I know, you think I must be crazy for suggesting you could save over $10,000 a year by living in Tokyo, a city famous for its supposed ‘high cost of living.’
But if there’s one big smack in the face I’ve received from reverse culture shock in the United States, it’s this:
It’s goddamn expensive to live in America!
I want to compare cost of living in America with what most people consider an expensive country: Japan.
More specifically, Tokyo.
This scenario is based on a single individual working in Tokyo with an English teacher’s salary, which is about 30,000 USD per year and averages out to 2,500 dollars per month.
For simplicity’s sake I’m going to compare Tokyo with Los Angeles at the above salary, but account an extra 5,000 dollars of income for our worker in L.A. since surviving on 30,000 USD in Los Angeles is unthinkable. Most full time jobs in L.A. will pay at least 35,000 USD, so this will be the salary benchmark for our young hopeful in southern California.
Also, I will calculate everything in rough dollar amounts to make things easy. My exchange rate used below is a simple 100 JPY = 1 USD, although the current rate is about 120 JPY = 1 USD.
Anyway, onto the numbers!
Housing & Rent
While housing in Tokyo tends to be more on the cramped side, apartments are still clean, well-equipped, new, and most of all safe. Usually these units include a tiny kitchen, a bathroom with tub and shower and a room that acts as your living room and bedroom (so basically, it’s a studio).
In the downtown area of Tokyo (such as in the Ueno train station area), a studio/apartment of this caliber will cost about 800 USD/month.
In Los Angeles, finding an clean studio in a safe neighborhood that is just as centrally located as Ueno will set you back at least 1500 USD/month.
Monthly Tokyo Housing Costs: 800 USD
Monthly LA Housing Costs: 1500 USD
Tokyo is blessed with the world’s best railway and subway network. You can literally go anywhere in Tokyo with the train and subway alone. Plus, the trains come frequently—and when I mean frequently, I mean every two minutes. Trains are clean, orderly, and most of all punctual.
Based on the assumption that you live in Ueno and commute to Shinagawa (a major business area near Tokyo station) your round trip ticket commute would amount to 8 USD/day (and about 30 minutes one way).
In Los Angeles, you could live without a car—but your life would be absolutely miserable. So for simplicity’s sake, let’s assume you cave in and get a car to move around because, really, living in Los Angeles without a car is near impossible.
Let’s assume you lease a car (which I did) and your monthly payment is 200 USD/month (no down payment) with car insurance at 100 USD/month (which is a deal for Los Angeles). Throw in gas and that’s another 100 USD/month.
Total? You’re paying 400 USD/month for a car. I know this seems like an optional expense—but trust me, living in Los Angeles without a car is a major handicap (plus, the average commute time in Los Angeles by car is 40 minutes—one way!)
Public transportation in LA is also not cheap. I actually take the train to work and it costs me 350 USD/month. No, you did not read that wrong. The train ticket is more expensive than my total car payment.
Monthly Tokyo Transport Cost: 160 USD/month in train tickets
Monthly Los Angeles Transport Cost: 400 USD/month in car payment/insurance/gas OR 350 USD/month for train/public transit
Food & Restaurants
Meat and fruit in Japan tend to be slightly more expensive than the United States (it’s an island nation, it’s hard to mass produce livestock and agriculture due to the terrain). In exchange, fish and seafood are much cheaper than the prices at your typical grocery store in LA. Vegetable prices in both countries are comparable. Depending on the types of meals you cook food expenses can vary, but for the most part Tokyo and Los Angeles are equal in food prices.
In the worst-case scenario where you don’t cook at all, 7-11 in Japan sells bento boxes for about 500 yen (5 dollars) per meal. Even if you ate at 7-11 for every meal seven times a week, your food expense would still come out to about 105 USD/week.
Restaurants prices in Japan are comparable to the USA, with an outing at a slightly nice establishment costing about 15 USD per person. However, there is one huge difference between Tokyo and LA: no tipping for Tokyo. Although tipping may seem like a small after thought, it’s actually an extra 20% in cost for Americans that dine out. Plus, service in America just plain sucks compared to Japan.
In Tokyo, I think one would be quite cozy spending 500 USD/month on food & restaurants.
Since food prices in America are comparable, I’ll budget the same price for the states—with an extra 50 dollars for tip.
Monthly Food Costs in Japan: 500 USD
Monthly Food Costs in America: 550 USD
The Grand Total
Monthly Cost of Living in Tokyo: 1460 USD/month
Annual Cost of Living in Tokyo: 17,520 USD
Monthly Cost of Living in Los Angeles: 2450 USD/month
Annual Cost of Living in Los Angeles: 29,400 USD
And the grand total for savings are…
30,000 USD annual salary – 17,520 USD cost of living = 12,480 USD Savings
Los Angeles Savings:
35,000 USD annual salary – 29,400 USD cost of living = 5,600 USD
Living in Tokyo will allow you to save an extra 6,800 more a year compared to life in Los Angeles.
Even if you were to blow an extra 2,000 USD on shopping, travel, etc.. in Japan on a yearly basis, you would still save more than double what you could in Los Angeles.
Can you imagine what you could do with over 12,000 dollars in savings? You could pay off a huge chunk of your student loans, invest, take a long vacation, or even get that masters degree you were pining after.
While Tokyo is infamous for being an expensive city, the great public transportation and low cost of rent make it much more affordable than costly Los Angeles.
And living in Japan for a year is more than just a great way to save money—it’s an amazing chance to take a year off from the grind of life in the USA and experience another culture.
Have you found that you can save far more money living abroad than in your own country? What do you think about cost of living abroad?
*Note on taxes: I did not account for taxes and healthcare in the above scenario. Taxes in Japan are actually quite affordable and are only slightly more money than what Los Angelites have to pay in California taxes.
*Note on health insurance: Healthcare is also cheaper in Japan, since the government (or company) is required to cover 70% of everyone’s healthcare cost. In the United States, many live without health insurance due to exorbitant healthcare prices. Even with Obamacare, I pay 250 USD/month for a plan that does not cover dental or vision. Healthcare in Japan is also ranked much higher than the United States, so you’ll not only be saving money—but you’ll get better care.