Kakeibo- Japanese Art of Money Management

Anything Japanese attracts eyeballs for a reason. They have been pioneers in setting up excellent systems  for execution of plans, which the world learns and implements. They have also stayed close to their tradition, much more than their counterparts in other parts of the world. The Japanese lifestyle has always been considered worthy of emulation.


  1. Let me take you back to November, 2016 – the month of Demonetization. Each individual could deposit up to Rs. 2 lakhs in cash, without being asked any questions.

Other than the usual suspects holding unaccounted money, women topped the list of holding cash. Housewives disclosed a lot of savings held in cash, in denominations declared defunct.

What exactly were they doing? They were saving for unforeseen expenditure, but did not know that savings need to be invested and multiplied. Cash does not grow or multiply on its own. They were losing the benefit of returns on investment.

But the intent was right. One needs to put away money for a rainy day. It was their financial freedom. It gave them the much-coveted feeling of financial wellness. They knew the art of money management.

2. Those of you born before 1980 might remember your parents writing down daily expenses in a notebook or diary, which was then carefully locked away.

3. My father had an interesting accounting system for purchase of clothes. Every month, a certain amount was set apart in our names (me and my brother) for clothes. The amount spent at any point of the year was deducted from the accrued amount, thus, creating a ledger account. Whenever we were struck by a desire to possess fancy threads, we had to ask for our outstanding balance in the account. That was our shopping budget.

School uniforms and shoes were not included in this. He had taken care to separate needs from wants.

I wish I had followed the system in later years. I could have saved a lot of money, but did not J. I succumbed to temptations like many of you do.


Kakeibo is the Japanese system of maintaining income and expense accounts in a diary.

The belief is that writing down something, creates a better connect with the subconscious, which rules our actions in a manner unknown to us.

The conscious mind is fickle, where data is constantly being replaced with new information.


The system is simple.

Write down your monthly income – salary, rent, monthly interest, pension. Exclude annual inflows like bonus, dividends on stocks etc. Save those for long-term investments.

Now, classify your monthly expenditure into sections




Utility bills

School and college fees

Amount paid to domestic help

Keep adding….

Eating ouBooks & magazinesSubscriptionsMedicinesContingency provisionInvestment on personal development and staying updated


  1. If both the sides match, you are in for trouble.

You need money to pay annual premiums

You need money to pay taxes

You need to save for financial goals

You need money for holidays and social occasions

What you need to do here is separate the needs from wants. It will pave the path to move further.

2. If income is more than expenses, you are good, but to what extent?

Your saving and investment plans will fall in this bracket.

3. If expenses are more than income

Consult a financial coach or debt management expert immediately.

You will need to augment income or reduce expenses. Learn how to do it.


Different versions of Kakeibo diaries are available online


Well, you are in a majority, if you find yourself asking this question.

You can create a digital version on an excel sheet and update it every day.

GoogleSheets has some formats. Elucidation of details calls for a separate article.

You can scan Google Apps for the Kakeibo app.


Monika Halan is a financial writer for Mint. She is also the author of Lets Talk Money. She manages a family and family finances.

She advises having three bank accounts – one for receipt of income, one for expenses and one for savings and investments. Once you have labelled the accounts, the temptation of mixing up the three elements is reduced.

The adage is no more

Income – Expenses = Savings.

It gets translated to

Income – Investments = Expenses

You are now on your path to financial freedom…..

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