Before currencies and money existed, people used to trade animals, food and time for
other services or things. It wasn't until 5,000 years ago that the first currency was introduced:
The Mesopotamian shekel. Since then, people have associated money with many things.
Some think money is evil, while some think it's a force of good and makes trading easier.
While not everyone will agree on this, nor the best methods to earn, save, and spend money,
many knowledgeable individuals have shared their perspectives over time.
When the world's fourth wealthiest person talks about money, it's wise to listen to
what they say. Warren Buffett's simple yet powerful advice is, "You'll never get around
to saving money if you don't make it a priority. It also won't be there when you need it. But,
on the other hand, you will never be sorry if you start and stick to a savings strategy."
Everybody knows that the US has a lot of debt, and according to the Federal
Reserve New York District, US household debt is currently $15.6 trillion USD.
On the other hand, Japanese household debt presently stands at $2.86 trillion USD.
This data tell's us that, Japan's household debt is about half that of the United States
when the population is taken into account. So, the question is: What's going on?
To truly comprehend the differences between Japanese and Western views about money,
spending habits and personal finance,
we must first consider Japan's history as a predominantly: Agrarian culture.
An agrarian society, or agricultural society, is any community whose economy is based on producing
and maintaining crops and farmland. Agrarian societies have existed in various parts of the
world as far back as 10,000 years ago and continue to exist today. Back then, Japan had a caste
system. During wartime, this system was simple, but peacetime brought intriguing modifications.
During peacetime, the merchant class, one of the lowest in the caste system,
had a surge in commerce. Their initiatives helped Japan's economy grow.
As a result, they earned money, and a lot of it.
While money and influence are rewarded in the United States with prestige, successful
merchants in Japan go undetected. Because of this lack of recognition, money and prosperity
were stigmatized. And this stigma still exists in Japan. This powerful Japanese philosophy has
kindled a new attitude toward money in countries like the United States and the United Kingdom.
Many Japanese people place a premium on power and influence over money.
Wealthy individuals in Japan don't flaunt their money because of the wealth stigma,
and the collectivist focus on fitting in with the population. In Japan, it's common to be
neighbours with a multi-millionaire and not realize it since their house looks like yours.
Simply put, ostentatious spending is frowned upon in Japanese society.
In contrast to the West, Japanese individuals have no societal compulsion to display their riches.
It's not unusual in the United States to see people living above their means to project a
specific image of themselves to the world. As a result, many people find themselves
living paycheck to paycheck and unable to save money, resulting in substantial debt.
The Japanese have very different spending patterns than Americans.
The Japanese elite are not known for their extravagant spending.
As a result, their wealth can increase, and they can live off the interest earned on their money
and assets. Japan's upper elite prefers to live simple, thus benefiting their finances.
Despite their apathy for opulent lifestyles, affluent Japanese people
prefer to purchase domestically rather than overseas for things like vacations,
fine art, and wine. This helps the economy by keeping money in Japan and in circulation.
Other differences can be seen when looking at Japanese personal finance and spending habits.
One significant difference is that Japanese children are taught personal finance from
an early age. Their parents instil in children, the value of saving money
and the advantages of deferring gratification from purchasing.
Japanese parents educate their children on the importance of saving and the penalties
of not doing so. They also advise their children against taking out loans from others
(including banks). As a result, Japanese youngsters begin saving money at an early age.
Another noticeable distinction is that most Japanese transactions are made with cash
rather than credit. According to Statista, In 2022, 40.4% of all consumer purchases in Japan
are and will be made with cash. By contrast, US cash spending is 34%.
Paying with cash has psychological advantages. You see, when you pay with a credit card, you
don't see the full impact of the purchase on your accounts. However, with cash, you can see and feel
the worth of what you're buying. This phenomenon makes you think carefully about your purchases. As
a result, you become less willing to spend money - thus helping you save money. This psychological
phenomenon helps explain why Japanese people are better at managing their money.
This isn't to imply that Japan is better than the United States or that Americans aren't as clever.
What it boils down to is a cultural and historical variable.
Neither is exceptionally wrong or right, and both approaches have their advantages.
