The Kakeibo and Japanese household budgeting tools

kakeiboasst.jpg

A few kakeibos, and Japanese womens' magazines with budgeting-oriented articles. Look for these words: 家計 (household finances), 貯める　(save money), 家計簿　(household finance ledger).

To kick off Frugal Food month, here is an article from the archives about Japanese household budgeting tools, which was supposed to be the start of a series - but then All Hell Broke Loose around Chez Maki, and the series sort of got forgotten. Well, the series will be revived this month, so in case you missed this one, here it is!

(Original intro: So why is there a money management article on a food site? Well, I think that the subject of our money is on a lot of people's minds these days, and food spending is a major part of that. An it's about Japan, and I know a lot of you read this site because it brings you bits of interest about my homeland. So, I hope you'll enjoy this little derail.)

Many people worldwide are concerned these days about the economy. While it's difficult for us as individuals to influence factors like what our financial institutions do, we can control where our money goes. While this topic is not directly about food, I thought it might be interesting to see how Japanese people handle household budgeting.

Why look at what Japanese people do? For one thing, Japan went through a severe economic correction (aka the "bubble economy") in the late '80s, largely in part due to overvalued real estate and resulting defaults on loans, which lasted well into the '90s and even fundamentally changed the way Japanese society works. While the current Japanese stock market, yen, and banks are on a wild and bumpy ride just like the rest of the world, individuals (except for those who invested in stocks, currencies and such) on a whole seem to be a tiny bit less worried than people in North America or Europe. This may be because saving rates in Japan are amongst the highest in the developed world, estimated to be around 25% of income (though that has fallen from previous savings rates of 30 to 35%; in contrast, the saving rates in the U.S. average around negative 0.5%), or simply because household budgeting skills have been talked about for quite a long time.

The wife is in charge of the household budget

In the West, money is considered to be the domain of males. This is not the case in Japan. In a typical Japanese household, the wife (who may or may not work outside the home) is firmly in charge of the household finances. She decides on how the money is spent, how to plan for big ticket purchases, even in many cases how money is invested. Financial products are often marketed with 'cute' themes, to appeal to a female audience. (See the cute kakeibo in the picture above).

The kakeibo, the household finance ledger

The 家計簿　(kakeibo) is the essential tool used by any money-savvy Japanese household budget manager. Kakeibo literally means household finance ledger. You can buy all kinds of kakeibo (here are the Amazon Japan search results for 家計簿). While there are several kakeibo software packages, Excel templates and the like, hand-written kakeibo are still popular. Many magazines aimed at housewives include a giveaway version as a supplement in their December issues, for use in the coming year.

A typical kakeibo has:

  • A monthly summary page, where monthly income is noted, and monthly budgets and savings/loan repayment goals are set.
  • Weekly pages (or 2 pages per week) with expense and income categories on the left, and daily columns.
  • A section for planning for irregular or unexpected expenses
  • A yearly summary section.

A truly diligent budget manager/housewife diligently keeps up her kakeibo every day, noting down items in each budget category, but there are alternative kakeibos and kakeibo methods out there for lazier people. Here's the cover of a kakeibo where the user can just stick on receipts for example.

kakeibocover1.gif

I know that it's a lot easier to use personal finance software, and in a bank account, check, and credit/debit card reliant society like the U.S. for example, it may make better sense, especially if you can automatically import your information online. But there's something to be said for actually writing down amounts by hand too: it may give a more tangible sense of how you're spending your money.

Focus on food costs

One thing that all kakeibos focus on is food costs, since food spending is both one of the biggest budget categories and one of the easiest areas to cut down on costs. Rather than lumping every eating purchase and activity into 'food' as a category, the kind of purchase or activity is sub-categorized too. Traditional kakeibo categorize food purchases by the nutritional type: carbohydrates, meat and fish, dairy and eggs, vegetable and fruit, etc. It also serves as a way to see if food purchases are balanced health-wise. More recent, easier kakeigo may divide it into larger categories like regular food, fun food (snacks and drinks), eating out, and so on. There are kakeibos that combine budgeting functions with meal planning and recipe tracking too.

Cash envelope budget management

In Japan, most people get paid by direct deposit (checks are rarely used by anyone) and pay things like utility bills electronically. But for other household spending, cash is still the king. One often recommended budgeting method is to draw out the cash you need for a week or a month, depending on how you manage your budget, and physically divide it into envelopes that are marked by spending category. Once the cash in an envelope is gone, it's gone - no cheating afterwards. It's a remarkably effective method - it almost becomes a game to try to have as much money left over at the end of the month. And having your money in your hand, rather than as numbers on a screen or a piece of printout paper, makes it much more tangible.

Another cash-oriented saving trick (which isn't that uniquely Japanese really, but is very popular there) is the coin saving method. At the end of every day, extra coins are put into a piggy bank or a jar, and when there's enough accumulated, it's either used for buying something extra or deposited into a bank account. Japanese ATMs even have coin deposit slots.

This is just a brief overview of the budget management methods discussed ad infinitum in Japanese magazines, books and blogs. Next time, I'll talk about my favorite Japanese how-to-manage-money book for money dummies like me. (Update: Here's my review of the book.)

