Austin is going to tell you how to keep from blowing your money at cabarets.
It doesn’t feel good to be controlled by your money. We all want to be secure with our finances, but we often do not realize the negative effect that a poor money situation can have on our body and minds. For some reason, money is not taught in schools, yet stress, depression, and suicide have all been linked to debt.
So, how do you put yourself in a better financial position?
By taking control of your money today. But, the truth is, if you are sitting on your hands two days before payday because your bank book reads ¥1,000, then your money is owning you.
It’s really easy for your money to go fast in Japan. There are places to see, festivals to take part in, drinks to be had, new countries to visit, and those dreaded loans waiting for you at home. But, there is a way to enjoy these things and have plenty of savings left over.
In order to enjoy the fruits of your labors, it’s important to exert control over your money. The more control you have over your money, the more you can enjoy the things you spend your money on. You’ll appreciate your trip to Seoul a lot more if you can pay for it with savings instead of putting it on a credit card with a 19% annual percentage rate (APR).
Dissecting the JET Paycheck
Controlling your money is about understanding your perception of money and how fast that money can bolt out of your wallet. It seems like you have the full ¥260,000 of your paycheck to spend every month, but then, all of a sudden, it is the first of the month, and you are blankly looking at your bank book wondering where the money went and why you are three weeks away from the next payday.
You may think that you have ¥3.6 million yen to spend every year, but you don’t. Let us take a look at how much our actual take home salary is based off my estimated bills for a year.
Starting salary: ¥3,600,000
- Rent: ¥456,000
- Phone: ¥36,000
- Internet: ¥48,000
- Gas: ¥54,000
- Electricity: ¥72,000
- Water: ¥25,000
Total yearly bills: ¥691,000 (or $7,475, 19% of salary)
Total left: ¥2,909,000
A fifth of your salary is gone without going to your wallet once.
The number above is not even an accurate portrayal of your take home money. This doesn’t include a car, loans, food, travel, entertainment, cable, or rice balls.
There are two positives with this situation: 1) As long as you are aware of your money, your salary is enough to pay the bills and have some savings left; and 2) your expenses in Japan will almost always be less than living by yourself in America. Smile: we’ll get through this together.
Tracking Your Expenses
If you really want to control your money, you need to start tracking your expenses in the short term. Think of yourself as the captain of a sinking ship. If your vessel was slowly going down, would you stay in the captain’s chair and hope for the best or get your ass on deck and check for leaks?
In our case, the amounts coming in (paycheck/income) and leaving (bills/expenses) every month are what we need to find. Fortunately, you should have a (rough) idea of how much you spend every month, and those numbers should be available to you in your bank book.
Here are the steps to track your finances:
1) Use a spreadsheet
Here is an example of a spreadsheet you can use:
Create a grand total at the bottom and a net so you can see how much you have left.
2) Write down your paycheck and bills for April
This is the most helpful thing you can do for your money because, like we did above, you’ll see first-hand how quickly your bills add up.
3) Write down how much you spend on food
You may not have this number available, but luckily, I am a numbers nerd and tracked it, and you can use my number instead. I spend around ¥20,000 on just groceries for myself and probably another ¥10,000 on going out and drinks every month. Put this number (or your version of this number) in your spreadsheet.
4) Include your loans, travel, and car expenses
If you’re sending money home every month to pay off loans, write down this number now.
The weather is getting really nice, so you’ve probably been doing some sight-seeing. Include a rough estimate for travel expenses – maybe ¥25,000 if you are traveling a lot or ¥10,000 if you are not. It is always better to overestimate your numbers than it is not to leave yourself enough money every month.
Gas is pricey. You probably spent between ¥4,000 and ¥16,000 that month on gas. Also, include your car insurance and any car related expenses you had in April.
5) Find your net total
Take your paycheck and subtract all of the expenses. Whatever is left is your net for the month. This is the real amount of money you have available every month.
This number may be smaller than you thought it would be. That’s totally fine, but it is important that you have seen this number. It will forever alter how you view your paychecks and spending.
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Tracking my money was the best money decision I ever made. It allowed me to increase the amount I save every month, open a Roth IRA (only available to those who pay taxes on American income in the U.S.), and travel without guilt.
This doesn’t have to be something you do every month, but it is important you have an answer to the monthly question of “Where the #&!*^@ did my money go?!” Now, take this information, put aside more than enough for a rainy day, and take control of your money for the first time in your life.
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Austin is a 1st year junior high ALT in Fukui Prefecture. He hails from the grand city of Chicago and he enjoys hot dogs, his guitar, and baseball games. In his free time he writes about personal finance for twenty-somethings at ForeignersFinances.com.
Thanks for the article, Austin. There are a lot of decent money tracking application out there for people who want to start taking your advice without creating their own spreadsheet. Personally, I use MS Money. Unfortunately, I do not recommend it because Microsoft stopped supporting the program earlier this year. As a result, I also do not recommend Quicken as they now essentially have a monopoly on paid money tracking services and are overcharging accordingly. Instead, for most finance beginners, I recommend Mint.com or a similar competitor.
Additionally, when I started budgeting, I put together a very simple formula that allowed me to quickly take control of my finances. It takes some serious discipline at first, but eventually becomes second nature. Specifically, I broke each paycheck into percentages: (1) 10% for fun (eating out, hobbies, etc.); (2) 10% for irregular expenses (medical emergencies, gifts, travel, etc.); (3) 10% for long-term savings (retirement); and (4) 70% for regular expenses (loan repayment, car payments, rent, utilities, etc.). Someone with high-interest debt should use the long-term savings and any leftovers from regular expenses to take care of that quickly. $300 per month may not seem a lot for fun, and it is not, but it quickly teaches you to set priorities, a critical aspect of money management.
That’s a great little system you got there, Jarrad. Do you ever change the percentages or have you been able to stick with them so far?
I used Mint for a while too but it became too much of a hassle for me. I can alter the spreadsheet to my liking which is what I like. Mint always had trouble updating my accounts too so I could never accurately check my finances. I’ll keep an eye on them, but I love my spreadsheet in the meantime.
Thanks for the comment!
I downloaded iXpenseIt for my iPod Touch to keep track of my spending. It makes it really easy to note little expenditures (conbini, Mr. Donuts, iTunes, bus fare) for which I don’t usually get or keep receipts. Dang, but I spend a lot of money on Bikkle every month.
Thanks, Austin! Now I have something to do on office days: budget.
Don’t have too much fun at school, Laurel.
Impossible.
Little side note, you should probably remove the comment on the Roth IRA to avoid people getting in trouble back home – you can’t put more into a Roth than you’re taxed on in the US, and for many of us JETs that’s $0.
I thought that it was stated in this article that the IRA will slay us for investing. Which comment?
Good idea, Phil. Sorry for the confusion.
I’ve actually stuck with them pretty rigidly. I’m really big on financial discipline, so it’s not too hard. It’s a great way to learn to live within your means.