“While the majority claim they could save $20 more per week for retirement, many of them have not even taken the time to find out how much they really need to save.” With Japan’s flagging pension system a current topic in the news, more and more Japanese people are waking up to the fact that they need to start taking responsibility for their own retirement. The Principal Financial Well-Being Survey notes that only 12 percent of Japanese workers believe their standard of living will improve when they retire, while only 3 percent have confidence in the government’s ability to provide pension or health benefits equal to the ones they currently receive.

Frightening!

Most large Japanese and foreign banks offer some sort of foreign currency denominated accounts, most often in Euro or US dollars, with other currencies offered at an increasingly number of establishments. Citibank, for example, offers simply foreign-currency denominated savings accounts in over eight currencies, with terms from one week to five years. Shorter-term maturity savings instruments often have a higher payout.

You can also open a direct deposit-style ‘gaika teiki yokin,’ which withdraws a set amount of yen from your bank account every month, converts it into your desired foreign currency, and holds it in a Japanese account. It’s a great way to build foreign currency savings while living in Japan.

© 2004 Wendy J. Imura.

Maybe it’s all the uncertainty in the air, but March always seems to find me performing an “annual review” on the state of my personal finances as well. In particular, I like to update my information on
the amount of savings that I have in my various accounts. Most people seem surprised to hear that there are a number of useful, smart, and frugal financial instruments offered by Japanese institutions that can be of help to the intrepid ex-pat who seeks them out.

One of the easiest ways I have found to save money in Japan is the use of a direct-deposit account (called a ‘teiki yokin’) through a commercial bank, trust bank, or the post office. There are several types. For ’salarymen’ families or employed persons at a Japanese company, there are “zaigata” savings accounts. These are essentially a direct savings plan set up by a company for their workers, and contract employees may not be eligible. The company usually manages these accounts, and interest rates and holding terms vary. Talk with your employer if you are interested.

For everyone else, I recommend the ‘tsumitate teiki yokin’ (automatic savings timed deposit). This can be set up through any commercial bank where you already have an account, and is even offered at the Japanese Post Office. Term periods anywhere from one month to a year or more. Minimum deposits are usually Y5000, increasing afterwards in increments of Y1000. (Note that post office savings are limited to Y10 million per person.)

Why use a ‘teiki yokin’? Well, while interest rates are negligible, it’s an idiot-proof way of starting and keeping a habit of saving. The money is automatically withdrawn from your main account into the savings account, and while accessible in most cases (should you have an emergency), most of the time it just grows without you noticing it! I personally time my monthly savings (10% of salary) withdrawal for the day after payday, avoiding any cash flow worries.

While there are many other unique ‘teiki yokin’ combination products, including multiple currency options, the simple automatic withdrawal plan is a very good first step to building savings, pain-free, in Japan. Are you interested? Walk down to your local bank tellers’ window during a quiet hour (be sure and bring your passbook, ID, and personal seal if you have one), and begin inquiring!

© 2004 Wendy J. Imura.