Japan once had a reputation for having a high cost of living. Previous surveys such as the one by global consulting firm Mercer, have shown that Tokyo has dropped ten spots. Currently, Tokyo holds 19th place, well behind Hong Kong (1), Singapore (2) and Shanghai (12) for the most expensive cities to live in.
Despite the lower ranking, the question remains for people who want to move here: “Can I afford to live in Japan?” The answer is still “yes!” Here’s what you need to factor in to understand how much it costs to live in Japan.
Calculating the Cost of Living in Japan
The cost of living measures the balance between how much money you need to spend to live your daily life and how much you earn. It goes without saying that the higher the cost of living, the less money you have left. Our calculation is based on local data, so you can work out what it costs to live in Japan, not just on the glossy surface of its capital.
Average Expenditure of a Japanese Household
The latest data on food spending from the Japanese Ministry of Internal Affairs and Communications in 2023 shows that the average national food and drink expenses for a household of two were ¥72,399 a month. That included ¥5,614 for cereals such as rice, bread and noodles, ¥12,504 for meat and fish and ¥12,191 for fresh fruit and vegetables.
Average Monthly Expenditure for Food ¥72,399 Cereals ¥5,614 Seafood ¥6,203 Meat ¥6,301 Dairy ¥3,897 Vegetables and Seaweed ¥8,745 Fruit ¥3,446 Fats and oils and seasonings ¥3,484 Confectionery ¥5,696 Prepared Food ¥11,056 Drink ¥4,668 Liquor ¥3,808 Eating out ¥9,483
Utilities, including electricity, gas and water, cost ¥21,169 on average per month for two. Although we can’t do without these services, we can always conserve our usage and trim our expenditures. Check outour tips on saving money in Japan article for ways to do that.
Average Monthly Costs for Utilities ¥21,169 Electricity ¥10,940 Gas ¥4,971 Water ¥4,242 Other ¥1,466
Transport and communications services are estimated at ¥36,472 a month. Other monthly figures include ¥11,187 for furniture and household products, ¥7,190 for clothing and footwear, ¥15,641 for health care supplies and equipment and ¥54,074 for miscellaneous spending such as beauty services and entertainment.
All these expenditures add up to a total of ¥218,132 for two people. Or ¥109,066 for one person if we half that and round up. To that, we need to add the sizeable sums of rent, taxes and social insurance.
Rent in Japan
One of our biggest living costs is rent.Tokyo is home to Japan’s most expensive properties, as all realms of real estate: offices, shops and housing all compete for space in the metropolis. Data from Japanese real estate leasing company at Home tells us that the average monthly rent for a one-room, or studio apartment in Tokyo is ¥94,694. It drops significantly once you look in Osaka, at ¥58,859, and further still in one of Japan’s most rural areas, Hokkaido, where it’s just ¥34,081. The average of these three figures is ¥62,544.
Taxes, Pensions and Health insurance
This is the last piece of our cost of living calculation. All of these taxes and fees vary according to factors including salary, location and the presence of dependents. We’ll calculate a general figure here, but you can check further details in theJapan 101 article that covers them.
Taxable Income Tax Rates Up to ¥1,950,000 5% Over ¥1,950,000 Up to ¥3,300,000 10% Over ¥3,300,000 Up to ¥6,950,000 20% Over ¥6,950,000 Up to ¥9,000,000 23% Over ¥9,000,000 Up to ¥18,000,000 33% Over ¥18,000,000 Up to ¥40,000,000 40% Over ¥40,000,000 45%
Income tax is calculated on a percentage basis according to the level of one’s salary. Annual earnings of ¥3,300,000 – ¥6,950,000 are taxed at 20%. According to an earlier article in this series, the average salary in Japan is ¥4.58 million and fits into that bracket.
Along with income tax, a prefectural tax of about 4% is also deducted. At the local government level,residence or municipal tax leeches another 6%.
Full-time employees have a further 10% removed from their paycheck to cover the Employees’ Health Insurance and Pension (which also includes unemployment insurance). Even those not working full-time are required to be enrolled in a form ofhealth insurance and the national pension system.
Based on the average annual salary, these taxes add up to 40% of income. Broadly speaking then, that’s around 40% of your earnings taken care of.
How much does it cost to live in Japan?
Divide the average annual salary by twelve, and we get a pre-tax monthly income of ¥381,666.
To roughly calculate the average monthly cost of living, we take 40% of that is ¥152,666. Adding the average Japanese rent of ¥64,544 and daily expenses of ¥109,066. That’s a total of ¥326,276 as the average monthly cost of living in Japan.
This leaves us with ¥55,390 from our salary meaning that yes, youcan afford to live in Japan. And possibly even save money, too.
Note that these calculations are based on averages worked out from the sourced data. How much it will cost you depends on many variable factors. But the point is that Japan is still very much an affordable place to live in 2024.
Will Japan be cheaper or more expensive to live in the future?
Rent in Tokyo has been rising and is expected to continue its ascent as families and elderly people move to its central wards. In addition, overall wage growth is also quite slow. At a time when the global economy is riddled with uncertainties, Japanese companies are reluctant to hire full-time workers amid concerns over the outlook for the economy. It is a time of number-crunching throughout Japan for households, as well as businesses.
Under such conditions, it is a good idea to have a career strategy in place to move you up the earnings scale. Read our earlier article in this series, What Is the Average Salary in Japan in 2024? to learn which job fields will have you earn more.
