Saving and Investing Plan Confusion - Ho w Much is Enough?

[mollymay5000]

I am a 24 year old Canadian living in Tokyo - I have lived here since I was 20 and have been working for two years.

Currently, all I do to manage my finances is put 30,000 a month in my Yucho account and send 30,000 to Canada to appease the student loan gods. While I admit I do lots of stupid irresponsible spending in my Canadian account with the money that isn't going towards student loans, I am basically fine with it taking another three years to pay my loan (unless it would be better to dumb my savings on it?)

That being said, how much money should I realistically have in the Yucho account before I allot some of that 30,000 yen somewhere else? I will have around 550,000 in the account by the end of the year even if I renew my rental contract out of my savings (might need to...). As well, I am quitting my job in March and will probably have to take a lower salary with any new job I get as I am trying to leave eikaiwa work. I'm really anxious about the whole thing and being at ease about my finances will just make the job hunting thing easier.

I guess what I am basically asking advice for is the most basic of things. Like, is my current situation worth putting time into investing? I don't really want to do something I have to think hard about and work at right now since I am really stressed about the possibility that I am going to be unable to find a new job. Obviously iDECO is best if I don't plan on leaving but I don't want to set that up with my employment in limbo. I was looking at Tsumitate instead of normal NISA because I can't make big contributions right now anyway but I am just so overwhelmed. I don't know if I should stop putting money in the emergency fund or reduce it to invest or what.

Any advice greatly appreciated. Apologize for the panic/anxiety induced forum vomit.

[ricardo]

Just keep saving money in the bank.

When you’ve got ¥3,000,000 in there, time to ask your questions about investing again...

[captainspoke]

I agree--given you tentative near-term future, your emergency fund (cash, here) is top priority.

[RetireJapan]

Pretty much agree. You should save as much as you can without making yourself unhappy.

If you are likely to need the money soon (as it seems you might) don't run the risk of investing it and seeing the value of those investments fall. Once you get settled in your new job that is the time to think about what to do

[adamu]

how much money should I realistically have in the Yucho account before I allot some of that 30,000 yen somewhere else?

A general rule of thumb is to save up 6-12 months of living expenses as an emergency fund.

ricardo above suggested 3M. That's a pretty big emergency fund for someone in their mid-twenties. If that was a 1-year emergency fund, it would represent 250k monthly expenses. Maybe 1-2M is enough? Basically work out how much you spend every month, times it by 12, and save up that amount. I think putting 5k into an iDeCo wouldn't hurt either, to get the ball rolling, but as you said that's more hassle than it's worth without a stable job. Probably worth looking into later once you're more settled.

I agree with the others, just saving cash seems like the best plan - as long as you don't get tempted to spend it! Maybe put it in a separate account to where you manage your daily expenses, or use some budgeting software / a spreadsheet to keep track of it.