The first step for every individual to embark on any financial journey, whether it be saving or investing, is to create a budget. Without creating a budget, it is impossible to develop any financial habit.
Why is a budget necessary?
Because without a budget, you won’t even have an approximate idea of how much money you’re getting in and how much you’re spending. Therefore, it’s important to get used to budgeting.
There are various methods of budgeting. Among them, the Japanese use a budgeting method called Kakeibo. Over time, the Kakeibo method has spread and become popular all over the world. People who budget using the Kakibo method say that their saving habits have improved. Let’s see how we can use this Kakibo method to budget and save money.
Kakibo Budget History
In 1904, Japanese journalist Hani Motoko created the Kakibo budgeting system. Kakibo was originally created for housewives to budget, but later became widely used by everyone.
Four categories
In the Kakibo budgeting method, you need to divide your expenses into four categories.
1. Essential expenses: The most essential, unavoidable expenses such as food, accommodation.
2.Discretionary Expenses: Your discretionary expenses; but expenses that can be avoided fall under this category. This includes things like buying a new mobile phone, eating out, etc.
3. Cultural costs: Going to the cinema, buying books, entertainment expenses, etc. fall under this category.
4. Unexpected expenses: Unexpected expenses fall into this category. This includes medical expenses, vehicle repairs, etc.