How to Save 40% of Your Income With Minimal Salary in Japan

There’s a saying floating around for a long time that you need a minimum 3 million yen annual income to get work visa in Japan. I’m here to bust that myth. That is not true because the immigration has never officially released any statement that this is the case. Most of the visa requirements are never explicitly listed out. This is to prevent people from trying to get in through loopholes and technicalities. But there’s a reason how this legend came about.

The truth is, the 3 million yen income will guarantee that you get past the salary requirement, so if you have a minimum 3 million yen annual income and your visa still doesn’t get approved, that means it’s some other reason. But anything less than that, no one can tell if it’s due to the lack of income as one of the requirements is for one to have enough income to live in Japan, even though the amount was never announced. The reason I dare to state this outright is because I know someone who received their work visa with less than 3 million yen annual salary.

Since that is the general understanding of minimum required salary to get visa approved for a non-Japanese person, let’s proceed with the premise that 3 million yen in annual salary (or 250,000 yen in monthly salary) is “minimal salary.”

If you’ve just arrived in Japan or are about to work in Japan, the first year of your work is crucial if saving up means something to you. This is because you are exempted from a lot of taxes in the first year, i.e. no residence tax, no pension, and ridiculously cheap health insurance. Yes, because the cost of these are all dependent on your previous year’s income in Japan and your first year means you do not have income in the previous year, so you can opt out of paying pension, and your health insurance would cost only a few thousand yen for the entire year. That’s why, this first year will be the year you can save the most (assuming salary remains the same in the second year).

Dirty Shoes has been in Japan for almost a year now and to help her save, I’ve been making her follow the mantra of “paying yourself first.” And I think I’ve set a pretty high bar in general because the amount I suggested for her was 100,000 yen. At the current exchange rate of about SGD$1 to 80 yen, that would be $1,250 per month. By keeping up with that, she would be able to save some $15,000 a year.

I’m not at liberty to reveal how much she makes (although she probably wrote about it somewhere), but if she makes the minimally “required” 3 million yen a year, a monthly savings of 100,000 yen makes it a 40% savings, and that is possible because so far, she has almost never spent more than 100,000 yen a month (less than 150,000 if you include her household contribution). And that is when she has to pay for her own transportation to-and-fro work. But as this level of savings will be difficult in the second year when residence tax, pension, and higher insurance fees kick in, this first year of thrift is very important.

For someone who doesn’t live with another person, here’s a possible breakdown of your expenses assuming you also save 100,000 a month with a 250,000 income.

Income: 250,000
Withholding tax: 25,500
Saving: 100,000
Rent: 55,000
Utilities: 10,000
Phone: 3,000 (we’re using Y!Mobile)
Internet: 5,000

That leaves you with about 51,500 yen. If you cook every day, it is possible to keep your groceries to about 20,000 yen a month and you’ll still have some 31,500 yen left over giving you some money for leisure. To be more realistic though, because Dirty Shoes’ salary is not stable and there was a period of time when we returned to Singapore + the time she followed me on a business trip to Korea, sometimes she makes less since she’s paid by the hour (40 minutes technically speaking). And when it was impossible for her to save 100,000, we decided to half that to 50,000 yen for the month, which is still a pretty decent savings rate. Remember, saving is to help your future, so no point killing yourself now with an impossible savings rate. So, if that reduced savings rate doesn’t happen too often, you should easily save some $10,000 a year, which would mean $100,000 in 10 years (assuming a flat income amount and also assuming your expenses don’t go up with your salary increment).

Perhaps it’s because I’m not a shopper that I find it odd how some people have it so difficult saving up when they are making average income and don’t seem to have any additional burdens. I recall the self-introduction of a guy I met some many years ago at a drinking party when he just moved to Tokyo from the countryside. He said he’s always wanted to move to Tokyo, so he chose to live at home with his family to save up, and was finally able to do so after 2 years of hard work saving up 500,000 yen. I could see everyone’s smile collapse when the 500,000 yen figure was announced even though the guy smiled proudly at his achievement. In my mind, I was thinking, 2 years and only 500,000? I was certain everyone else was thinking the same.

But then again, I also remember how I used to save almost nothing when I just moved to Tokyo because I never paid myself first and I never tracked my expenses. So tracking it is a good start.

While this 40% of savings (or more) is possible, don’t forget to always make the amount not one that causes you to starve. I personally feel the ideal amount is one that makes you almost uncomfortable. Almost is the word.

Update 5/29: J pointed out to me in the comments section that my reference to “pension” wasn’t 100% accurate. To clear things up, the pension mentioned in this post refers to the 国民年金 (National Pension) for self-employed or those doing part-time work. Company employees are typically enrolled to the 厚生年金 (Welfare Pension) and I don’t think it’s possible to opt out of that. Welfare Pension costs more than National Pension because the former is based on your salary, while the latter is a fixed rate regardless of how much you make. But all is fair because Welfare Pension payers get bigger payouts when they retire.


Add a Comment

Your email address will not be published. Required fields are marked *