FW-90 -- Start Saving: June Approaches!

* * * * * * * * F R U G A L W A T C H * * * * * * * *
A weekly roundup of how to be frugal in the world's most
expensive country to live (unless you read this!), written
and compiled by Wendy J. Imura.

Regular edition, March 11, 2006 Issue No. 90

- Start Saving: June Approaches!
- Credits

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*** Start Saving: June Approaches! ***

Dear Frugal Readers,

Everyone who has spent any length of time here realizes that
April signals a "new start" in Japan. Television commercials abound
with cherry blossoms and new "randozeru" backpacks worn by
shiny-faced first graders, and the subways are filled with fresh
college graduates making their first tentative forays into the working
world. Along with ill-fitting black recruit suits and welcome
parties, April is also the start of the new fiscal year for most
Japanese corporations, schools, and government offices.

What does this mean for the average Frugalite? Well, if you're
employed full-time by a company that already calculates your
pension, health insurance, and local tax requirements, then you
probably won't notice much difference. If anything, you might see
a slight raise or increase in your vacation days as you attain
seniority. If, however, you are self-employed, part-time employed,
a student, or anything other than a salaryperson, you might do
well to note that there are some major expenses due in June.

Why June? Well, in addition to everything else, health insurance,
pension, and local tax payment cycles "restart" every April. Local
residents' tax (jyuminzei), National Pension (kokumin nenkin), and
National Health Insurance (kokumin kenko hoken) payments are typically
based on your prior year's income, calculated for 2006 from your
January-December 2005. These figures are usually available early in
the following year, with the exception of persons who have
adjustments from kakuteishinkoku (tax returns) filed in February/March.

However, the new payment packs (a stack of payments slips for
pension, NHI, and residents' taxes) reflecting revised income for
the prior year are usually sent out in May, with payment beginning
in June. As the prior packs run out in March (for pension and NHI)
or January (for quarterly expenses such as residents' taxes), you
can often find yourself with a sudden surge in expenses due after
a several-month break. If you changed jobs in the prior year, or
quit your job, you might find it doubly difficult, as you'll likely
be taxed on your higher income from the year earlier. Private
insurance plans, school fees, neighborhood dues, and other annual
bills also often come due in April/May/June, making it a tough
time of year indeed.

To avoid a lean summer, I recommend starting to set aside money
ahead of time, as with any anticipated large payment on the horizon.
This strategy can also save you money (and time) in the future.
For example, if you pay into the kokumin nenkin pension, did you
realize you could save 2,950 yen on your annual pension payments if
you pay all at once, in cash? And you can save 3,490 yen annually
if you pay all at once using automatic bank withdrawal (annual total
reduced from 166,320 yen to 162,830 yen). While this does require
advance registration (available during March from the following
Japanese website: http://www.sia.go.jp/top/gozonji/gozonji03.htm),
it could save you a significant amount of money. Tax payments and
NHI payments are also discounted slightly when paid in full or
in half-year installments instead of monthly. If you have the cash
available, why not pay in full?

There are still three months until the June payments start, and
one can definitely get a head start by setting aside a portion of
your monthly paycheck to meet these one-time expenses. Good luck!
Also note that only a few days remain until the annual window
for tax return filing (kakutei shinkoku) closes on March 15th.
Tax filing centers get crowded towards the end of the period, so
try and get there early.

Frugally yours,
Wendy J. Imura

PS: Searching for information on Japanese pension benefits in
English? The Social Insurance Agency just updated its English
homepage. Take a look here: http://www.sia.go.jp/e/index.html

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Written by: Wendy J. Imura (frugalwatch@japaninc.com)
Edited by: JI

Copyright 2005 Japan Inc. Communications Inc.