This Japanese Money Method Can Help You Save Money

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I am constantly finding new and creative ways to save money. Alas I bump into this Japanese method that helps one save money and even cuts spending by 35%. It might not be a relatively new idea since this was introduced way back in 1904 but its mechanics can still be used up to this day.

Introducing Kakeibo, pronounced kah-keh-boh. The translation is household financial ledger. This is a physical notebook where individuals write their spending patterns to save money.

While listing down expenses to a notebook or a diary is not new, Kakeibo has a more organized approach. The notebook that was created by journalist Motoko Hani has inspirational messages to encourage individuals to save and reach their goals. It also has spreadsheets to help you keep track of your cash inflow and cash outflow.

Image from Express UK

Kakeibo Mechanics

Every month, the individual will need to sit down with the book/ledger in order to plan this month’s finances.

The Kakeibo spending is divided into four categories. These are survival, optional, culture and extra.

These are the categories I am so delighted to know. And these basically covers more than our needs. Let us know each one in detail.

Survival Category. This category spans one’s basic necessities. This includes food, transportation, medicine, utilities and the like. 

Optional Category. This category covers more of the wants. This includes money for shopping, dining out and related expenses. The individual or the family can still go on with their lives even without spending a peso in this category.

Culture Category. This category might be relatively new to me but I like how this is categorized in culture. This is money intended for books, movies to watch, music to buy and the like. This is money allocated to enriching one’s self. And I personally love having this category included.

Extra Category. This category covers gifts, home repairs and related expenses.

The four categories above work very like the envelope system. The individual would have to allocate money for each of the category. For instance, if the money allotted for culture is depleted already for the month, you will have to wait for the next month for another round of budget. You must not use the money intended for the other categories.

Another great thing about the Kakeibo is that it asks reflection questions which are:

1. How much money do you have? 
2. How much would you like to put away?
3. How much are you actually spending?
4. How can you improve on that?

Even at the end of the week, there’s a reflection box in the ledger to review whether the individual is in the right track and meeting their targets.

How Kakeibo Helps You Save

With the help of the Kakeibo ledger, this will make you aware of what you’re spending on. You can even realize on the bad habits you’ve incurred for the month like excessive dining out. It is also a realization why you might not be hitting your saving goals and just wasting money month over month.

Kakeibo helps you pre-plan where your money goes. Your money is split in the four categories so you will know how much you can spend on for each.

Paying attention to your money is very essential in personal finance. Without it, you might not be able to reach your saving goals and your financial goals in general. Here is where Kakeibo comes in as it provides detailed notes on your money, where it goes, the way you spend and reflections in the end.

P.S To those doing the 52 Week Money Challenge, it is Week 4 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too. 

P.P.P.S I am also sharing my stock market secrets and information via these resources

New Year’s Financial Resolution: Creating a Sinking Fund

Image from dsouzalegalgroup

Throughout the year there are celebrations we get to enjoy and spend. There are even bigger purchases like buying a new car or a new appliance for the family. Because of the gravity of the amount needed oftentimes, some ends up in debt to afford the item.

However that should not be the case.

In order to guarantee that it won’t happen again, try creating what we call is a Sinking Fund.

Sinking Fund

According to Miriam Caldwell, “sinking funds are used to pay for large expenses that are planned. You may use different sinking funds to pay for home repairs, save for a new car, pay for your vacation or to cover large medical bills.”

This means setting aside money aside before using it but not necessarily touching your savings.

A good example of the use of sinking fund is celebrations like birthdays. We know when that comes and approximately the cost of doing one. Rather than busting your budget and draining your savings in order to do the event, you can opt to start creating a sinking fund for it.

For example, if a birthday would cost you around 10,000 and the birthday will be on October, that means you have 10 months to save up for the 10,000. Starting this month, save 1,000 and put it directly to your sinking fund for the birthday event. This guarantees that by October, you will indeed be getting 10,000. You end up getting the money less the panic and no debt in the process.

Sinking Fund and Emergency Fund

The Sinking Fund is very different from your Emergency Fund. An emergency fund is setting aside money for the unknown. These are during emergencies like accidents or suddenly losing one’s job. Usually the ideal emergency fund is 6 months worth of salary. With the sinking fund, you know where that money is for, how much you would need and when to use it.

