Japan has a reputation for being an expensive place to live and so it comes as no surprise that Tokyo was recently ranked as the fifth most expensive city in the world for expats. But with the right planning and a few tips and tricks up your sleeve, Japan doesn’t have to be as expensive as you think. In fact, you can have fun, indulge, travel and enjoy life to the fullest in Japan without breaking the bank. In this article, we’re going to show you the ins and outs of budgeting, including kakeiboi, a one-hundred-year-old method used to budget and some nifty money-saving tips.
Jump to:
- What is Kakeibo?
- Navigating Taxes
- Rent: Choosing Where to Live
- Transport: Getting Around and Exploring
- Cheap Trips Away
- Living Expenses: Food
- Savings: What is a NISA?
What is Kakeibo?
Kakeibo (家計簿) literally translated means “household account book”. The three kanji break down into house, ka (家); measure, kei (計) and record book, bo (簿). Kakeibo has been trending in the media across the world as the Japanese way to budget. What a lot of people are really referring to is a particular method for kakeibo that became popular in 1904 when Motoko Hani, also known as the first female journalist in Japan, wrote about a technique used by housewives to budget. Even one hundred years on, you can find many budgeting books and even apps based on Motoko Hani’s concept. In these books, the reader is assisted in the process of categorizing their expenditures into a variety of categories. Then the household income is recorded over a period of 12 months, each month individually and the budget is set accordingly to ensure no overspending and to ensure money is being put away and saved.
Compared to other budgeting techniques, this method might seem quite complicated at first as it has an overwhelming amount of different categories. These categories can be simplified into expenditures that must be paid such as food, rent and taxes, and then expenditures that you would like but don’t necessarily need, then there are savings and finally a category for the unexpected, the things you don’t plan like an emergency visit to the doctor. But this is perhaps an overgeneralization, in some books for kakeibo “food” has five categories!
Despite its learning curve, this concept developed by Motoko Hani has been widely used across Japan by many households and is believed to be particularly advantageous if used year after year, as it highlights any wasteful expenses and allows for reflection to re-evaluate what is and is not a necessity. It further allows for financial wiggle room with savings and for unexpected expenses. Hani’s method might not be for everyone but it has proved useful to many. You can pick up your own kakeibo at bookstores, online or even at the 100 yen store.
Taxes; no one adores them but once you know what you need to pay it makes it a lot easier to budget for your other expenditures knowing exactly how much you’ll start with. We won’t go into too much detail, but to give an idea there are several different taxes to pay in Japan – on a national, prefectural and municipal level. If you are employed, your employer will usually do most of these for you and you’ll see how much is reduced each month. Depending on your citizenship, you may be in for a nice surprise. America, for example, has a tax treaty so Americans don’t need to pay some Japanese taxes for the first two years of their life in Japan. But if you do then below is a list of some of the basics you can expect.
1. Income Tax (Shotokuzei)
This is based on your salary and is usually automatically deducted from your income on a monthly basis. However, if self-employed or working more than one part-time job you’ll need to sort your own taxes. This is where a “my number” card can come in handy and you can do it all online!
2. Resident Tax (Juominzei)
This is paid in two lump sums every year. How much you pay is based on where you live and how much you earnt the previous year so if you’ve just come to Japan, don’t worry you won’t have to think about this until the next year.
3. Health Insurance (Kenkou hoken)
One of the many wonderful things about Japan is the excellent healthcare system. Every resident must enroll onto national health insurance, a system that you automatically pay into every month just like your income tax. When you need to go to the doctor or dentist, you’ll then only pay 30% of the bill, the rest is covered under your health insurance. This can make checkups with the doctor as cheap as 200 yen (around 2 USD)!
4. National Pension (Kokumin nenkin)
Everyone 20 years or older needs to enroll in the national pension in Japan which, similar to Health Insurance and Income Tax, is deducted from your monthly salary.
Still worried about taxes? Search online for your local tax office (zeimusho) or visit your city hall (shiyakusho) for more advice. In big cities like Tokyo, there is a lot of assistance for expats navigating taxes with translation and interpretation services.
Rent: Choosing Where to Live in Japan?
Rent in Japan largely depends on the location, size and age of the building. Housing is far cheaper in the countryside than in big cities such as Tokyo. But the big cities have a lot to offer from frequent and fast transportation to a wide variety of restaurants and more job opportunities.
Tip 1: Choose A Location Away from Train Stations
In cities, a large proportion of the residents use trains to get around so the closer the apartment is to a train station, the more expensive. These train stations often serve as hubs and are where you’ll also find grocery stores, drug stores and the larger stations usually have department stores. If you don’t mind taking the bus or cycling to your nearest station, you can save a lot on rent by choosing a place further away from these highly sought-after locations.
Tip 2: Keep in Mind of Japanese Apartment Layout
The size of your housing will also play a big factor in the price of your rent. Rather than “a two-bedroom apartment” being advertised, you’ll see the shorthand “2LDK” written. The L stands for living, the D for dining and K for kitchen, the LDK part of the apartment is often open plan and takes up one room. Then the number that comes before is how many other rooms there are. A 1K is the smallest, this is a studio and the most budget-friendly.
