The Percentage-Based Automation System: How I Split My Salary Automatically in Japan

Tuesday at 9:47 PM, I was sitting at our kitchen table in with my laptop open, bank apps scattered across my phone screen, and a spreadsheet that would make any accountant weep. Three hours into my monthly financial review, Lily was crying in the next room, my wife was handling bedtime alone again, and I was still only halfway through manually calculating how much I could save versus spend this month.

That was eighteen months ago. Last week, I completed my entire monthly financial review in 14 minutes while Lily played with blocks at my feet. The difference? I finally discovered the power of the "Fundamental, Fun & Future System"—three simple percentages that automatically split every yen before I can even think about it.

Here's what changed: Instead of agonizing over budgets and tracking every konbini purchase, I divided my financial life into just three buckets—Fundamental (what I need), Fun (what I enjoy), and Future (what I'm building). Once automated, these percentages handle everything, including protecting me from lifestyle inflation as my income grows.

【重要】本ニュースレターは教育・情報提供のみを目的としており、特定の金融商品の売買を推奨・勧誘するものではありません。投資判断は読者様ご自身の責任で行ってください。過去の実績は将来の結果を保証するものではありません。

IMPORTANT: This newsletter is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any financial products. All investment decisions are made at your own risk and discretion. Past performance does not guarantee future results. All numbers in this post are hypothetical to reflect a realistic scenario.

The Mental Trap of Manual Money Management

When I first committed to building our life in Japan permanently, every payday brought the same exhausting ritual. The mental math was endless—calculating what we could afford to save after bills, wondering if we were investing enough for Lily's education, feeling guilty about that nice dinner in Omotesando.

What really opened my eyes was discovering a simple truth: every financial decision you make repeatedly is a decision you shouldn't be making at all. The Japanese have a concept called 仕組み化 (shikumi-ka)—systematization. Why not apply it to money?

The Three-Bucket Revolution: Fundamental, Fun & Future

After months of analysis, I realized every expense in our life fits into just three categories:

Fundamental (50-60%): The non-negotiables that keep our life running in Japan
Fun (15-25%): The guilt-free money that makes life worth living
Future (25-35%): The automated wealth building for tomorrow

The beauty lies in the simplicity. No subcategories. No detailed budgets. Just three percentages that scale automatically with your income.

Setting Up Your Fundamental Bucket (The Foundation)

Your Fundamental percentage covers everything required to maintain your current life in Japan. This includes:

• Rent or mortgage (including property tax allocation)

• Utilities and internet

• Insurance (life, health, home, car)

• Basic food and household supplies

• Transportation (train pass, car costs)

• Phone and essential subscriptions

• Daycare or education costs

For permanent residents in Japan, I've observed these typical ranges:

• Tokyo families with children: 55-65%

• Regional city families: 45-55%

• Single professionals in Tokyo: 40-50%

• Couples without children: 35-45%

The key insight: be ruthlessly honest here. Netflix isn't fundamental. Starbucks isn't fundamental. Your mortgage is fundamental. Train pass is fundamental.

Automating Fundamental with Japanese Banks

In Japan, we set this up through a dedicated "Bills Account" (mine is at Rakuten Bank). Every payday, exactly 55% of my salary automatically transfers here via 自動振込 (automatic transfer). From this account:

• Mortgage auto-pays on the 26th

• Utilities pull via 口座振替 (account deduction)

• Insurance premiums auto-deduct monthly

• Credit card for fixed expenses auto-pays in full

Once set up, I never touch this account. It's a sealed system that ensures our fundamental needs are always covered first.

Building Your Emergency Fund First (The Essential Safety Net)

Here's the critical sequencing that many get wrong: before optimizing your Future bucket for investments, you must first build your emergency fund. This isn't just financial advice—it's the foundation that makes everything else possible.

