Cost of living in Tokyo: My surprising experiences
Tokyo is a beautiful city if you like humans and urban living. If you love the greens, it’s probably not a place you might enjoy. I shared some of my reasons on moving to Tokyo in an earlier blog. My experiences over the last few months have been from “Oh my god. Why did I do this to myself!” to “How could I have ever lived in another city?”. I decided to move here only after doing a very quick analysis on cost of living. I had heard a lot of stories ranging from it’s not so bad to it’s crazy expensive. So after having lived here 3 months, I can share some more details on what to expect and what not to.
I put the major costs of living in Tokyo (and some parts maybe applicable to all of Japan) as the following:
- Taxes & Insurance
- Rent and Bills
- Everything else
Note: This is just my personal account and is not intended to be a replacement to financial or tax advice from a professional. Please use this information at your own risk.
Taxes & Insurance
Tokyo has a progressive slab based income tax. As of 2017, the rates and other major information can be found on this site. The slab rates vary from 5% to 45%. Depending on whether you are a resident or non-resident it can obviously vary. There is an employment income exemption available as well and bunch of other exemptions that I do not know about.
On top of this, there is a ward tax. This goes directly to your municipal government and is applicable to any residents who were residing in Japan on 1st January of the year. It is basically determined at approximately 10% of your total income from last June to current May.
Depending on your company, you might have the standard national insurance or your company might have its own insurance. Generally there are 3 types of insurance: health, pension and labor. There are various rules around these insurances. Here are the ones I know:
- Health Insurance rate depends on whether your company pays a part of it or you have standard insurance etc. The standard rate is 9.9% in Tokyo I think but if you work for a major company you probably pay about 3.5%. This rate is applicable to a maximum salary of 1,390,000 JPY per month. For anything above that amount, no additional amount is charged. There is a cap of 5,730,000 JPY on bonuses i believe.
- Pension Insurance rate is 18% or so paid half (9%) by employee and half by employer. This is also subject to a cap of 620,000 JPY per month. There is a cap of 1,500,000 JPY on bonuses i believe.
- Labor insurance is 0.03% I think. There is no cap on this.
Here is an info-graphic on various salary scenarios detailing how much tax and insurance you might pay. I generally use a USD to JPY conversion of $1 = 100 JPY though the real exchange rate is around 114 at the time of writing.
Rent and Bills
Rent is the tricky one. I have seen rents in Tokyo area from anywhere from 50,000 JPY to 500,000 JPY per month. It honestly depends on your budget. The rents are comparable to major metropolitan areas in US like Seattle, NY or bay area. However you will get smaller sizes of apartments here. A normal, comfy 1 bedroom apartment is somewhere around 45 sq. meters. Similarly a 2 bedroom apt and 3 bedroom apt are 55 and 65 sq. meters respectively. If you stay in the heart of Tokyo, I believe it is possible to find a 2 bed apt for 200-250K JPY. On the other end if you live like 30 minutes away from Shibuya (probably the most downtown part of Tokyo) , you can possibly get a 1 bed apartment for less than 100K JPY as well.
Utilities: In total i think you can expect to pay 15,000 to 20,000 JPY per month on utilities including Internet, Phone etc for 2 people.
- Internet: Most major internet services providing higher than 10Mbps services generally require an installation. The installation can be expensive relatively costing about 30,000 JPY. After that though it is feasible to get plans that cost about 3000-4000 JPY per month.
- Phone: There are quite a few cheap cellphone providers. It’s possible to get a SIM card with voice and data services with 5GB of data for 1500 JPY per month. There are certain plans which might have per day data limit of 150 MB that are available for 1200-1300 JPY per month as well.
- Electricity: The per unit cost of electricity is around 27-30 JPY per KWh. There are certain plans that allow for night usage to be charged lower at 17.7 JPY per KWh. I think a 2 bedroom apartment usually consumes about 7000-8000 JPY of electricity per month.
- Gas: Expect to pay about 5000 JPY for a 2 bedroom apartment. Some apartments, like mine, do not have gas at all and use electricity for all kinds of heating.
- Water: Water is fairly cheap as well. Expect to pay about 1000-2000 JPY per month for water.
- Apartment Move-in costs: No one tells you about this but this can be an extremely difficult and expensive part of renting a new apartment in Tokyo. Some of the charges include: Security deposit of 1-2 months rent, Brokerage: 1 month rent, Key Money: 1 month rent, Guarantor company: 0.5 months rent and the actual rent. Ultimately it depends on the apartment you are trying to rent and your broker etc. It is possible to avoid these fees by renting directly, being able to speak Japanese or using sites like UR Housing. So it is quite probable you might have to pay 3 months of rent upfront to move into your apartment.
- Appliances: Another thing i found weird coming from US was being used to getting appliances in your apartment by default. However, in Japan, you get the house with nothing. Literally nothing. If you are lucky, you might get an A/C or two. But for most part you will get an apartment with no refrigerator, no washing machine, no microwave, no dishwasher, no light bulbs in my case and of course no A/C. Trying to buy all this on day 1 can be challenging both financially and due to language. The good part about Tokyo (and Japan in general) is the really strong recycle infrastructure. You can pretty much buy everything in Used but excellent condition. If you are willing to buy 5-7 year old appliances, you can get great deals. However the TV’s in Japan are generally much more expensive than US for some reason.
- Transit / Transportation: The two previous countries I have lived in are US and India. In both, the cost of transit has been fairly cheap compared to actual cost of living. In Delhi metro for example tickets are INR 15-30 ( $0.25 – $.5). Similarly in Seattle a bus ride would cost you $2.25-$3.5 but you could always get a day pass for $8 or monthly pass for all transit for $100 or so. Most companies also provided the monthly pass for free to employees.Tokyo however is more expensive. The bus fares are 210 JPY. The train fares start from 160 JPY. There are 3 major train networks: Tokyo Metro, Toei Oedo and JR East. If you switch from train to bus or between networks you may not really get any discounts as well. So if 2 of you want to go anywhere on the train, that’s 640 JPY ( 2 x 160 x round trip). If you have to go to 3 different areas, you are still going to pay for each ride. There are monthly commuter passes available between the set of stations you specify which might save you 20% perhaps. The unlimited train passes are only valid on their respective networks. Tokyo Metro for example has a 15,800 JPY monthly unlimited pass.
- Food & Grocery: In general Tokyo is a food lover’s paradise. There’s a lot to try catering to every budget. You can go into a cheap ramen shop for a huge steaming bowl of ramen for 500 JPY or you can go to one of the higher end places with their 10000 JPY set menu. On average i have found that we pay about 12-1500 JPY per person while eating out. Groceries on the other hand seem to be more expensive then US for sure. The biggest surprise is Milk. In US, you could get a gallon (3.78L) for $2.5-$3. In Tokyo, the milk prices are about 200 JPY per liter ( or $6.5 per gallon). Vegetables, fruits and personal care items also seem to be more expensive than US. I think for 2 people you can expect to pay 20 to 40K JPY per month.
So that’s how I have found Tokyo so far. If you are curious about Tokyo or have questions, let me know and i will try my best to answer.