Tip 3: Find a Sharehouse in Japan
Another option to consider is a share house or sharing apartment, great options for socialites looking for a budget-friendly place to live. More modern complexes now come with added facilities like ensuites and small kitchens so you can have your privacy whilst still having the option to socialize with your roommates when the timing is right for you.
In Japan, April is a new school year and also when many people switch or start a new job. This results in the movement of a lot of people who are uprooting and moving home in the spring. Inevitably this can put the cost of moving up as moving companies get busy.
Tip 4: Seasonal Sale and Buying Second Hand Item
On the flip side, it also means that there are great deals run by electronic and home stores selling essential appliances like microwaves, washing machines and fridges in a bundle package at a discounted price. A bargain if you’re just moving in!
If you’re on the lookout for other furniture on a budget, you can check out recycling apps such as Jimoti and Facebook groups titled as “Sayonara Sales. It costs to throw away furniture in Japan so sometimes people give their belongings away for free or at very low prices when they move.
Transport: Getting Around and Exploring
Japan is esteemed for its public transport network and unless you’re considering settling in the inaka (countryside), you’ll have an abundance of options for transport that are clean, efficient, safe and on time. The trains in Tokyo are so on time that if they are running late there is even a “late train slip” densha chien shoumei-sho to prove that your train was late to your employer.
Check out: Life in Japan Tip: Deals on Japan Train Travel (Tokyo Rail Pass & Kansai Rail Pass)
Tip 5: Purchase a Commuter Pass
If you take the same train to work or school every day by purchasing a commuter pass which can be purchased for 1 month, 3 months or 6 months at a time, you’ll then be free to travel to any station in between at no extra cost. This also applies to the bus if a bus route is included in your pass. A bicycle is another great way to explore your local area. There are many second-hand bicycle shops or for a cheap new bicycle, you can try Donkihote, a large chain with affordable prices.
Cheap Trips Away from Tokyo
When considering a little getaway, although the shinkansen is something you’ll want to experience at least once, flying domestically is much more cost-effective for some locations and sometimes quicker too. But perhaps the ultimate cost-saving travel tip is to take the night bus. Japan has excellent night buses which include women-only seats, outlets and curtains for privacy.
If you can sleep on the bus, this will save you a lot of money on overnight trips to other cities in Japan and you can save money from one night’s stay in a hotel. Speaking of which, capsule hotels may not be spacious hotel rooms, but they have everything you need, are surprisingly comfortable and very affordable.
For escapes that are close to Tokyo, you may want to consider a trip down to Kamakura, a sea-side town with surf-friendly beaches, a big buddha statue and a bamboo forest, or Nikko, a town northwest of Tokyo that has breath-taking views, especially in Autumn with waterfalls and onsens. Nikko is also home to Edo Wonderland, a theme park that transports you back in time to experience Japan during the Edo period and includes costumed staff and workshops.
Living Expenses in Japan: Food
In Japan food can get pricey if you shop for imported goods so picking up a few recipe books and learning some Japanese recipes will not only add to your vocabulary but your wallet will thank you too. Another tip is to buy produce that is in season, for example, picking mikans (satsumas) for fruit in winter and squash in autumn, you’ll find better prices and they tend to taste better.
Tip 6: Use Point Cards to Rack up Points
At the checkout, you can find out if your local grocery store has a point card system so you can collect points. You’ll usually find leaflets for this in the parking area. You’ll get one point for a certain amount of yen (usually, it’s 100 to 200 yen for one point). Once you’ve collected enough, you can use them to pay for your next purchase.
Tip 7: Discounts at Japanese Grocery Store
If you’re looking to grab some discounts at the Japanese grocery store it’s best to visit at around 7pm when most stores including convenience stores begin marking their fresh produce down knocking anywhere from 5% to 50% off! This includes ready-made meals that can make for a quick and easy dinner. That being said you have to be fast as the shelves clear quickly!
setting up a savings account in japan: What is a NISA?
Since 2014 the Japanese government has been running a tax-free investing scheme where you can invest some of your earnings every month into a separate bank account and your bank will invest it for you (5). This scheme is called NISA, short for Nippon Individual Savings Account and is available to any resident in Japan, serving as a nice option for those that want to invest tax-free. If you’re interested in an option like this you can ask your Japanese bank about it and they will explain the details.
Last tip: Learn Japanese
The biggest secret to budgeting in Japan has to be getting to know the language. It opens new doors as you find better deals, can ask for advice, get into the nitty gritty details of campaigns and make friends. If you want to learn Japanese, Coto helps you find the right Japanese language school. Contact us for free support today and get started.
Review the Japanese in this article:
| Japanese | Kanji | English Meaning |
|---|---|---|
| Kakeibo | 家計簿 | Household Account Book |
| Shotoku zei | 所得税 | Income Tax |
| Juomin zei | 住民税 | Resident Tax |
| Kenkouhoken | 健康保険 | Health Insurance |
| Kokumin nenkin | 国民年金 | National Pension |
| Zeimusho | 税務署 | Tax Office |
| Shiyakusho | 市役所 | City Hall |
| Densha chien shoumeisho | 電車遅延証明書 | Late Train Slip |
| Inaka | 田舎 | countryside |