The Emergency Fund Priority Protocol

For your first 6-12 months of automation, a portion of your Future bucket should flow exclusively to building an emergency fund. Only after reaching your target should these automated transfers redirect to investments. Here's why this sequence matters:

Months 1-6: Emergency Building Phase

• 10-15% of gross income → Emergency fund account (separate bank)

• 5-10% → Basic retirement accounts (iDeCo/Company DC for tax benefits)

• 0% → NISA or taxable investments (patience required)

Months 7-12: Transition Phase

• Emergency fund reaches 3 months expenses → reduce to 5%

• Begin NISA contributions with freed-up percentage

• Continue building to 6 months if job security uncertain

Month 13+: Full Investment Mode

• Emergency fund complete → 0% ongoing (unless depleted)

• Full Future percentage now available for wealth building

• Original emergency fund percentage redirects to investments

Calculating Your Japanese Emergency Target

Your emergency fund target depends on your specific situation as a permanent resident:

3 Months Adequate If:

• Seishain (正社員) with stable company

• Dual-income household

• Strong industry with easy re-employment

• Unemployment insurance (雇用保険) coverage

6 Months Necessary If:

• Contract or freelance work

• Single income household with dependents

• Specialized role with longer job search times

• International school commitments (can't quickly reduce)

For our family, we targeted 4 months: ¥1,320,000 (¥330,000 Fundamental × 4). This took 8 months to build at ¥165,000 monthly, after which that entire amount redirected to NISA and additional investments.

The Psychological Power of Completion

The beautiful moment comes when your emergency fund is complete. Those automated transfers—already established, already habitual—simply change destination. You don't need new discipline or willpower. The same system that built your safety net now builds your wealth.

My automated transfer history shows this transition clearly:

• Months 1-8: ¥165,000 → Sony Bank (Emergency)

• Month 9 onward: ¥165,000 → SBI Securities (Investments)

Same amount. Same date. Different destination. Zero additional effort.

Why Separate Banks Matter

Keep your emergency fund at a different bank from your daily accounts. We use Sony Bank specifically for emergency funds because:

• Psychological distance reduces temptation

• Different app/login creates friction for non-emergencies

• Still accessible within 24 hours when truly needed

This separation is crucial—your emergency fund should be inconvenient enough to prevent casual raiding but accessible enough for genuine emergencies.

Optimizing Your Future Bucket (The Wealth Builder)

The Future bucket is where wealth building happens automatically. But the order matters tremendously for tax efficiency. Here's the optimal priority for permanent residents in Japan:

Priority 1: iDeCo (Up to ¥23,000/month)

Start here because iDeCo offers triple tax benefits: deduction on contributions, tax-free growth, and favorable treatment at withdrawal. For someone in the 20% tax bracket, ¥23,000 monthly saves ¥55,200 annually in taxes alone.

Priority 2: Company DC Match (If Available)

If your employer offers matching on Company DC (企業型確定拠出年金), maximize this before Ideco. It's literally free money. My company does not match and so IdeCo makes more sense to maximize first as you do not need to sell the assets when changing roles.

Priority 3: Company DC to Maximum (Up to ¥55,000)

After securing any match, increase Company DC contributions up to the limit. This still provides tax deductions, though without the match bonus.

Priority 4: NISA (Up to Your Percentage Limit)

Whatever Future percentage remains after tax-advantaged accounts goes to NISA. While NISA doesn't offer tax deductions on contributions, the tax-free growth and no capital gains tax on withdrawal make it powerful for long-term wealth building.

For example, with my Future allocation on a monthly salary:

• ¥20,000 → iDeCo (automatic deduction)

• ¥35,000 → Company DC (pre-tax from salary)

• ¥50,000 → NISA (automated investment)

How Your Percentages Determine Your Freedom Timeline

Here's the mathematical reality that changed my perspective entirely. Based on standard investment returns, your Future percentage directly determines your timeline to financial freedom:

• Save 15% → 34 years to freedom

• Save 25% → 26 years to freedom

• Save 30% → 23 years to freedom

• Save 40% → 18 years to freedom

• Save 50% → 14 years to freedom

• Save 65% → 9 years to freedom

Looking at these numbers, my wife and I chose 15% for Future,

giving us a 23-year runway while still enjoying life today. Your percentage might differ based on when you want to reach financial independence, but knowing these numbers makes the decision intentional rather than arbitrary.