One thing is apparent in this day and age. With the growing cost of living in the United States
and the ever-present debt threat, now could be a good time to borrow a page from Japanese culture.
We could all be saving a bit more money.
The Japanese are known for Kakeibo: their ancient and effective manual way of saving money.
Kakeibo is about more than simply saving money; it's about getting to know yourself
better and simplifying your life. Kakeibo is a three-principle accounting system:
1: Kakeh - Shsei, or keeping track of your income and spending.
2: Keshiki - Seiri, or organizing your monthly expenses into key categories.
3: kekka – Kaiketsu or setting a suitable budget for each category.
Kakeh - Shsei :Why track your money manually?
Although using an automatic budgeting tool may be more convenient, you are more likely to process
the information you record by hand-writing. According to a research published in Psychological
Science, students who took notes in class using longhand, were better at answering
in-depth conceptual questions on a subject than students who took notes on laptops.
Manually noting your goals, especially financial goals, can also help you attain them. For example,
you create an easily accessible record of what you want to save
if you spend a few minutes each month thinking about and writing down what you want to save.
The act of writing something down can help you remember it. For example, as you write
down your goal to save $100, you analyze it and begin to consider how you might accomplish it.
This could be the catalyst for taking the steps necessary to achieve your goal.
How Can You Include Kakeibo In Your Life?
Kakeibo is based on a simple concept.
In the same way that journaling your food intake gives you awareness of your eating patterns,
Kakeibo helps to bring attentive awareness to the budgeting process. Kakeibo is a Japanese word
that means "journaling" or "documenting." Therefore, it works with pen and paper.
The first step in Kakeibo is to become conscious of your financial situation.
This entails keeping meticulous records of your expenditures over a specific period. The goal
is to integrate the procedure into your everyday habit, similar to journaling. Before creating a
budget, most financial gurus advise keeping track of your spending and income for at least a month.
The kakeibo practice is about keeping track of your expenditure and income.
The Four-Category Spending Habits System
A kakeibo is a basic ledger that many people find rather brilliant.
After tracking your spending for a month, you may divide it down into categories.
Kakeibo allows you to keep track of everything you buy and organize
your finances by categorizing purchases into four categories:
1 Necessities: Essentials such as food, toilet paper, and toiletries.
2 Wants: Items you want but don't need, such as a takeaway lunch or a new pair of shoes.
3 Culture: such as books, museum visits, and vacations.
4 Unexpected: Unexpected expenses, such as a doctor's visit or auto repair.
The four-category strategy can help you become more aware of your spending patterns
and prevent wasting money on items that don't contribute to your objectives.
What Are the Benefits of Using Kakeibo?
Its focus on mindfulness sets it apart from other budgeting methods, making it an excellent fit
for individuals who want to make sure their money goes to things that make them happy.
For example, it encourages monthly savings goals that are achievable, it encourages saving small
amounts of money every day rather than large sums on rare occasions, and it celebrates little
victories. However, it's necessary to remember that you may still buy non-essential items.
Kakeibo is about practising awareness to avoid making purchases that will only
provide you fleeting enjoyment. It doesn't matter if you want to get out of debt,
save more money, or become a billionaire; all of these things need sound financial habits.
Everyone wants to be in good financial shape. However, to be successful,
you must have systems in place that describe the steps that will lead to positive outcomes.
Who is kakeibo best for:
1. Households with children who need to learn about how household expenses work.
2. Fearful and reluctant budgeters.
Kakeibo is a master at dispelling the notion that someone is "terrible with money." The strategy
gives individuals more power and confidence by putting them in command of their spending.
3. "Envelope" budgeters Kakeibo's categories are similar to the "envelope
budgeting" system, which involves pre-planning monthly costs and dividing set amounts into
real or virtual envelopes. You'll probably enjoy kakeibo if envelope-style planning works for you.
4. First-time savers The "start anywhere" method
encourages you to save more by celebrating even the smallest savings milestones.
5. Inconsistent budgeters If you've ever struggled to
stick to a budget, kakeibo's simplicity and flexibility could be the answer.
With that said, thank you so much for watching, and have a great day!