Moving to Japan: what to fix in your first 90 days so you don't bleed money on rent, taxes, and insurance

Key Takeaways

Life in Japan's cost of living has finally crept above long-term lows, so budget planning is more important than ever for expats.

• Inflation: Consumer prices in Japan have exceeded 2% since FY2022, meaning rents and utility costs are rising.
• Rent Guideline: A common rule is to keep rent around 1/3 of your net salary, and ideally closer to 1/4 if you're just starting your new life in Japan.
• Move-in Costs: Typical first-month expenses (security deposit, key money, agent fee, prepaid rent) can total 4–6× the monthly rent when moving into a new apartment. Planning ahead is crucial.
• Must-Do Legal Steps: All foreigners (visa >3 months) must enroll in national health insurance and national pension. Skipping this means paying full medical bills and retroactive premiums.
• 2025 Update: In July 2025 Japan launched a new Cabinet office for foreigner integration, signaling stricter oversight on social insurance and tax compliance for newcomers new to Japan.

Why "fix your finances" matters for expats in 2025

Japan is a country that has long had low inflation and stable rents, but after the pandemic global price surges hit Japan. Since FY2022 prices have risen over 2%, squeezing household budgets. At the same time, Japan's population is aging and competition for housing is shifting (for example, foreign residents in Japan are near record levels). In short, newcomers can no longer assume rents and costs will stay flat – starting your new life in Japan with smart moves is now critical. For example, especially in big cities like Tokyo, the skyline has become increasingly expensive, and missing a simple step (like signing up for insurance) could cost thousands later. The contrast with past decades (when housing costs were much lower relative to income) makes this urgency clear. In 2025, being proactive can save you a major headache – and wallet pain – down the road.

Administrative setup for starting your new life: residence card and banking

All newcomers coming to Japan must register your address (住民登録) at the municipal office within 14 days of moving to a new country, per Japanese law. This residency registration is the basis for local taxes, insurance enrollment, and even opening a bank account. When you register, you will receive a juminhyo (residence certificate) and often a My Number (Individual Number) card, which you'll need for many services. At this visit you should also apply for national health insurance (国民健康保険) and national pension (国民年金) if you are not covered by an employer plan. Some key tips: have your passport and residence card on hand, and double-check city office hours. Pro tip: Save copies of all forms and get official seals (personal seal) if possible.

Once you have a local address and plan to live in Japan long-term, open a Japanese bank account. This will be needed to pay rent, utility bills, and receive salary. Choose a major bank branch or one that offers English support; online banks like Japan Post Bank or Shinsei japan often have simpler requirements and are more foreigner-friendly. Having a local account avoids foreign transfer fees. Also set up any required utilities (electricity and gas, water) and connect your mobile phone/Internet – you may need a SIM card from convenience stores or supermarkets initially. Compare plans: many providers charge high fees if you start service late in a month, so plan accordingly.

Common Pitfall: Delaying registration (or insurance enrollment) can create large back-pay bills. In fact, any foreigner staying >3 months is automatically subject to Japanese national insurance rules. If you fail to sign up quickly, you could owe premiums retroactively and lose your 70% insurance coverage (meaning 100% of a hospital bill). Always mark "14-day rule" on your calendar and treat it as mandatory.

Renting an apartment in Japan: find an apartment in Japan and cut the costs of renting

Rent and housing are often the largest living expenses for new arrivals. Understand all the fees: Japanese landlords typically charge a refundable security deposit (敷金) and a non-refundable key money (礼金) paid to the landlord as a gesture, each often one to two months' rent. On top of that you pay an agent/broker fee (法律上、上限１ヵ月分 of rent) to a real estate agent and the first month's rent in advance. In total, moving into a new apartment in cities like Tokyo can easily cost 4–6× the monthly rent in upfront costs. For example, a 100,000¥-per-month room might require ~200,000¥ deposit + 100,000¥ key money + 100,000¥ broker fee, etc. Many landlords also require a Japanese guarantor or that you use a guarantor company for additional fees.

Finding and negotiating: To save, look for rentals advertised as 「礼金0」 or 「敷金0」 (zero key or deposit) and beware of renewal fees. Public housing by UR (Urban Renaissance Agency) is popular with beginners – UR apartments require only a 2-month deposit and explicitly have no key money or broker fee. There are even "no renewal fee" clauses, and some listings offer a month or two of free rent (フリーレント) as an incentive. These perks can slash your initial cost dramatically.

