Becoming a Japanese Millionaire: Step 3

Want to save some yen? Check out Step 1 and Step 2 for improving your financial health.

Photo: Alan Cleaver

When you know your income and how much you have to spend on things like bills, you’ve basically got what you need to spend some money guilt-free, and save the rest.  For most of us we need a little self-discipline, too.

Step 3 you’ll need to decide what to pay yourself (which is what you’ll put away and save — you know, for a house or grad school or a baby or an emergency, or whatever).  The fun part is that you also get to decide how much money is your fun money — to spend guilt free on whatever non-essential activities you do.

If your monthly income is 250,000 yen and you must spend 100,000 yen each month on rent, bills, food, and other necessities, then you’re left with 150,000 yen every month.  Decide now what you’ll be doing with that money.

Pay Yourself First

It’s a good idea to pay yourself first.  Decide an amount that you’d like to be saving every month, and set that.  For me, my initial goal (while I was paying off my key money for my new apartment) was to save 50,000 yen every month.  Once I paid off my key money, I had already grown used to living without that money, so I set my payments to myself at 100,000 yen each month.  I didn’t allow myself to touch that money, and promised myself that I’d be happier after JET when I could afford to live in more than a souped-up cardboard box.

Set a “Fun Money” Budget

By saving 100,000 yen each month, I’m left with 50,000 yen (about $500) each month for fun spending — that might go towards shopping, eating out with friends, or traveling.  And also consider, if you make more than 250,000 yen every month, then you can spend even more on fun stuff — or tack it onto your savings.

Homework: Go now and figure out how much you should be paying to yourself and how much you can spend guilt-free!

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