Submitted by maki on 2009-04-01 15:33.
Filed under:  essays japanese budgeting

Comments

Passionate Eater

31 October, 2008 - 14:06

Dear Maki,

I am visiting Zurich with my husband and so far have gone two of your recommended locations with great success! I loved the farmer's market in the train station and also have really enjoyed every snack at Sprungli. Thank you so much for your incredible blog (which I used as an indispensible resource). Best wishes!

Avlor

31 October, 2008 - 15:11

How cool! This is so timely.

I adore the envelope system - it's the only way I can keep from overspending. Though I use software to track our $ via the envelope system. It really is helpful to have to see how much $ goes where after each transaction/receipt.

I still find it amazing that the Japanese save about 25% of their paychecks. I wonder how much of that is for the future/retirement and how much is for future expenses (like our property taxes, replacement cars, etc).

blacklilly

31 October, 2008 - 16:02

Hi Maki,

Thanks for Just Hungry and Just Bento. They've been little lifesavers as I've started taking bentos to work, instead of buying one each lunchtime. 400-600 yen a day on lunch is too much! I also like wowing my colleagues with my onigiri and furikake!

Further to your article, I've been living in Japan for two years now and the emphasis on paying for things in cash has been quite liberating. Though I still have a credit card, I rarely use it anymore, and have got used to living on the money I have left after I pay off all of my obligations!

The ability to save a large percentage of your income still alludes me for various reasons, but "wife-power" is definitely the most effective way. My friend recently married, and within two days of his wedding was being made a bento and given 1000yen a day to live on by his wife. He seems to quite enjoy it so far, despite having to beg bottles of tea of off people when the money runs out! Apparently he's saving nearly half of his paycheck every month this way!

The envelope system sounds good. I'm going to give it a go!

Thanks!

SBS

31 October, 2008 - 16:25

My mother used this method, as I recall, back in the 1940s, 1950s, 1960s, etc., for the household expenses. She had been a bookkeeper; my father was an accountant. Also, in those days, people saved for a major purchase rather than build up debt as today. Her own mother's comment was typical of those days: "If you have carpets on the floor, you don't have money in the bank." Japan's tax laws favor savings, unlike present USA laws, so Americans must adopt to how Congress wants to tax and spend our money instead of leaving it up to us and our own good sense. It's not an innate virtue of Japanese to save -- and not Americans -- but rather favorable or unfavorable tax laws regarding savings. We'd rather have it the other way around, too!

z

31 October, 2008 - 22:34

Interesting! The kakeibo you write about sound similar to the Migros Haushaltungsbuch that are available for CHF 5.80. Have you seen those?

By the way, I hope your house move and all have worked out nicely.

z

31 October, 2008 - 22:41

[Sorry if this is a duplicate comment, can you delete it if it is?]

The kakeibo sounds like the Migros Haushaltungsbuch that is available for CHF 5.80 along with all the other agendas around this time of year. Hadn't seen anything similar in the US and I was rather tickled by the concept which seemed so dated. A good idea though.

Sherri

1 November, 2008 - 17:19

I agree that this is cool. Any links to English versions that I can print out? I like the focus on food since that's where a large portion of our budget goes...

Lydia

1 November, 2008 - 23:10

What a great post, thank you for sharing the subject with us. I found it very interesting and full of great ideas. I wish these household ledgers were available in English!

purpleshoes

7 November, 2008 - 19:09

Seconding (thirding) the wishes that these came in English - hey, maybe that could be your next big break! (You could teach corporate seminars on how "kakeibo" is an ancient Japanese philosophy meaning "don't spend all your money and go broke" :D )

Kathleen

7 November, 2008 - 23:03

Hi,

I came across your blog recently and just wanted to say that I really like it! I am definitely going to try a bunch of your recipes. My mom is Japanese and Japanese food is my favorite type of food ever. I am also an expat (Ecuador).

This is a great article. I think it's awesome that Japanese women take care of the household finances (my mom didn't because my dad was of a different mentality). Unfortunately my husband is not thrilled with the idea of me running the finances either. I will follow these tips for myself though. I have a tough time cutting down the grocery bill since hubby eats so much meat!

It's interesting how you say Japanese people save so much yet how low the interest rates in Japan are in comparison to say, the U.S. My mom complains about that and saves her money in CDs, IRAs, and an MMA with her US account.

anon.

25 November, 2008 - 06:14

I thought I'd comment on a societal difference you probably didn't even consider when proposing the envelope method. When I go to Japan (sometime next year), I will be sure to use it. Hopefully it will be a good way to keep from overspending on food and the like.

Many Americans would never use such a method for a very simple reason. If you get robbed, you have now lost a whole month's worth of salary. Ouch. I'm sure people living out in the rural, less populated areas don't experience much crime, but imagine someone living in a highly urban area. That's also the reason many Americans don't walk around with a thick wallet of cash like the Japanese do.

purpleshoes

1 April, 2009 - 17:24

After you posted this the first time, I went out and got a folio notebook and tried the envelope thing (withdrawing just a week at a time, and still paying my big things by check or debit). The good news is, it got my spending down to the maximum amount of money I put in all the envelopes (mostly, if I hid my debit card at home). The bad news was, first, I kept pilfering all the other envelopes for meals out, and second, in the end I left it on top of my car with 80 USD in it and drove off at a gas station.

