“What gets measured gets improved.” – Robin Sharma, author of The Greatness Guide.

I love reading financial blogs where they track savings/spendings and give their own figures. This week, I wanted to write my own post about the cost of living in an average city (ie. not Tokyo) in Japan.

As an experiment, I kept track of ever single yen I spent over the past week. It’s a good thing to do once in a while, especially if you find yourself at the end of the month with less than you had figured on – which, this month, I have…   ;)   It can be very eye-opening to see where all your hard-earned money is going, and useful for deciding how to adjust your spending habits.

(As a side note, my parents hate it when I write about money: too much personal information, they say. I respectfully disagree, and point to things I’ve learned from others’ financial blogs…  Sorry parents.)

I hope somebody living in Japan or planning on moving here will find my spending figures useful, but at the very least it was a good exercise for my own financial well-being.

Here’s the breakdown of what I spent this past week living in Japan (Mon, May 23rd to Sun, May 29th)

Utilities (electricity, gas and water, prorated to one week) 2,200 yen

Rent (prorated to one week) 9,030 yen

Groceries (5 trips to the grocery store, including wine) 11,492 yen

Eating out (sushi resto x1 and Yayoi-ken x3) 2,505 yen

Conbini Bentos (pre-made convenience store lunch x3) 1,261 yen

Cleaning supplies (from the 100 yen shop) 525 yen

“Band meeting” (ie. Chipping in for lunch at a jam session) 850 yen

Stuff I didn’t actually need (new earrings, etc) 5,000 yen

Grand total 32,863 yen

Or, $388 CAD per week. Not terrible, but not where I want to be.

Analyze

It was admittedly a quiet week: I had a bad cold for a few days and didn’t go to any bars (an average weekly bar tally might be 1500 yen). As if to make up for that, I bought some stuff I don’t really need but wanted (earrings, cologne) — I don’t usually spend this money. So if we remove the “stuff I didn’t need” from the equation, and if I spend a similar amount every week for a month, that amounts to about 123,000 yen — which puts me only slightly over budget. About 4000 yen per week over, which is completely fixable.

Another reason my numbers are high this week: I’m trying to gain weight. I’ve been working out, trying to put on a bit of muscle (I’ve had very mild success so far and I stepped it up this week) and protein is expensive in Japan. For example, as I type this, I’m snacking on a bag of cashews – 130g of nuts for 320yen (almost $4 CAD). That’s pretty expensive in my books. For protein in Japan, Chicken breast is the best deal, at between 58 and 68 yen per 100g, but I’ve discovered that one can only eat so much chicken…

Improve

Looking at my numbers, I can see that I could cut down on my costs by replacing most of my restaurant and conbini meals with home-made bentos — which also has the added benefit of being healthier. I’m also thinking about cheaper, yet still healthy sources of protein — but I would much rather be eating healthy than saving a few extra bucks. I may try this receipt-saving experiment again in a few weeks time to see if I can bring my costs down.

If you’re reading this, and have some cost of living tips for Japan (especially about buying groceries), please leave a comment!

###

Postscript: I suppose I should also address the elephant in the room. Some of my friends reading this may have noticed that my numbers are for only one person. Kim and I had some amazing adventures together over the years, but in April we went our separate ways. Kim’s now on her way to India for some spirit-cleansing yoga. She’s an amazing woman on an incredible path, and I wish her the best.

###

People I meet often ask me how I can afford to travel so much, so I thought I’d write out what I do. It isn’t easy to save like I do, but it does get me to my goal fast. Personally, I’d rather make some sacrifices for a year (no going out, etc) and then have a full block of uninterrupted time to travel.

How I Think About Money

If time is money, then the reverse is true: Money is time. I generally think this way, but I rarely see evidence of other people doing so. For me, if I save $10,000 to $15,000, I think of that money as a year’s worth of vacation. That means I don’t have to work for a year and get to travel and have incredible experiences. Really think about this – no work for a year. It’s pretty amazing once you experience it. Our work-centric culture would have us believe that this is somehow wrong, immature or selfish. That’s fine by me.

