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!

How to Use a Kerosene Heater

If you look at any of the posts about dealing with the winters in Ishikawa, you’ve probably noticed that kerosene heaters get a lot of recommendations.

And then you probably thought, “How the hell do I use one of those [without accidentally killing myself]?”

I have to admit that, while I’m not new to living in regions with bitter winters, I am new at this whole “no-insulation, no-central air” thing. However, I think if we can get the comments rolling on this post, especially from you old hands, we could make a nice little English-language guide for using kerosene heaters.

Click here for a basic guide on buying and using your kerosene heater.
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Becoming a Japanese Millionaire: Step 2

Photo:  the_toe_stubber

Check out Step 1 for becoming a Japanese Millionaire if you’re new.

For the rest of you, you’ve been dutifully saving your receipts (and updating your bankbook), right?  Let’s get started.

Start by pulling out that pile of receipts with a category written at the top of each one.  Haven’t written categories on them? Do that now if you can decipher them. Then…

  • Add up just how much you spent within each category in one month. (I recommend using a spreadsheet program for this (Google Documents has a free one), but anything can work.  Use a notebook you have lying around.  Write your categories at the top of the spreadsheet (I had 14 categories or so) and then, going down the side of the page write a few months  (Oct 2009, Nov 2009, Dec 2009, etc.)  Record the total of how much you spent for each category during each month.  For example, I may have spent 9,800 yen on “beauty” in September and 1,500 in October.  That’s fine.  Overtime you’ll see an average and get a realistic idea of what you spend.
  • Separate your essential spending from your fun spending.  Rent is essential.  Food is essential.  Paying loans is essential.  Books are not.  Eating out is not.  Be honest with yourself about what your bare minimum requirements are.  Don’t forget about things like visiting the doctor, which cost money but may not happen every month!
  • Find out how much money you’ve spent on everything (essential + fun spending).  Hopefully it’s less than you make in a month.  If it’s not you have some serious soul searching to do (but we’ll get to that. no worries.)
  • Decide how much you need each month for essential spending (you have my permission to make an educated guess — use the numbers you got from your receipts and bankbook to do this).  For me, my electricity varies from 3,000 yen per month to 11,000 yen per month, depending on whether it’s summer or winter, so I’m going to assume that I spend 7,000 yen per month on electricity.  My opinion is that it’s better to over-estimate when budgeting for essential items.  I don’t want to be without heat one month because I didn’t budget well! (Again, don’t forget to budget a few bucks each month for dental and doctor checkups — as well as any other “maintainence” types of essentials that may not have come up this month).
  • Figure out how much money is left. Subtract your “essential spending” money from your income.  For example: If I get paid 250,000 yen each month and I need 100,000 yen each month for essential purchases, then I know I have 150,000 yen each month to use to pay myself and to use for fun spending.

Okay, that’s enough to do for now.  Go out and make your spreadsheet for essential spending and fun spending you did in the past month or two.  Then, estimate how much you need to budget for your monthly essential spending.  Finally, find out how much money you have left to spend on yourself.  We’ll use that number next week and do some fun stuff!

Become a Japanese Millionaire: Step 1

Photo: Kairuuinzuro

When I came to Japan, one of the first things I did was freak out about how expensive everything was.  I had to pay key money (mine was $3,000) just to put my foot in the apartment door, not to mention pay rent, buy stuff for my apartment and work — and oh my god, look at the price on that apple!  Oh yeah, and since I was fresh out of college I had a pile of school loans that made me sick to my stomach.  Awesome.

Well, rather than wallow in self pity, I decided to do something that I was certain would terrify me: I looked my finances square in the face.

The first step of working towards becoming a financially-reponsible adult lies in not being afraid of your money.  Stop.  Look it square in the eye.  And remember money is just math, which may not be exciting, but it’s pretty damn consistent.

