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!

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.)

Using your ATM card with the Post Office Machine.

Hello Beautiful People, Fergal Here

This is very simple, and very useful.

When at a post office you can take money from their machine, even if you are with another bank. (I believe there is a charge but I don’t know how much)

First click “English Guide”

Then “Others”

Then “Cooperation”

Then put in your card and it works like a normal ATM.

This is useful, I have a post office near my house but no ATM. Knowing stuff like this is really useful every so often.

If you are in the Josei Centre, (Where you tend to go for your English clubs English Festivals and such) you are next to a Post Office that has these ATMs and knowing this is pretty handy if you need some money.

Well I hope this helps you out sometime

Good Luck