Money Matters

Hi Jin Han,

Has your monthly cost of living in Tokyo increased since your last post on this topic? And I would be glad if you could share some money saving tips and hacks.


Hi W,

I’m not sure if I can offer something that you don’t already think of, but I’ll share how I manage my finances and perhaps you could share yours if you find me missing out on some great hack you might have.

First, to ensure that I don’t provide misleading information, I am currently in Kawasaki, which is considered one of the biggest cities in Kanagawa prefecture after Yokohama, just outside Tokyo. But my expenses shouldn’t be too different than if I were in Tokyo Metropolis. As a general reference, and to stop myself from digressing, I shall write it in point form regarding how much you can expect to spend:

– Rent: 60,000
– Internet: 4,600
– Utilities: 10,000
– Mobile: 9,000
– Transport: 10,000
– Food: 30,000-60,000 (cook every meal vs eat out every meal)

Note that the above does not include insurance, pension, residence, and income taxes as they vary greatly depending on your salary. But you should expect at least a total of 50,000 yen per month for these taxes if you’re making very minimal income required for work visa here.

For money saving tips, I do things quite the traditional way. Every month, I pay myself first and make no exceptions. You should choose an amount that is comfortable for you and make sure you save that amount every month.

I have an excel sheet that lists out all the expenses I have every month. These include bills that I have to pay, food, Korean language class, etc. When you list out all the expenses you have, it becomes easy to see where you can cut down on. As I’m not huge on shopping, my only variable expense is food. But reducing expenses on food doesn’t mean I have to eat less. It just means I have to cook more often. I can spend 30,000 yen on food if I eat home every meal, every day. Eating out would double that amount easily, and saving that additional 30,000 yen a month is no small sum as that would be approximately SGD$4,500 a year.

Another important thing for me is that I have 2 accounts in Japan. One of which is purely for savings and the other for spending. In general, I don’t touch the money that goes into the savings account. Every month after pay day, I would deposit a fixed amount into my savings account. The rule is, if you don’t see it, you won’t spend it. So, I have very little balance in my spending account every month.

After savings, bills and all other necessary expenses, I will let myself spend the rest of the money that remains in the spending account, though I do not always spend everything. I always only have 30,000 yen earmarked for food but I do spend more than that since I do not eat home every day and have additional left in the spending account. To put it simply:

Salary: 200,000 yen
Non-variable expenses (bills, taxes, classes): 80,000 yen
Variable expenses (food): 30,000 yen
Savings: 50,000 yen

After the above, you would be left with 40,000 yen not earmarked for anything. That can be your additional pocket money if you need to go enjoy and have fun with your friends sometimes, or eat out on some days. If you don’t use up all the 40,000 yen, you would realise that this pot of pocket money will keep growing every month apart from your savings account.

Say this month you dug into this pocket money, used 30,000 yen and have 10,000 yen remaining. The next month, you would have an additional 40,000 yen put into this pot and that would give you 50,000 yen. If this continues, you would also be growing your pot in your spending account as well. This additional amount is free for you to decide how you want to use. You can just keep it for some big purchases you may make, let your hair down and go for a trip, or put part of it into an investment.

So what happens if on some months I don’t have enough to spend because there happens to be a lot of events that month such as somebody’s wedding, friend’s farewell party, birthday party, etc.? Because I plan my expenses for the following month every month (e.g. plan November’s expenses in October), even though if it’s not 100% accurate, I do get an idea on how much I may be short of. And when this happens, I do not reduce my savings amount. I try to find additional sources of income outside my existing income by taking on additional freelance work, or if I have things at home that I don’t use anymore, I would sell them. Sometimes, when it becomes absolutely necessary to make a big purchase, such as buying a new laptop for work and it is difficult to get so much additional income, I would use my credit card. This may sound like a bad move but the truth is, my savings plan doesn’t get messed up at all. This is because, when the bills for the laptop comes the following month, I would have the current month’s pot of 40,000 yen plus next month’s pot of 40,000 yen in addition to the side income from freelance work and/or selling of my old stuff. And I make it a point to never pay by installments even though paying by two-time installments would get me double the number of points for my credit card. The danger is, splitting the bill this way makes it difficult for me to manage my finances. I make it a point to make sure that what I spend in one purchase shall be paid for in one settlement.

If you have additional money leftover and are willing to reduce your pocket money pot size, I would suggest putting them in some form of investment. Reason being, interest rates in Japanese banks are so pathetic, it’s as good as no interest. The standard rate here is 0.001%, which means, for every 100,000 yen in the bank, you get 1 yen a year (or every $1,000 in your bank gives you 1 cent a year), so there really is no reason to keep so much in the bank. But of course, you still need to have your emergency fund liquid.

I think it differs from financial adviser to financial adviser, but in general, I make sure I have at least 8-10 months emergency fund I keep in the bank in case of, well… emergencies. This does not mean 8-10 months of your salary, but 8-10 months of your expenses. So if I spend $1,000 a month, I would need at least $8,000 in my bank that I don’t touch. If I do lose my job for any reason, at least I won’t die for the next 8-10 months while I hunt for the next job.

Last, as I’m no investment expert, I shan’t advise you on anything but you should look up on the types of investment vehicles available to you and decide how much of what is comfortable for your appetite. No point throwing $10,000 in stocks if it makes you jittery every ticking second. But if you do your homework well, investment shouldn’t be dangerous. It’s only dangerous for people who don’t do their homework.

Hope that this is ample information for you.

I will update as-and-when something else comes up.


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