What I mean is that as an ibanker you get a nice amount of money, but since a nice chunk of your income comes at year end, and flactuates...would you say most Ibankers live beyond their means?
Afterall you make 60-80K per year before bonus, but yet as an Ibanker you live like you make 150K(3000 dollar suits, eating at the best restaraunts, traveling first class, living in luxury apartments etc.)
I personally make all financial decisions based upon my salary and save my bonus.
what about your coworkers?
Judging by bonuses in the last few years, there's no reason why you shouldn't be able to both (i) max out your 401k and pad an emergency 3-month cushion in a CD or money market account, and (ii) have plenty leftover for some "peripheral" expenses such as the ones you listed at the top of the thread.
your question also depends on what level banker you're referring to (analyst, associate, vp?). my points mentioned above apply to analysts. if you're an associate or vp, the rest is gravy...PLENTY leftover for luxury spending, gambling, recreational investing, etc.
Some people I work with are incredibly uptight about spending money for their own personal reasons (b-school, etc.). Some are incredibly ostentatious but I think it's more of a function personalities than something brought on by living up to "banker lifestyles."
Your personality will dictate how much you spend more than your salary and bonus will. A cousin of mine is a VP for a PE firm that many of you know--and he also happens to live an extraordinarily ascetic lifestyle simply because that's what he likes. Also look at Warren Buffet.
i thought u said aesthetic lifestyle. i was wondering how he can manipulate his own looks.
Plenty of analysts use bonuses to either pay off undergrad loans or save for B-School. However, many shops sponsor B-school if analysts return as associates. How many of you guys would actually return to your bank after B-School?
If you are a first year in New York you will likely put on about 10k of CC debt before getting your first bonus. Even if you purchase relatively cheap clothes, you will still need to spend a decent amount of money on that to start with. Another fact to consider is housing. With bonuses being so big in the last couple of years, rents are way up in the city. If enough people are willing to live at 120% of salary, then you will to. Or, you will be living in the Bronx.
buysideanalyst you've got it all wrong. if bonuses are high, especially at the VP/MD level, then bankers will be BUYING apartments, not renting. If buying residential real estate increases across the city, rents drop, they do not increase...simple supply and demand for rentals.
According to Citi Habitats, rent per square foot for a studio is up from $36.22 in the six month period ending October 2002 to $46.90 in the six month period ending December 2005. Vacancy rates are down from 1.67% in 1Q05 and 0.89% in 4Q06 to 0.55% in 2Q06.
Junior level individuals living and working in New York have been making substantially more money in the last few years and this has led to increasing rental rates. You are only looking at one factor, namely renters leaving the rental market, while the market would be better represented by a 3-5 factor model.
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