Kakeibo and the $5.34 Rule: The Japanese Art of Saving Money

Taking a non-technological approach to finances sounds unheard of in this day and age of apps and Excel spreadsheets, but it might be exactly what you need.

Kakeibo, a Japanese word that translates to “household ledger,” is a powerful budgeting technique that manually records all financial transactions.

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“This method encourages a more mindful approach to spending and saving,” said Abid Salahi, finance expert and co-founder of FinlyWealth . “Individuals develop a stronger connection to their financial habits by physically writing down expenses, leading to more conscious decision making.”

Below, experts explain why this Japanese method of saving money is so powerful. Also see 25 creative ways to save.

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Kakeibo Creates Heightened Awareness

The power of Kakeibo lies in its simplicity and the heightened awareness it creates, Salahi said.

“When you write down every expense by hand, you’re forced to confront your spending habits in a very tangible way,” he said.

This act of writing serves as a moment of reflection, he explained, often leading to more thoughtful financial choices.

Salahi added, “I’ve had clients tell me that the simple act of having to write down a potential purchase has stopped them from making impulsive decisions, saving them hundreds of dollars a month.”

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It Helps You Internalize Financial Habits

According to Salahi, the physical nature of Kakeibo aligns well with how our brains process information.

“Studies in neuroscience have shown that writing by hand activates regions in the brain responsible for learning and memory in ways that typing on a keyboard does not,” he explained.

This suggests that the manual recording of expenses in Kakeibo might lead to better retention and internalization of our financial habits.

“In our fast-paced, technology-driven world, there’s immense value in slowing down and engaging with our finances in this more deliberate, analog way,” Salahi said.

He noted that Kakeibo isn’t just about tracking numbers and cultivating a mindful relationship with money. “It encourages us to pause and consider the ‘why’ behind our spending, not just the ‘what’ and ‘how much.'”

It Encourages Mindfulness

“I’m thrilled to see Kakeibo gaining popularity,” said Ant Tumi, personal finance expert and founder of Loan For Success . “In a world where money stress is so common, this old Japanese tradition offers a fresh way to take control of your finances, one thoughtful choice at a time.”

Kakeibo is all about being mindful of your money, he added.

“When you write down your income, expenses and savings goals each month,” Tumi said, “you create a real connection with your finances that you just can’t get from tapping on a screen.”

According to Tumi, Kakeibo is more than just a way to budget; it’s a lifestyle.

“It makes you ask hard questions about your spending habits and pushes you to find happiness in the things that really matter,” he said.

Some questions that might arise: Do you need that expensive coffee every day, or could that money be better used for experiences that make your life richer and bring you closer to your dreams?

“What I love about Kakeibo is how simple it is,” Tumi said.

He advised to grab a notebook and a pen and to be honest with yourself.

“First, set a savings goal for the month,” Tumi said. “Then, write down every single penny you earn and spend. As you fill up the pages with your money story, you’ll start to appreciate the power of spending mindfully.”

Kakeibo and the $.5.34 Rule Helps You Keep Perspective

“Here’s the part that really caught my attention,” said Tumi, “the $5.34 rule. Before you buy something you don’t really need, ask yourself if it’s worth the same as a typical Japanese lunch, which costs about $5.34.”

This puts your spending in perspective and helps you tell the difference between short-term wants and actual needs.

Nischay Rawal, CPA and founder of NR Tax & Consulting , is equally enthusiastic about this approach.

As a CPA, he highly recommends handwriting your budget, as physically recording each transaction makes you fully aware of your spending.

“One client was overspending $200 to $500 each month,” Rawal said. “After two months of a handwritten budget, she found unused subscriptions and renegotiated bills, saving $500 a month.

“The $5.34 rule builds savings without noticing,” he added. “Rounding up transactions and saving the extra adds up. A client funded a Hawaii trip with only excess change from her budget.”

Overall, he explained that handwriting your budget and using the $5.34 rule provide control and stability.

“A little time now saves money and stress later,” Rawal said. “Start with the basics. Then get fancy with apps, if needed. A budget on paper is simple but transformative.”

Tumi advised the same. “I suggest you try the power of Kakeibo for yourself. Pick up a notebook, sharpen your pencil, and start your journey to financial freedom.

“Who knows? You might find that the secret to financial success has been right at your fingertips all this time.”

This article originally appeared on GOBankingRates.com : Kakeibo and the $5.34 Rule: The Japanese Art of Saving Money