Implementing Kaizen in your Personal Financial Life


5-personal-finance-tips-cash-strapped-entrepreneursKaizen is the practice of continuous improvement, one of its notable features being that big results come from many small changes. It is no different from the famous saying “big things come from small beginnings.” While Kaizen is an important pillar in the long-term competitiveness of business organizations, its concept of continuous improvement in order to make processes more time-and-cost-efficient is a practice you can apply in your personal financial lives.

Here, I describe how its basic guiding principles may be implemented in your respective families.

Good processes bring good results

Fill yourself with money-saving tips, which abound in the Internet, and put them to good use. Small savings from various lifestyle improvements can generate the big bucks. Adopt a good system of managing the household so that money is spent properly and family life is lived in an organized manner. This system includes the processes on building and managing cash flow, allocating funds for the regular monthly bills, supermarket and wet-market purchases and school expenses, arranging bills payments, safekeeping important documents and setting the do-it-yourself mind-set among family members.

Go see for yourself to grasp the current situation

BE the active manager or participant member of the family. Do not let the house-helper or relative run the household or manage the family expenses, because it is the least bit their concern to aid you in achieving the family goals.  Go to the battlefield, so to speak.  Do the purchasing errands yourself so that you can make outright decisions on particular items as to choice of store, brand and price.  Work the kitchen so that you know what gets left over, how food is consumed and wasted, and then devise ways to control what goes in and out of it. Review the state of family finances with your spouse and adult members on a regular basis so that all may be able to put in their two-cents on how to make further family lifestyle improvements.

Speak with data, manage by facts

Analyze the data presented in the cash flow and expense table.  How much of the total income is saved each month? What is the proportion of the active income over passive income? What expense categories take up a high percentage of the budget?  How much of the income goes into paying debt? What are your target ratios in terms of savings, consumption, use of debt, passive to active income proportion and the proportion of categories in the expense pie chart? What small actions can be implemented in order to achieve these targets?

Take action to contain and correct root causes of problems

Execute those small actions according to plan. Are there items in the expense categories that are considered wants and can they be reduced or totally eliminated? Is the food and entertainment expense taking up the biggest portion of the pie, and if so, can dine-outs and movie outings be replaced with family cooking and DVD watching at home? Can vices be avoided so that the thousands of money saved can be used to build the emergency fund, pay up debts, or buy insurance?

Work as a team

Family finances can only be well-managed if all family members row toward an agreed financial destination, else they will get nowhere and eventually drown in a sea of financial sorrow. If the couple heading the family differ significantly in their money upbringing, they must resolve their basic money differences and blend their money values.  Also, family life goals must be discussed, mutually agreed to, compromises reached, action plans and due dates defined and assigned, and reviewed by all members on an annual basis to align them with changes in the family situation.

It is everybody’s business

Living the good life and having the money to fund this life is every family member’s business. Each member has to adapt to a built-up culture that imbibes the practices of living simply, yet comfortably, in an organized fashion, doing it yourself and consistently looking for ways to improve family activities to save time and money.

The Kai-Zen mind-set is one continuously on the lookout for improvements and resolve. It should become part of the family culture and lifestyle. As you move through life, you make big changes—you change jobs or careers, move to other locations, graduate from school, change marital statuses, take-up advocacies and retire from work or business. But regardless of which situation or location you find yourselves in, you must keep the continuous improvement spirit at work. Each small improvement will bring about that little triumph that will, in turn, build up the bigger victory of financial wealth and freedom for your family.


Eve-Reyes-MercadoEve Reyes Mercado is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 57th RFP program from October 1 to November 19. To inquire, e-mail or text <name><e-mail> <RFP> at 0917-9689774.


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