Living and working in Japan can be a great experience. Some take that experience back home with them, and some find a whole new life through it. One question that many who are on the fence worry over is, “Can I afford to live in Japan?”. Whilst Japan has a reputation for being an expensive country, the answer is actually “Yes, and quiet comfortably too!”. The key thing that you need to realize is that while Japan can be rather expensive for tourists, as a resident things become much more manageable.
Today we are going to look at average salaries, expected taxes and other deductions, rent, food and utilities. We can therefore get an idea of the kind of money you will be able to live and work in Japan. Everyone is different, and some people like to spend more than others. Read on to get a good idea on whether living and working in Japan is right for you.
Average Japanese Salary, Before and After Tax
Salaries are fairly simple to understand in Japan, because wages are more based on experience than the particular field (within reason). Whilst the median salary is a very livable 545,000 JPY per month, the data for foreigners is a little bit different. Let’s look at average salaries for 2020.
| Industry | Average annual income (万円)* | |||||
|---|---|---|---|---|---|---|
| Age | 20s | 30s | 40s | 50s | Male av. | Female av. |
| Maker | 372 | 477 | 553 | 705 | 492 | 366 |
| Finance General | 372 | 532 | 581 | 716 | 540 | 370 |
| General Trading Company | 367 | 500 | 538 | 867 | 487 | 376 |
| IT/Communication | 370 | 498 | 599 | 716 | 471 | 386 |
| Medical | 346 | 442 | 540 | 694 | 510 | 357 |
| Construction/Factory/Real estate | 367 | 453 | 501 | 551 | 451 | 349 |
| Internet/Advertising/Media | 352 | 446 | 518 | 579 | 448 | 364 |
| Specialized Trading Company | 347 | 437 | 522 | 619 | 443 | 343 |
| Services | 326 | 403 | 443 | 476 | 405 | 328 |
| Retail/Restaurant | 308 | 384 | 449 | 496 | 390 | 309 |
*万=10,000. Therefore 372万円 is 3720000 yen.
Source 1: https://doda.jp/guide/heikin/gyousyu/
As for English teaching positions, average salaries are as follows.
| Eikaiwa | ¥250,000/month |
| ALT – direct hire | ¥250,000/month |
| ALT – contract company | ¥250,000/month |
| University & Int. Schools | ¥300,000 ~ ¥600,000/month |
Income tax in Japan falls into the following brackets:
| Annual Taxable Income | Tax Rate |
|---|---|
| < ¥1,950,000 | 5% |
| ¥1,950,000 – ¥3,300,000 | 10% |
| ¥3,300,000 – ¥6,950,000 | 20% |
| ¥6,950,000 – ¥9,000,000 | 23% |
| ¥9,000,000 – ¥18,000,000 | 33% |
| > ¥18,000,000 | 40% |
On top of your income tax, you also pay a residence tax in Japan. This tax is paid according to where you live, and each city is slightly different. It ranges from 5 percent to 10 percent of your taxable income. Finally you will also need to pay a pension and health insurance. As a full time worker these should be deducted from your salary. Health insurance equates to another 10 percent of your salary, and the pension is also around 10 percent.
In the 1,950,000 to 3,300,000 taxable income range, you are therefore looking at receiving around 60% of your salary after taxes and insurance payments.
Cost of Living Expenses
The following data was found by the statistics bureau of Japan, showing the average monthly expenses for a single resident household in 2020.
| Food | ¥38,257 |
| Furniture and Housewares | ¥5,293 |
| Light, heat and water | ¥11,686 |
| Residence (rent, maintenance etc.) | ¥20,948 |
| Clothing and footwear | ¥4,692 |
| Health care (medicine etc.) | ¥7,029 |
| Transportation | ¥2,633 |
| Car expenses | ¥8,298 |
| Communication expenses (phone etc.) | ¥7,286 |
| Education | ¥0 |
| Cultural entertainment | ¥15,452 |
| Hairdressing and care | ¥4,802 |
| Personal belongings | ¥903 |
| Tobacco | ¥1,562 |
| Other expenses | ¥6,576 |
| Excess entertainment expenses | ¥12,934 |
| Total expenditures | ¥148,351 |
Source: https://www.stat.go.jp/english/data/tanshin/et20.html
As is always the case with statistical data, your situation will be somewhat different (for example nonsmokers will not have a tobacco expense). However this data is a better indication of the monthly cost of living in Japan, if you intend to live like a local. Expat focused data will show a higher cost of living, because it generally assumes higher wages and a certain non standard lifestyle.
Personally I am surprised at the rent of 20,000 yen in this data. In more rural areas you can certainly find such apartments, but in any city you should expect to pay 50,000 yen or more. The average rent for a studio apartment in Tokyo is about 90,000 yen!
Example Case Study
By far the most common job for foreigners from English speaking countries is English teaching. The average English teaching salary is ¥3.21 million yen, or ¥267,500 a month. Let’s take a look at what kind of financial situation this would place you in.
| Yearly | Monthly | USD | |
|---|---|---|---|
| Salary | ¥3,200,000 | ¥266,667 | $2,528 |
| Insurance / Pension | – ¥451,200 | – ¥37,600 | $356 |
| Income Tax | – ¥62,700 | – ¥5225 | $50 |
| Resident Tax | – ¥122,800 | – ¥10,233 | $97 |
| Net Income | ¥2,563,300 | ¥213,608 | $2,025 |
Taking the cost of living expenses of ¥148,351 from a net income of ¥213,608 you could pocket ¥65,257 each month. That’s not half bad at all! Assuming a more realistic rent of ¥50,000, that’s still ¥35,257 in savings each month.
English teaching salaries tend to be rather static, but other career industries usually have yearly set raises and bonuses. Many of the positions advertised on Jobs in Japan will have such upward momentum, so if you would like greater financial freedom it’s a good idea to regularly check their job postings. It pays to be proactive about your employment in Japan!
I hope this data will help you make an informed decision on whether you can afford to live in Japan. Everyone’s situation is different, but working and living in Japan is by no means financially difficult, if you live like a local.
Luke Jackson
Currently living the good life on my little farm in the mountains of Japan. I grow my own rice and vegetables, and try to avoid doing things I don't enjoy! I figure this is the best way to live life. I enjoy writing every day, sometimes songs, sometimes bedtime stories for my daughter, and sometimes articles about Japan.More articles by Luke Jackson
