions before making any non-essential purchases.” Here are some strategies by Sarah or inspired by Sarah when using the Kakiebo method:
- Pause Before Purchase: Allow a 24-hour window before purchasing an item. If after a day you’re still drawn to it and can financially justify it, then proceed.
- Resist Sale Psychology: Deals can be enticing, but it’s crucial to evaluate if you’d want the item at its original price. If not, maybe that “deal” isn’t worth it.
- Daily Balance Checks: Familiarize yourself with your account balance. A daily check can enlighten your spending habits and make you more intentional.
- Cash is King: There’s a certain finality in handing over cash. Utilize it to make your spending more tangible and deliberate.
- Wallet Reminders: Annotated cues or stickers on credit cards can act as deterrents to impulse buying.
- Rethink Your Triggers: Recognize what spurs needless spending – be it marketing emails or social media influencers. Altering these patterns can reduce impulse purchases.
- Allocate For Treats: Remember, Kakeibo doesn’t aim to remove all joy from spending. Occasional treats are encouraged but should be rooted in mindfulness.
The convergence of the Kakeibo method and the $5.34 rule underscores the beauty of integrating age-old wisdom with contemporary practices.
Together, they promote financial growth and a heightened sense of fiscal responsibility. Embracing these principles doesn’t just foster a healthier bank account but cultivates a holistic financial wellbeing.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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