[See the numbers for yourself: Spreadsheet]

Protecting Your Fun Bucket (The Sanity Keeper)

Here's the revolutionary mindset shift: your Fun bucket is not just allowed—it's mandatory. After Fundamental needs are met and Future is secured, this money exists solely for enjoyment. No tracking. No budgets. No guilt.

For our family, this 20~35% covers:

• Dining out without checking prices

• Lily's toys and unnecessary-but-cute outfits

• My coffee shop addiction

• Weekend trips to Hakone

• Random combini splurges

• That new gadget I definitely don't need

The psychological freedom this creates is invaluable. When you've already automated your savings and investments, every remaining yen is truly guilt-free. This isn't irresponsible—it's the reward for systematic wealth building.

The Japanese Bonus Protocol: Predetermined Percentages

Japanese bonuses create wealth-building opportunities twice yearly—if you have a system. Without one, bonuses disappear into "lifestyle inflation" or create decision paralysis. Here's my predetermined bonus allocation:

Summer Bonus (June):

• 20% → Fundamental (property tax reserve)

• 40% → Fun (family vacation fund)

• 40% → Future (extra NISA contribution)

Winter Bonus (December):

• 20% → Fundamental (annual insurance payments)

• 30% → Fun (holiday spending)

• 50% → Future (max out investment accounts)

The key: decide these percentages now, automate them, and never think about it again. When that bonus hits, the transfers execute automatically. No willpower required.

Building Your Automation as a Couple

Japan doesn't offer true joint bank accounts, which actually forced us to build a better system. Here's how my wife and I coordinate our automated finances:

The Family Hub Approach

We maintain a "Family Hub Account" in my name at Rakuten Bank where:

• Both our Fundamental percentages flow in

• All family fixed costs auto-pay from here

• Each maintains separate Fun buckets (critical for marital harmony)

• Each manages separate Future buckets (different investment preferences)

This structure provides both unity and autonomy. We're aligned on family expenses while maintaining individual freedom. The automation means we never argue about who pays what—the system handles it.

Your Income Dictates the Timeline,

The most powerful aspect of percentage-based automation? It naturally protects against lifestyle inflation. When your salary increases, every bucket grows proportionally. That 10% raise automatically becomes:

• 10% more for Fundamental (same lifestyle, more buffer)

• 10% more for Fun (gradual lifestyle improvement)

• 10% more for Future (accelerated wealth building)

Without the system, that entire 10% typically vanishes into invisible lifestyle creep. With automation, wealth building accelerates while life gradually improves—the best of both worlds.

The Step-by-Step Implementation Guide

Week 1: Calculate Your Reality

• Track every expense without judgment

• Categorize into Fundamental, Fun, or Future

• Calculate current percentages honestly

• Determine your desired freedom timeline

Week 2: Design Your System

• Set target percentages based on freedom timeline

• Open necessary accounts at different banks

• Map out exact automation flows

• Plan for irregular expenses (annual insurance, property tax)

Week 3: Configure Automation

• Set up 自動振込 (automatic transfers) for the day after payday

• Configure investment automation (iDeCo → DC → NISA order)

• Enable all bill payments from Fundamental account

• Set up bonus automation rules

Week 4: Test and Refine

• Run one complete monthly cycle

• Verify all transfers executed correctly

• Adjust percentages if needed

• Document system for partner/emergency

How Our Three Buckets Evolved: A Five-Year Journey

Looking back at our financial automation journey, our percentages shifted subtly but meaningfully as life evolved. The core framework remained constant—Fundamental, Fun, Future—but the exact allocations adapted to our changing reality. Here's how our system evolved over five years, with real numbers to show you how flexibility works within structure.

Stage 1: Pre-Marriage in Rental Apartment (2019)

Allocation: 45% Fundamental, 25% Fun, 30% Future

When my wife and I were dating and living in a 1LDK in Meguro, our Fundamental costs were relatively low. Rent was ¥180,000 split between us, no car, minimal insurance. This allowed us to aggressively save 30% toward Future while still enjoying Tokyo life.