Photo: jetalone

This month, if you want to become a Japanese millionaire (by which I mean have 1,000,000 yen) you’ve got to know what you make and what you spend.  Here’s how:

  • Update your bank book. Japanese banks give you a bank book.  Find it and make sure it’s updated.  It shows what has been deposited into your account (your wages!) and what has been withdrawn (for bills, spending money, etc.)
  • Save your receipts! (and if you’re really good, make a note when you buy from vending machines or pay for a bus or train, too) Don’t forget your online purchases as well.
  • Make a “receipt box” and throw your receipts into it for the next month. I’ll get back to you on this in October.

Here’s the idea:  If you save your receipts and track your spending for a month, you can look back on it to see how much you spend in a month.  (If you want to really do this well, you should also write on your receipts what kinds of purchases you made — “clothing”, “work”, “food”, “gift”, etc. You should choose categories that are meaningful to you personally.  Then you can see exactly how you’ve been spending, so if you need to cut back in an area you can easily do so.)

At the beginning of next month I’ll do a post about Step 2 to becoming a Japanese millionaire, but you really can’t do that without having a realistic idea of how much you’re spending!  So go, make yourself a place to stash those receipts, and we’ll get back to them next month.

Until then, happy saving!

(P.S.  Even if you’re not suffering financially as I was, this is still a great way to learn how to pad your wallet with a little extra yen each month.)

Japan Blog Matsuri – Frugalista Japan

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This month’s topic for JapanSoc’s Japan Blog Matsuri is living cheap in Japan hosted by Frugalista Japan. Japan is a expensive place to live in, and for those of us living on a teacher’s salary, it’s important not to toss money out of the window! Here’s a few of my favorite tips for living cheap in Japan:

First: Utilities are expensive!

1) Unplug unnecessary electronics

It’s a know fact that most electronics, even while “off,” consume a small amount of power to keep internal clocks and those little “power off” lamps running. If you want to save money, try unplugging your unnecessary electronics (like gaming systems, computers, TVs, DVD players, stereos, NOT YOUR FRIDGE ~_^) when you’re not using them. Or you could plug them into those power strips with the power cut switches for each outlet. This could cut down your bills by a whole lot!

2) Surviving the seasons: Anyone who’s lived in Japan knows just how cold it gets (mostly because houses have minimal insulation, which means it’s just as hot/cold inside your house as out!). How do you stay warm without spending a fortune? Here’s a few ideas: first, spend as much time out of your house as possible. Use another area’s heat/cooling! That means spending time in your local coffee shop, shopping mall, etc. Second, get yourself a kotatsu, that wonderful little table with a blanket and a heater. Most people move into one room for the duration of winter because it’s easier to heat that way. Put your kotatsu there. Even if you don’t use a room heater, 90% of you will be warm if you’re under the kotatsu. Third, don’t use your aircon unit as a heater. Too much of an energy hog. Get yourself a small electric/kerosene space heater or consider a heated carpet. Also, sealing your windows with bubble wrap and tape helps reduce heat-stealing drafts and increases insulation. You can find bubble-wrap window insulation in your local home store. In the summer you can keep cool with box fans and open windows. Hang your wet laundry near a window. The evaporation that happens as the breeze from outside dries your clothes also cools the air.

Second: Food is really expensive!

1) Prepared foods (like bento, sushi, fried items) are all half-off at the end of the business day at all supermarkets/bakeries and smaller food stands. Hold off shopping until 7pm and you could run away with a pile of food for half the prince you usually pay! Also, prepared foods get “time service” throughout the day. If something hasn’t been bought 3-4 hours after it’s been prepared, it’s get a discount sticker. They’ll keep discounting until the end of the day.

2) Fruit and Veg Reject Days/Carts:

Each grocery store has a cart near the produce section for “rejects,” fruits and veg that aren’t perfect (by Japanese standards, that is ^^). The produce people cull their section every day – the selections on the cart are usually half-price or even more. Keep your eyes open for good stuff there. Also, some bigger grocery stores have a specific day a week they do the big cull. You can get heavily discounted fruits (aka, a bag of apples for Y400 instead of Y800).

3) Eat seasonally.

That means mikan in winter, watermelon/melon in summer, figs and persimmons in fall and bananas all year round. Fruits and veg are way less expensive in their season, so gorge yourself and save money in other seasons when you can’t stand the thought of eating that stuff again!