... I never found that again. Not my proudest day. So the envelopes don't work that well for super-forgetful people like me! But I have had luck doing a spreadsheet with "virtual envelopes" and trying hard to keep my debit-card use for each category within those limits. Though again, if you're like me and not great with financial discipline, carrying just enough cash for what you need in a day, and a hearty packed lunch, and leaving the debit card at home isn't always a bad plan.

Verdandi

2 April, 2009 - 12:45

Interesting! This reminds me of a Japanese acquaintance who used to joke that he submits a "budget proposal" to his wife when he wants to get electronic toys. Now, I know why he said that.

Nina

3 April, 2009 - 14:06

Thanks for posting this!! I have been looking mysteriously at all the kakeibo in Japanese bookstores, and wishing there were a cute one that's in English, because I'd like to try the Japanese way of accounting... I much prefer handwritten to spending even MORE time in front of the computer. =)

Any leads to 英語家計簿？　お願いします！！

Mrs. Leon

3 April, 2009 - 16:24

I am a married, working, American woman living in Japan and I have been doing a combination of Kakeibo and the envelope method for a while now and I love it.

The Kakeibo I have seen are just a little too detailed for me, so I made my own simple version on excel. I update my handmade kakeibo about 3-5 times a month. Usually at the end of the month when we get paid and when all of the bills arrive. I even give my husband a monthly allowance.

The funny thing is, when we meet other Japanese couples... the men, including my hubby, are always joking that their wives have all the money and how the husbands are always having to beg for a little pocket money. LOL!!! It doesn't matter if the guy is just married, a teacher, a CEO or retired engineer... they are all at the mercy of their wife's designer pocketbooks! HAHAHAHA!!

dianne5

6 April, 2009 - 06:02

Since my spouse and I recently retired and are trying to learn how to live on a fixed income, Maki's Japanese budgeting ideas are ones we'd definitely like to utilize.

We do have one practice that is something like the Japanese end-of-the-day piggy banks that Maki described: the spare change or "found coins" bottle. Ours used to be an oddly shaped glass pomegranate juice bottle that I liked too much to put in the trash. That eventually broke or got lost, and now I'm using a gallon-sized, cheap glass florist's vase that I also couldn't bear to toss out. The truth is, my husband and daughter drop coins all over the house, and I'm always picking it up after them. I hate carrying around change in my tiny purse where it will scratch my sunglasses, so at the end of the day i just fling mine in the jar too.

First time the pomegranate juice bottle filled up, about 4 years ago, my college-aged daughter claimed the contents to decorate her apartment bedroom; next time, my husband announced the $$$ in the jar was too significant an amount to squander, so he was taking control of it to spend it on "something important"--like a bill. But he didn't; he just put it in the family bank account and who knows what it got spent on. Since those two raids on the original pomegranate juice bottle, it has taken the big florist's jar a year or two to get to a level where it's almost full, and I've announced that next time it does, it's my turn to decide how to use the contents. Oddly enough,given their previous actions, this time no one in the family has had the moral authority to disagree with my announcement, so the jar just keeps on growing heavier. It's actually getting hard to pick up!

I plan to use the money in it for an extra charity donation. Sure, there are a couple of charities I donate too regularly, but I usually feel that I can't afford to give as much I should or as much as I'd like to, and I worry about that.

This jar is a fairly guilt-free way to set aside a little more to help someone out. It doesn't matter how long it takes the jar to fill up because sooner or later it will be full of money that my family was actually able to do without at the time I picked their change up off the floor or scooped mine out of my purse at the end of each day and threw it in the jar. Meanwhile I'm getting a lot of warm fuzzies thinking about how we will be able to use it to help somebody, and I have been worrying a lot less about the paltry size of our more regularly budgeted charity donations.

municipalww

25 March, 2011 - 16:10

I am preparing a website and blog on environmental accounting housekeeping (EAH) books of municipal wastewater. I am interested in your article and introduced it in my blog. Thank you. Yoshiaki

Laura

2 January, 2012 - 08:08

It is interesting! Thanks for the information.
My husband and I use an expense management software that helps us to record and categorize expenses and then helps us with analysis the expenses. It helps me to budgeting accurately. I use Costsbook it is so simple and not complicated at all. You can see yourself
http://www.costsbook.com/?lang=en

Derek

31 January, 2013 - 19:45

What an awesome blog. I've always been fascinated by Japan, its people with their unique culture and way of thinking that spiked tremendous interest. I'm a contract worker and that's why I happily accepted a job in Japan when I was offered one. Back home I used to keep track of my daily expenses using this nice online budgeting tool inexfinance.com. I'm still using the software after having moved to Japan and I find it immensely useful, since it allows me to manage my personal finances in dollars and yens at the same time. It's cool, since thus I can keep an accurate record of all my expenses in their original currency.

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