Monthly breakdown on my ¥500,000 salary:

• Fundamental (¥225,000): Rent share, utilities, basic food, train pass

• Fun (¥125,000): Dates, travel, hobbies—building our relationship

• Future (¥150,000): Maxed iDeCo, started NISA, emergency fund building

The key learning: We established automation habits when life was simple, making future adjustments easier.

Stage 2: First Year of Marriage (2022)

Allocation: 48% Fundamental, 22% Fun, 30% Future

After marriage, we combined finances partially but kept the same apartment. Fundamental crept up slightly with increased insurance and starting to save for a house down payment within our regular expenses. We consciously reduced Fun to maintain our 30% Future rate.

Monthly breakdown on ¥550,000 combined target:

• Fundamental (¥264,000): Added life insurance, increased emergency fund target

• Fun (¥121,000): Shifted from dating to building our home together

• Future (¥165,000): Continued iDeCo/NISA, added house down payment saving

The realization: Marriage itself didn't dramatically change our percentages—the system scaled smoothly.

Stage 3: After Buying House in (2023)

Allocation: 55% Fundamental, 20% Fun, 25% Future

The house purchase was our first major percentage adjustment. Our mortgage payment exceeded our previous rent, and property tax reserves became necessary. We chose to reduce both Fun and Future slightly rather than decimating either.

Monthly breakdown on ¥600,000 salary:

• Fundamental (¥330,000): Mortgage, property tax reserve, home insurance, utilities

• Fun (¥120,000): Maintained absolute amount despite percentage drop

• Future (¥150,000): Slight reduction, but house equity counts toward net worth

Critical insight: The house is part of our Future bucket conceptually, even though the mortgage sits in Fundamental. This mental model helped us accept the temporary Future percentage reduction.

Stage 4: Welcoming our Daughter

Allocation: 58% Fundamental, 17% Fun, 25% Future

Lily's arrival pushed Fundamental higher with daycare costs (¥60,000/month) and increased daily expenses. We protected our Future percentage absolutely, letting Fun absorb the impact. Surprisingly, we needed less Fun money anyway—our entertainment shifted from restaurants to parks.

Monthly breakdown on ¥650,000 salary (after raise):

• Fundamental (¥377,000): Added daycare, baby supplies, larger grocery bills

• Fun (¥110,500): Reduced percentage but adequate for new lifestyle

• Future (¥162,500): Maintained percentage, increased absolute amount

The transformation: Parenthood naturally reduced our Fun needs while increasing our Future motivation.

Your Life Stage Adjustment Framework

Rather than prescriptive percentages for each life stage, use these adjustment principles:

1. Major Life Events = 5% Maximum Shift: Marriage, house purchase, or first child should only shift any bucket by 5% maximum. Larger changes suggest lifestyle inflation, not necessity.

2. Protect Your Floor: Set minimum percentages you'll never breach—perhaps 15% for Future, 10% for Fun. These become your non-negotiables regardless of life stage.

3. Temporary vs Permanent Changes: International school is temporary (18 years maximum). Mortgage is temporary (35 years maximum). Don't permanently adjust percentages for temporary expenses.

4. Review Annually, Adjust Sparingly: Life stages don't change monthly. Annual percentage reviews are sufficient, with adjustments only for major life changes.

Your Next Step in the Journey

What percentage of your income currently flows to each bucket—Fundamental, Fun, and Future? More importantly, does that allocation match your desired timeline to financial freedom?

Reply and share your current percentages or your target percentages. I'm particularly curious how other permanent residents balance family life with aggressive saving goals.

Next newsletter, we'll dive deep into optimizing the investment side—specifically, how to choose between different NISA and iDeCo options for maximum tax efficiency and growth.

Until then, may your three buckets automatically build your wealth.

For personalized financial guidance, please consult with qualified Japanese financial advisors who can assess your individual circumstances.

Stay Wealthy

Jason

Building wealth for residents in Japan, one story at a time.

P.S. Last week, a colleague asked how I have time to research investments with a toddler and demanding job. I laughed. "I don't manage money anymore," I told him. "I set three percentages eighteen months ago. The system handles everything else." The look of disbelief on his face reminded me why this newsletter matters.