The Olympics in Tokyo this year have all eyes on Japan, bringing the island nation’s culture into the global spotlight.
One of the amazing things about Japanese culture has always been their devotion to process and discipline. It seems that there is a well-thought-out, agreed upon way to do almost everything in life from running a business to folding laundry. Fortunately for our financial lives, this includes a Japanese method of budgeting called “Kakeibo”.
Kakeibo focuses on mindfulness in finances and connecting our financial lives with our overall life. That is music to my financial planner ears.
The practice focuses on keeping a physical financial diary of income and spending. This makes your transactions feel more real and connects you more to your finances. It then has you break down your spending into categories, so you can see where your money is going.
After you gain this awareness of your income and spending, it is much easier to set financial goals for yourself in the short term and long term.
I’ll let you read up more on the details of Kakeibo if you want, but the thing about this concept I think is useful to everyone is being familiar with your cashflows. You don’t even have to change them, just know what they are. This is really the first step to setting up any successful financial plan and will inspire confidence in all your financial decisions. This awareness can also really help take the stress out of budgeting, which is a major hang up for many retirees.
Many people try to start with a budget, which is putting the cart in front of the horse. Being familiar with your spending habits can help you set up future cashflows that feel comfortable and natural. If you think of it this way, then a budget no longer feels like a restraint on your spending it is just another goal to meet in your financial plan.
So maybe in the Olympic spirit we should give this a whirl and see what we learn about our finances. This way of showing support for the Tokyo Olympics is much more financially sound than the route I have taken thus far which is impulse buying Japanese cutlery online. Hey, I never said I liked budgeting, just that it’s a good idea.