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Budgeting Tips with the 5S System

Seiri, seiton, seiso, seiketsu and shitsuke. Sort, set in order, shine, standardize, and sustain. These are the five elements that make up the 5S methodology for workplace organization. Originating in Japan, this methodology organizes a workplace by reducing waste and increasing productivity. Although this process is used mainly in manufacturing, its use is branching out into other industries such as business management and healthcare. It is a way to fine-tune operations by implementing the five “S” words.

So what does this have to do with budgeting? The 5S methodology does not have to be limited to manufacturing or the workplace. You can use it as a process for organizing, cleaning, fine-tuning, and maintaining your personal budget. Follow these five steps to budget with the 5S methodology:

1. Sort (Seiri)

In the first step of 5S, you need to sort out whatever is unnecessary and keep only what is essential. Look over your expenses. Are there things that you are spending money on that you don’t really need? Do you have a gym membership you don’t use or a home phone that never rings? Figure out what you are wasting your money on and leave it out of your budget.

2. Set in Order (Seiton)

The motto for this S is “A place for everything, and everything in its place.” In this step, manufacturers arrange items and set out where everything should go so that it is easy to access when needed. A budget needs to be set in order as well. How are you going to document your expenses? Microsoft Excel,, Quicken? Figure out how you want to categorize your expenses and place goals and limits on those categories. For example, perhaps you set a goal for spending $300 per month on groceries but currently spend $400. Document it in your budgeting software. You will never stick to it otherwise.

3. Shine (Seiso)

In a manufacturing plant, the employees must clean up at the end of their shift. On a daily basis, everything must go back to where it is assigned to be for the third S, shine. Just like with manufacturers, you will also need to “shine” your budget daily. Record your expenses every day so that you don’t get behind. Keep up with how you are meeting your budget every day. Are you staying pretty close to your goals, or do you need to readjust how you are spending? Take the opportunity every day to fine-tune your budget.

4. Standardize (Seiketsu)

You need to have a plan for the first 3S’s, and you need to stick to it. Determine who is responsible for entering data into the budget. You also need a plan for what you do when there needs to be a change made to your spending categories. At my house, we put all of our receipts to the right of the computer monitor. Then at the end of the day, my husband enters in all of our expenses. My responsibility is to enter in all of our income. This standardized system works well for us, and it is good to know who does what so that we never miss anything. Also, it is a good idea to have a set time to review your budget. My husband and I review the previous month’s budget the first Sunday evening of each month.

5. Sustain (Shitsuke)

Sustain is probably the most difficult of all the 5S’s. In this step, you need to practice self-discipline. In other words, you need to sustain the first of the 4S’s. Do not fall back into your old ways. The whole reason you make a budget is so that you can know your limits and set boundaries for yourself. There is no point if you don’t practice self-discipline. It’s up to you to make your budget a success.

Final Thoughts

Budgeting can be a challenge, but if you go about it in an organized, methodical manner, you are more likely to achieve your goals. The 5S methodology has had proven success for many companies by reducing waste and increasing productivity. If it has worked for them, hopefully it can work for reducing waste in your budget and increasing your savings!

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Casey Slide lives with her husband and baby in Atlanta, GA. She graduated from the University of Florida in 2005 with a bachelor’s degree in Industrial Engineering and worked for a prominent hospital in Atlanta. With the birth of Casey’s son in February 2010, she decided to become a stay-at-home mom. Casey’s interests include reading, running, living green, and saving money.