Keeping a Sinking Fund

There are many creative ways to keep your Sinking Fund. You can use an envelope to store in the money or perhaps a piggy bank stash somewhere in your closet. Just make use that you can be able to easily get to it when the time comes. This would be dependent however on the amount. If you are creating a sinking fund in order to purchase a car or bigger money goals, it would be ideal to put it in the bank. At least there’s not much cash lying around in the house.

Getting Started with the Sinking Fund

Simply identify the events or goals you would like to get funded within the year. List down those items and make sure to include the probable cost and the date.

The next thing to do is divide the amount with the months. Like the example above if you need 10,000 for a birthday come October, you need to set aside 1,000 starting January.

Then, have a dedicated place where to put those money. You can have one envelope for the birthday fund, another envelope for the travel fund and so on.

Finally, save consistently. A sinking fund would prove helpful if you get to save in the first place. Which is why include saving in your calendar or make a habit of setting aside money.

Better start your own sinking fund right now!

P.S To those doing the 52 Week Money Challenge, it is Week 3 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too. 

P.P.P.S I am also sharing my stock market secrets and information via these resources

3 Steps to Make the 52 Weeks Money Challenge Easier and Faster to Complete

For the longest time I’ve heard individuals complain that the 52 Weeks Money Challenge is no joke. Yes, it start with little amounts but the amount you need to save will eventually increase each week. No wonder some failed to finish the challenge midway.

However, there are steps you can take in order to make the challenge bearable and easy. This guarantees that you can be able to successfully finish the 52 Weeks Money Challenge. As a bonus, I will even throw in a step to finishing it faster than the rest. You don’t need to wait for 52 weeks to reap your rewards.

Ready to hear it? Here are 3 steps to do.

Step 1: Start with the goal in mind.

The 52 Weeks Money Challenge can be difficult and even more a chore if you don’t have a goal. So ask yourself, why are you doing this? What will you use the money for?

These goals will help you motivated to do the challenge. Even if the amount keeps on rising each week, it wouldn’t be a bother since you will be using the end money for something great in the near future. You might want to use it as an educational plan for your kids or use the saved money for an investment for the next year and so on. Remember, no goals are small.

Step 2: Do the challenge with someone.

Two minds are better than one. In this case, two individuals or more are better than one. So instead of doing the challenge alone, it would be more fun to do it with someone. You can do the challenge with your spouse, your partner, your kids, or even the entire family. You can make it as a couple goal, or siblings goal or even a family goal. Just make sure that everyone is in the same page as Step 1 which is the goal.

Make everyone contribute to the amount no matter how small it is. Get someone involved in the challenge. It would be beneficial that someone will keep tabs on when to save and how much. He or she can also do the reminding and the collection. The 52 Weeks Money Challenge would be all the more fun.

Step 3: Save in advance.

There are some weeks in the challenge that the amount to save would be getting high. This could really take a toll in your finances. Which is why as early as today, start saving up for those bigger amounts. For example, if you choose to do the 50 Increment of the challenge, you can put 50 for Week 1 and put 1350 for Week 27. At least with this method, you finished two weeks already.

You can do this method especially if you are paid twice a week. Every month, you can save for four weeks and save for two more weeks in advance. At least when the time comes for you to save for those future weeks, it will be made lighter to your pockets.

The 52 Weeks Money Challenge can really be challenging. However, with few tweaks you can be able to make it easier and more fun on your end. Just follow these three steps for guaranteed success.

P.S To those doing the 52 Week Money Challenge, it is Week 2 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too. 

P.P.P.S I am also sharing my stock market secrets and information via these resources

3 Financial Resolutions You Can Follow this 2018

Image from coastalwealthmanagement24

Happy New Year fellow Kuripots.

New Year, new beginnings and new resolutions. I hope this time your financial resolution would be to become financially literate in the coming year. They say resolutions are very hard to follow but if you have realistic and bite-sized resolutions, you can most definitely achieve it. Not to mention, a little motivation can go a long way in realizing those resolutions too.

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