Cost item	Typical amount	Notes
Security deposit (敷金)	≈one to two months' rent	Refundable (minus cleaning fees)
Key money (礼金)	≈1–2 months' rent	Non-refundable "gift" paid to the landlord
Broker fee	≤1 month's rent	Up to 1× rent by law
Advance rent	One month's rent	Typically first month's rent paid
UR housing:	2 months' deposit only	No key money, no broker fee

Practical tip: Before signing, use online rent calculators or listings to compare average rents in each ward. For example, one rule of thumb is to keep rent ≤1/3 of your take-home pay, or even 1/4 in your first year to live comfortably. Also, read the rental agreement for auto-renewal and fee clauses (some contracts charge a renewal fee each 2 years). By choosing neighborhoods wisely and taking advantage of 0-key-money deals, many foreigners save tens of thousands of yen per month. For instance, avoiding Tokyo's priciest districts (Azabu, Hiroo, Roppongi, etc. with rents ≈¥300k/m²) can cut your rent in half. Some real estate agents specialize in foreigner-friendly apartments that don't require a Japanese guarantor and may speak Japanese or English.

Japanese Taxes: budget for what you'll owe as an expat

Income Tax vs. Resident Tax: Japan taxes income on two levels. All residents (including foreigners who qualify as "tax residents") pay national income tax (progressive rates from 5–45%) plus a flat residence tax (~10% of the previous year's income). In practice, if you are on payroll, your company will withhold (源泉徴収) income tax and later start deducting residence tax. Notably, newcomers usually pay no residence tax in their first year because there was no prior-year income in Japan. In effect, your first calendar year of work in Japan is typically tax-free on the local side; then from June of the next year onward, about 10% of your income will be taken as residence tax.

Short-term vs. long-term stays: If you are in Japan for less than 1 year and have no permanent address, you may be treated as a non-resident for tax purposes. Non-residents are subject to a flat 20.42% withholding tax on Japanese-sourced income, with no deductions. (Example: an intern or consultant on a sub-1-year visa would see 20.42% deducted automatically.) On the other hand, a "tax resident" (one-year+ stay, or with a registered address) qualifies for standard progressive rates and can claim deductions (housing, social insurance, etc.) when filing.

Filing: If you have only one employer job, no extra side income, and arrived after Jan, you may not need a separate tax return (the company handles year-end adjustment). However, if you have multiple jobs, capital gains, or are self-employed, you must file a tax return by March 15 for the prior year. In all cases, save receipts for life insurance premiums and dependents – these can reduce your taxable income. Calendar-tip: a small spring tax bill often arrives in June (for the previous year's income), so budget accordingly.

Practical tip: Check your payslip. In your second year, you should see about 5–10% of salary deducted for residence tax. If you change jobs mid-year, notify your employer and the ward office ("給与異動届") so that taxes are calculated correctly. Avoiding Japanese taxes is not legal, but understanding the system means you won't be surprised by a sudden large deduction. For example, even if you earn ¥4 million/year, expect roughly 5–10% of that to go to national tax and ~10% to local tax after deductions.

Health Insurance & Pension: mandatory coverage once settled in Japan

Japan also requires public health insurance for all residents. If you work for a company, you'll be enrolled in employee insurance (健康保険) automatically (the company pays half the premium). Otherwise, you must join national health insurance (国民健康保険) at your local municipal office. Prompt enrollment is critical: enroll within 14 days of moving or job start. Missing this can leave you uninsured – any medical bill would be 100% on you, and the city can charge back premiums (often with late fees).

Likewise, the national pension (国民年金) is compulsory for ages 20–59. This means nearly all foreigners of working age must pay into Japan's pension system. Employed persons pay pension through payroll (厚生年金), but if you're not on a corporate plan you must apply at city hall.

Cost: Premiums depend on income, age, and municipality. As a rough figure, an office worker might pay ~10% of salary for health insurance (split with employer) and ~9% for pension (also split). Cities may provide discounts if your income is low. Regardless, count on spending 10–15% of your earnings on these social insurance payments. Skip tip: If you have a working spouse under Japan's system, you might qualify as a dependent on their plan and save on premiums.

Common pitfall: Some expats mistakenly delay or opt out, thinking "I rarely visit hospitals." But Japan's system is not optional. In fact, a recent analysis emphasized that foreign residents receive no special exemption – if you stay over 3 months, you must pay the same premiums as a local. In 2024–25 the government even set up a new agency to ensure foreign residents meet their insurance and tax obligations. Save money here by completing your enrollment quickly (so you never back-pay a year's worth of premiums) and by applying for any available premium relief.