My current goal, working here in Japan is $22,000 by the end of 2011. My average in the last few months is about $1,750 out of a monthly payday of $2,800 — a monthly savings of about 62% of my income.  Not bad considering it’s Japan.

10 things I do to save money:

1. Limit monthly expenses. Have a cell phone and a land line? Axe the land line. Downgrade to the lowest possible mobile plan and only use SMS. Any other service (cable, Netflix, etc) that you pay monthly for, ask yourself: How much do I really need this? Can I get this (internet, etc) somewhere else without paying? (ie. Library)

2. Stop going to bars. They don’t call it drinking away your money for nothing. Instead, try hosting a potluck at your apartment. You’ll probably end up with leftovers and if you’re lucky, a spare bottle of wine for the week.

3. Analyze your spending habits. If I find my money is going too quickly, I write down every penny I spent for a week. $5 a day for that Starbucks latte doesn’t sound like a lot, but it adds up to almost $2000 over the course of a year.

4. Pay yourself first. The day you get paid, separate your money into two piles: monthly budget, and savings for X trip. I put my trip savings in an account that I don’t touch, even if I spend my monthly budget money too fast.

5. Find a job situation that covers some of your necessary expenses. If you haven’t started working yet to save, look for jobs that include arrangements that cover some expenses, such as rent or food. I decided on my past job because, although the salary was relatively low ($27,000 a year), the job included room and board, allowing me to pocket 100% of my after-tax salary. (I used half the money to finish paying back student loans and the other half to travel)

6. Don’t buy anything new. Again, you should be asking yourself: how much do I really need this (shirt, guitar, etc). It amazes me when people ask me how I can save so much money, especially people who make double what I do, and spend their hard-earned money on Plasma TVs in every room and new silver plated rims on their Honda Civics. (Okay, I made the last one up – I don’t know anybody with a Civic).

7. Have a yard sale. If you’re planning a long trip, a few months before you leave, take everything you don’t need anymore that’s worth more than $30 and list it on Ebay. Take everything that didn’t sell and the cheaper items and have a yard sale – Craig’s list works wonders for getting rid of junk!

8. Take advantage of smart offers. i.e. Credit cards with cash back. I got a Citi Mastercard that gave me 2% cash back on every dollar I spent. I used it for everything and received a check for $600 after the second year. A quick google search for “best (insert your country here) credit cards with cashback” will tell you what’s best at the moment. Caveat: it just occurred to me that not everybody pays their balance in full every month – this one will only make you money if you clear your balance every month. Otherwise, skip it.

9. Get a roommate. Whatever you’re paying in rent right now, imagine paying half of that. Have lots of space? Imagine paying just a third of that. Short term sacrifice (lack of privacy, dirty dishes) for long-term gain (a year off work!). Plus, there’s a lot to be said for shared living.

10. Parent’s house for the transition. Once you’ve amassed most of your nest-egg, there’s no shame in heading to the parent’s house for that period of time between working and setting off. Okay, there’s a little shame, but suck it up. You’ll save money, get home-cooked meals, and the parents will love it.

Opinions Please!

How much does it cost to travel? I get asked this question a lot.

The answer: Half a million dollars. Read on.

Last time I was in Halifax, while scanning the Globe and Mail’s lifestyle section, a headline caught my eye:  Couple cost out a life of travel.

The article profiled a 40-ish couple who were looking to retire early (at 60 rather than 65) and then spend each year living in a new country: France, Morroco, Egypt — yeah, this was a little while ago…

The article examined the couple’s finances and incomes and calculated how much money the couple would need to save before saying goodbye to their jobs to live their dream life. The number the financial analyst came up with? $50,000 for each year they were on the road. Ten years of travel would mean $500,000. Count those zeroes, that is not a typo. The happy couple estimated they would reach their goal in a mere 15-20 years. Just in time for their first hip-replacement surgery.

So, if I want to see the world, all I need is to wait twenty years until I’ve saved up half a million dollars. Awesome. Inspirational.

The article demonstrates two assumptions that I disdain about mainstream financial culture: the deferred lifestyle plan and the idea that travel needs to be expensive.

Read the rest of this entry »