When I first started on my financial independence journey, I didn’t really know what to expect. It was something totally new to me and so I had to try different ways to make it work. All I knew at the time was that I wanted to save at least ¥1,500,000 per year. That meant saving at least ¥125,000 per month. Now, working as a customer support staff at a small start-up, the pay is not the best. According to Gaijinpot, the minimum average salary for an entry-level employee is ¥255,500 per month. However, I didn’t even earn that much. My salary before taxes was ¥225,000 inclusive of overtime pay plus my company didn’t offer bonuses, which meant that I actually earned less than the national average.
Monthly salary: ¥225,000 Deductibles: ¥38,988 Take home pay: ¥186,012
After deducting things like income tax, health insurance, pension payments, etc I was only left with ¥186,000 of take-home pay. This meant that if I was to save at least ¥125,000 of it, I would only be able to spend around ¥61,000 a month which was unthinkable especially when I lived in one of the most expensive cities in the world. Thus, I came up with a plan;
- Step 1: Earn Side-Income For Extra Money
Since I didn’t earn enough at my full-time job to be able to save the amount I wanted, the fastest way to achieve that goal was to make more on the side. I filled up my time after work and during weekends by taking up various part-time jobs such as teaching English privately, working as a test invigilator, selling used items on Mercari, etc which greatly increased the amount of money I was able to save. It’s kind of ironic though how an aversion to working has made me work even harder than ever lol.
- Step 2: Move Somewhere Cheaper
Or in my case, move in with my boyfriend at the time. The rent I was paying for my room at the share house was ¥99,700 per month which was an expense I needed to cut if I were to reach my savings goals so I took the plunge and moved in with my boyfriend to save costs. He was also staying at the share house, which meant that the two of us would have to share a tiny 9m² room and hopefully not kill each other in the process. Do you even know how small a 9m² room is? My friend Cheryl dropped by the apartment once when I was moving in and she commented that it looked smaller than the bathrooms in Malaysia. That’s how small it was lol. Luckily, we got along really well and seldom argued so the cramped living arrangements didn’t bother us too much. I also got to save a significant chunk on rent so yay me!
- Step 3: Spending Less Than I Earned
As you can see from the image above, my total spending for the year was ¥977,653 which was around a third of my total earnings for 2019. I did that by cooking most of my meals at home, bringing bentos to work, staying in most of the time, and not buying new clothes. This worked partially because I was an introvert who didn’t like socializing much anyway and also because most of my friends lived in the same share house which meant I could hang out with them at home (for free). If I was living outside, I imagine my spending would have increased a little more.
- Step 4: Keep Track Of Expenses
Being able to keep track of how much money is going in and out of your accounts is crucial in your planning for financial independence. For me, I used a Japanese personal finance app called Money Tree which enabled me to keep track of how much I spent each month. The app lets me enter how much I spent every day as well as tracks the amount of salary entering my bank accounts each month. Just thinking about saving is not enough as being able to see the cold hard figures of my spending gave me the wake-up call I needed in the beginning to start cutting costs. Unfortunately, I haven’t found a good finance app that caters to the Malaysian market yet and so my 2020 earnings vs spendings have largely been left undocumented 🙁
- Step 5: Invest
Just saving my money was not enough to reach financial independence, and so investing was also a crucial factor in increasing the number of assets I had. Being an investing beginner, I tried using a robo-advisor Wealth Navi during my first year. However, the earnings weren’t great that year due to a drop in the stock market in 2018 and they charged a 1% management fee per year which eroded my meager earnings even more. I sold all my holdings in 2019 and moved on by opening a NISA account with SBI Securities to invest in index funds. I invested ¥1,200,000 and made a profit of ¥154,297 after selling the stocks this year. Truthfully I’d have liked to continue investing in my NISA account as Malaysia does not have a wide selection of good ETFs to choose from but sadly SBI deactivated my NISA account once I left Japan.
- Step 6: Research, Research, Research
To make sure my plan was a success, I had to do as much research as possible and what better way to do it than to emulate those who were on the same journey as myself? One of my favorite resources for achieving financial independence in Japan was Retire Japan, a blog focusing on, you guessed it; retiring in Japan. I also perused the blogs of other FIRE peeps such as Mr. Money Mustache and Mr Tako Escapes. Their blogs are catered more to an American audience but I enjoyed reading their content nonetheless. Besides blogs, I also joined r/financialindependence where their stories of achieving FI motivated me to charge on when the going got rough.
And there you have it! These are the steps I took in order to save a grand total of ¥2,088,497 (Roughly RM77,274 with an exchange rate of 3.7 at the time) in 2019 despite earning less than my peers. I hope this post has inspired you to kickstart your own financial independence journey as well! If you have any questions, do leave them in the comment box below.
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