Best Practices for Life in Japan

Risk / Mistake	Impact	How to Avoid
Skipping Residency Registration	Fines, inability to enroll in insurance or even open a bank account	Register at city hall within 14 days of moving; carry your residence card.
Overpaying Up-front Costs on Rent	Losing thousands in unnecessary security deposit/key money	Hunt for "礼金ゼロ" and "更新料ゼロ" listings, or use UR housing (no key money).
Choosing an Unaffordable Apartment in Japan	Month-to-month budget crisis, no savings left	Stick to the ≤1/3 (ideally 1/4) of salary rule; compare multiple neighborhoods.
Missing Tax or Insurance Deadlines	Penalties, interest charges, or unplanned bills	Note all deadlines (e.g. tax return by Mar 15); set calendar reminders; file on time.
Neglecting Health Insurance Enrollment	Uninsured medical bills and retroactive premiums	Enroll immediately at ward office; carry your insurance card to clinics.
Failing to Budget for Residence Tax	Shock in summer of Year 2 when ~10% of income is deducted	Keep a tax fund: set aside ~10% of monthly income in Year 1 for next summer's bill.

Overall, focus on avoiding these traps. For instance, if you see an apartment listing that advertises "0円礼金/更新料", jump on it – it could save you hundreds of thousands up front. And always double-check paperwork: mistakes on your visa status or address can cause big fees later.

Checklist for Expats New to Japan

• Register your address (住民票) at the ward/city office. Obtain your residence card certificate and My Number.
• Enroll in health insurance and pension. At the same visit, sign up for national health insurance (or confirm coverage under your employer) and national pension if needed.
• Open a Japanese bank account. Bring your residence card, passport, and seal (personal seal) if you have one. Use this account for salary, rent, and bill payments.
• Secure housing with minimal fees. Search listings carefully for an apartment in Japan: prefer no-礼金 properties, UR apartments, or share houses. Read the contract closely for deposits, renewal fees, and "free rent" offers.
• Pay initial rent costs. Prepare funds for security deposit, key money, agency fee, and first month's rent (often 4–6× the monthly rent). Aim to minimize this by choosing apartments with lower up-front costs when moving to Japan.
• Set up utilities and phone. Transfer or start gas, electricity, water, and internet under your name immediately after moving into a new apartment to avoid overcharge or service delays. Pick up a SIM card from a convenience store or supermarkets if needed.
• Check your payroll deductions. After your first pay, ensure income tax is being withheld. If you start mid-year, confirm who will handle your year-end tax adjustment or final return.
• Prepare for residence tax. Know that in June of Year 2 you'll start paying ~10% of Year-1 income as local tax. Begin saving money now so it isn't a surprise.
• File income tax (if needed). By March 15 if you had side income or need deductions. Otherwise keep proof of income and insurances in case you do need to file or claim refunds.
• Review insurance coverage. If your situation changes (e.g. leave your job or return to your home country), notify authorities to stop contributions and avoid continued charges or refund issues.

FAQ

Q1: Do I have to join Japanese health insurance? – Yes. Any foreign resident with a visa over 3 months must enroll in either the employer plan or national health insurance. Japan has universal coverage, so failure to join means paying full medical bills yourself.

Q2: When do I start paying residence tax? – New hires actually pay no residence tax in Year 1 if they had no prior Japanese income. From Year 2 (June onward), about 10% of your previous year's earnings will be deducted each month. Plan ahead for this drop in take-home pay.

Q3: How can I cut the costs of renting an apartment in Japan? – Look for rentals with zero key money (礼金) and low security deposit (敷金). Public UR housing and many newer apartments advertise 礼金0・更新料0. Sharing a flat or choosing less popular neighborhoods also cuts rent. Remember the 1/3-of-salary rule to avoid overspending when renting an apartment in Japan.

Q4: What happens if I delay insurance enrollment? – If you miss the 14-day enrollment window, you will be uninsured until you sign up. Any medical expenses in that gap are 100% yours, and the city will bill you retroactively for premiums (often with late fees). Don't delay – register as soon as you have an address.

Q5: Are foreigners treated differently under tax law? – Not really. If you stay over a year or have resident status, you're taxed as a Japanese resident (progressive rates). Short-term residents (non-residents) pay a flat 20.42% withholding on Japanese income. Some tax treaties may reduce this. In either case, prepare to pay Japanese taxes on your Japan income.

Q6: Is the national pension optional for expats? – No. If you're aged 20–59 and living in Japan, you generally must be enrolled in the pension system, either through work (厚生年金) or directly at city hall (国民年金). There are hardship exemptions, but plan to pay into it unless you qualify.

Conclusion

Starting your new life in Japan on the right financial footing means acting fast: register your address, enroll in health/pension plans, and find an apartment wisely. By handling these steps early (and knowing about Year 2 taxes), you'll protect your wallet and enjoy a smoother first months when moving to Japan.