Hello, I'm posting here for the first time. I have been working as a seishain at a Japanese company in Tokyo for 2 years, and I wanted to get an outside perspective on where I stand right now financially. My goal is to be comfortable enough for a peaceful life with a little bit of travelling once in a while, nothing too fancy. I don't really plan to retire early, but just focusing on building a good financial base first. I’d say I’m comfortable right now, not frugal but not reckless either. I want to keep increasing investments in the future while still keeping some cash for comfort and flexibility.
- Age: 25
- Monthly income: ~250,000 yen/month after tax. I get bonus from work so my total is around 4-4.5M per year.
- Spending bank account: currently sitting at 700k yen. Around 400k of which will be used for a driving school course this year, so I have 300k as buffer spending every paycheck.
- Emergency fund: 1M yen in cash. This is sitting inside a savings account thats separate from my daily spending account.
- Investments: 500k in NISA (just starting this year, currently putting 40k/month into tsumitate, considering putting more into growth funds later)
- Expenses:
- Rent + utilities: ~70k
- Credit card bill: ~150k/month (includes food, transport, gym, hobby, eating out sometimes, almost everything else. Sometimes go up to 180-200k if there are unavoidable spending, but trying to limit that)
Questions:
- Does this seem like a good financial position for 25 in Tokyo in your opinion? Am I on track compared to what’s “normal” at this age? (I feel like there's some FOMO in this question but any opinions from people with more experience would be big help)
- Should I prioritize building more cash buffer, or put as much as possible into investments early?
Would love to hear your comments. Thanks in advance.
*Edit: Tokyo in the title
by Pthrowinyuaway
9 comments
Comparison is the thief of joy. If you’re comfortable right now, and you are already thinking of the future I think that’s fine.
I think you are fine and stable.
At your age though, I think most investments are still in yourself and improving your situation.
– Getting that driver’s license will pay itself (assuming you do not overspend on cars as a result)
– Get promoted, get more skills, change jobs for a better salary
– Finding a significant other who is supportive and whom you like to support
– Getting experiences that will motivate you to do better
– Take some calculated risks
I feel like yes, adding that extra 40,000 JPY in an index fund will yield many returns throughout your life, but maybe you can find some friends at that event, and they will save you from needing a therapist down the line. You’re probably fine with adding 25,000 and trying to spend that 15000 on something that will help you grow. Of course if you cannot think of anything, investing it is also fine.
I’m a bit confused of your math.
You get a little less than 250,000 a month after tax. I’m going to imagine the 4-4.5 is before tax because I doubt your bonus is over 1 million post tax if your monthly salary is 250,000.
Rent 70,000
NISA 40,000
Credit card spending 150,000
First of all, spending over 60% of your money on “wants” as some would say it is quite excessive.
Even if you had a budget of 10,000 a week for food (which is a lot for a single person) and your gym membership, there’s still 100,000 that’s being used. I guess you could have an expensive hobby but if you want to compare in a good sense, you wanna cut that down.
I wonder how you saved 1.3M with this spending pattern haha. Even if you didn’t have NISA, it would have taken you over 3 years to save what you saved which would have been before you even started working.
I personally would try and cut spending down to 100,000 and try and get more into your NISA.
> My goal is to be comfortable enough for a peaceful life with a little bit of travelling once in a while
> Am I on track compared to what’s “normal” at this age?
These two questions feel like they are quite opposite.
Let me pose the questions back to you.
Are you living a peaceful life?
Are you traveling once in a while?
If your stated goal is true, then these two questions are the only things that matter.
1. I would say you’re slightly above average for financially responsible 25 year olds. If you include irresponsible 25 year olds, the median is probably 0 savings.
2. Investing is the best thing you can do. But you need to widen your perception of what “investing” is. Getting a drivers license is “investing” in yourself. Getting some certifications relevant to your field is investing in yourself (some companies offer stipends to help you get certs, TAKE ADVANTAGE!)
Keep in mind that maintaining good quality relationships with peers/friends is an investment in your future. Money can not fix loneliness in old age. Obviously don’t just become a piggy bank for friends, but refusing to go to all drinking parties and events because it costs money is also a missed opportunity for great dividends of friendship into the future.
You seem to gloss over it with “eating out sometimes” but I guess that’s with friends?
Anywho, you’re doing great.
A lot depends on your lifestyle.
Folks who would otherwise be working in restaurants (evenings, smelly, unstable) are envious of you.
Folks who dedicated years of their life to good education (and yet kinda normal) make 6M by now.
Folks whose outdoor hobbies center around fishing and camping do fine with less.
Folks whose outdoors include skiing in both Thredbo and Whistler… well they need much much more.
If you’re happy living single life, dating a bit, doing city things: more than enough.
If you must have cats and thus your own house, and in Tokyo, you need 2x more.
And so it goes, family plans, obligations towards parents.
The great thing about Japan IMO is that such a wide variety of lifestyles is possible. Do yours!
P.S. I would not keep 700k and 1M in bank acct; I’d invest those in index funds or stocks, something that yields capital gains, yet not too risky, can be liquidated within hour or days. Cash on hand should be 1 month spend or so.
Only advice I could give is make sure some of your emergency fund is in cash. From personal experience I’ve had two situation where immigration took too long updating my visa – causing my old visa to expire; resulting in the banks freezing all my accounts for 2 weeks until a new visa was issued. Always good to have some cash on hand for when Japanese banking systems do what they do and go down.
Been working my entire life in US and now in Japan. I’ve been in military and private industry. I have this to offer:
1. Stay out of debt
2. Live within your means
3. Stay healthy and plan to be useful to your business or community your entire life
4. Devote yourself to your family
5. Work hard and honestly
That’s it. God (the Universe) will take care of the rest. Focus on the present and being the best person you can be in this moment. Tomorrow is a promise and yesterday is a memory.
Make the best decisions for yourself. It’s not about money, it’s about your choices. If you are your own best advocate, everything else including financial security will follow.
🫡
You start nisa at your 25, you are way ahead of many people
Comments are closed.