Personal Finance Kaizen

by Ryan Guina

Kaizen is a Japanese philosophy that focuses on continuous improvement throughout all aspects of life. A rough translation for Kaizen is “change for the better.” Kaizen became popular in Japan during post-WWII reconstruction and later spread to the US where it became better known as Continuous Improvement as part of TQM (Total Quality Management) and Lean Manufacturing.

While most people relate Kaizen to work in a factory or business environment, Kaizen can be applied to just about any process – from manufacturing to personal finance. Like all process improvement methods, it works best when you follow a plan and when you have the entire group supporting it. So if you manage your finances with a partner, get him or her in on this and start improving your finances.

Kaizen for personal finance

Kaizen is easy to do, but it requires commitment and action. Follow these steps to improve your personal finances.

Assess current methods. How do you currently manage your finances? Do you have a process, or just take it as it comes? Does one partner handle all the financial duties or is the work shared? When you analyze your current process, identify areas for improvement. It will help if you document the process. In a business environment you would use flowcharts, but in personal finance you will likely use a budget and spreadsheets.

Plan improvements. Once you list your current methods, look at ways to improve them. It may be something as simple as using Quicken to track your expenses, or consolidating bank accounts, retirement accounts, or brokerage accounts. Or, your improvement plan could be as grand as reallocating your investments or creating a new budget from scratch. Your best bet is to go for the changes that will have the most impact with the least amount of work. Remember, improvements don’t need to be complicated to make a difference. Sometimes the small changes can have positive effects.

Take action. Once you have planned your improvements, take action. One way to track your results is to establish benchmarks and goals. For example, it could mean reducing the number of financial accounts you have, or it could be contributing toward your retirement accounts or toward reducing debt every month. This step can be the most difficult to perform because everything to this point is planning. This is step calls for action that takes commitment.

Evaluate changes. Analyze your progress, but don’t sugar coat it. You are only short changing yourself if you convince yourself things are better than they really are. When evaluating your performance, use benchmarks such as percentages, figures, and specific goals. You will also want to schedule periodic reviews to see how your progress is going – a one time checkup won’t be enough. It will help if you assign responsibility and accountability. The purpose is not to place blame, but to better define roles and not leave tasks waiting for someone to do them.

Reassess and repeat. After you have followed the first 4 steps, you are back at the beginning – assessing the process. Sometimes you will find that you have leaned the process as much as you can – other times you will find there is still room for improvement. The key is to leave room for improvement and be willing to look at the process objectively. When you continue to improve these processes and standardize them, you will find they are much easier to accomplish and weigh less on your mind.

Kaizen applies to all aspects of life

Kaizen is about making a lot of small changes in order to standardize and improve processes. The changes you make don’t need to move the earth, they simply need to make it a better place for you.

Published or updated May 9, 2013.
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{ 4 comments… read them below or add one }

1 Donny Gamble

This is a unique idea that I will try to initiate for the upcoming year. I plan to implement a more drawn out investment strategy than my current one.


2 MG

As someone who has done multiple Kaizens in the work envirnoment, about a year ago I started at home. I recommend it to everyone. The process mapping allow of any of your personal processes opens your eyes. You start to question why do I do this or why don’t I do that.


3 Ron@TheWisdomJournal

Very cool idea. There’s a lot of lip service given to “continuous improvement,” especially in the corporate arena, but there is always very little REAL action. Too many times, improvement means stepping on someone’s toes or getting into a turf battle. It takes a commitment from the very top to really get it going.

I like how you said it’s a way of life. That is so true.


4 Ryan

Ron: That is why buy-in at all levels is so important. too often people want to go the easy route and verbally support “change” because it sounds good, but don’t follow through because it involves “work.”


I’ve been on a few Kaizens as well, and when you can get everyone behind it, it has the potential to do very good things. Asking “why” is a very powerful question!


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