How Much Parental Assistance Do People Actually Have?

Incoming SA at MM. I know the finance is filled with rich kids but how much of the industry does that actually make up? I'm wondering because as I plan for the next few years I have no idea how people can afford student loans (esp at private universities), student housing, FT housing, general living in HCOL cities, MBAs, etc while also prioritizing lifestyle choices (Prestige, Cool Factor, Fun, Clout) over affordability in the early years. No hate I'd be doing the exact same thing if I could but I'm not as fortunate to have parents who can help financially or even remotely know careers in finance. I'm just curious how much parental assistance is normal?

 
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First sentence was absolutely the most important, thank you for that.

 
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I can offer a small sample size, but I went to a target. All of my friends who entered the industry had parents/family who worked in the industry and had school paid off. I know some people who even had parental assistance with paying rent/access to parent's credit cards after school while doing IB/consulting etc.

I had to take on massive loans for school (my choice; alternate options meant having no shot at a good career). I'm sure there are tons of people like me in the industry. I stayed with multiple roommates, didn't go on ski trips, or even went out to fancy restaurants or bars every week - I stayed within my means and still had fun in cheaper ways. Not saying that I never went out to a fancy place or bought something nice to treat myself; I just did it when my budget allowed for it.

You can make it work with loans. You don't need to do things just for the cool factor/clout. Cut back on unnecessary spending, manage your cash flows well, and you will be able to do whatever you want to do. If you want to go on a ski trip with your friends and are tight on the budget, just cut back costs somewhere else and make it work.

 

+1 to this sample from me as well. Grew up in a poor immigrant family where we struggled to make ends meet. Understood from a young age that one of the only ways out of the pit I was born into was education, so I studied my ass off and made it into a target school for college.

Graduated with a degree in finance but in return ended up with $200k+ of student loan debt. Was lucky when I graduated and landed a PE role directly out of school, after countless hours of networking and hundreds upon hundreds of job rejections.

Unfortunately the long hours and years of abusing my body to make ends meet (skipping meals when I was in school to save a few dollars, pushing myself to study and do well on exams while working part time jobs to pay bills and not sleeping, etc.) caught up to me and I essentially collapsed on the job after my body failed during the pandemic, joining the large group of folks who eventually burned out. 

My health is better now thankfully, but I can say from my life experiences that this can definitely be a rough path to take when you don't have the good fortune of being born into a well connected and wealthy family - all you can do is keep grinding hard in the hopes that one day your efforts will pay off.

Folks like us are the exception and not the norm, a good chunk of people who are able to enter the industry in the first place have strong familial connections and a safety net to fall back onto. Being born with privilege is real and is just something that's a fact of life to adapt to. Just gotta suck it up and keep going. 

 

After reading your response I'm quite scared for the path I'm going in. Similar situation, incoming freshman Westcoast target LAC, will have to go +200k in student loans. Started networking and applying for internships with not much luck. Have a couple coffee chats but no real position. My goal is equity research but is this really something I should be getting myself into? I love the finance field, self-taught because my parents aren't in this field. Would you recommend I continue?

 

Based on my cohort, he’s how things play out:

  • parents pay off the student loans (undergrad and often mba)
  • parents sometimes help with rent during mba
  • parents help with first purchased residence
  • parents die and help with second residence

It’s an incredibly messed up unfair world. I make this point on any budget thread:

1) people whose parents are their safety net

2) people who end up broke

3) people who are on their own and end up ok

In order to be 3, you have to ignore 1 & 2, which is really hard for a lot of people. No matter how much you make, the only way to do it is systematically living way below your means. This means being an associate/VP and living like most analysts and having roommates and living like you are in college for the first several years out of college.

It also makes doing an MBA a really tough decision that people who are being supported can’t even fathom. “one deal can make up the cost” yeah? Well that one deal might not occur until a person is 50 and doing an mba is a great way to not be able to afford a house until your late 30s.

All that said, there are ways to meet all your financial goals it just really requires being crafty and not spending for a decade after college.

 

I had zero parental support but I worked internships and other jobs almost every semester, winter break, and summer break during college and never struggled with money. Also worked during middle and high school and invested the money instead of spending it.

Got my uncle to cosign student loans at a private uni and had the ability to pay it all off within 4-6 months after graduating while working in IB.

You can afford these things, you just haven't worked hard enough or you are not smart enough. More likely the former.

 

I'm making ends meet that's not what I'm referring to so no need for sly comments. I'm saying even at my relatively modest levels it's challenging, so I couldn't imagine what going to an expensive private school, upscale housing and living a fun (but expensive) life could be affordable for a single person not working a FT job in the industry during undergrad. Then once your in, the costs still doesn't stop piling. Internships make sense and is the way to go but realistically opportunitys are rare. I've had off cycle internships before but landing them every few months is a challenge in itself. All I'm saying is that WSO glamorizes Manhattan, T15s, Ivy's, MBAs, Watches, Designer brands, night life/bars, etc and all of that but no one really covers how exactly people pay for all that especially the junior level. IB salary is good and very flexible to budget/live with, but until you become more senior I really don't see how the salary alone can cover that excessive lifestyle people on this site talk about.

You hold plausible deniability but I don't believe anyone would start saving money for college since middle school without ur parents guiding you to do so which kinda proves my point. Good to have that btw.

 

yeat its impossible to have an investment account under 18 without your guardian setting it up. But my brothers had the same thing and they spent their money, I invested mine. What I'm saying is I have been able to afford that lifestyle you are talking about (except watches b/c I don't care abt them) without any parental support beyond them opening an UTMA account when I was a kid, which I am grateful for but it paid for less than half a semester of college anyway. So no, you don't need to have daddy's money to live this lifestyle. You got it right when you said getting off-cycle internships are hard, but it can be done if you put in the time. You can get plenty of scholarships if you spend the time applying. 

I am not being sly, I am simply telling you that you can obtain this lifestyle by working harder, and using my personal experiences as proof. Yes, much of the industry got jobs through nepotism and have allowances but don't let that discourage you from trying to live the life you want. You have two hands, go and do whatever it is you want to do.

 

I would consider my family to be doing okay - definitely not connected in the industry or loaded. Won’t have student loans going into my job and had assistance throughout college but am definitely cut off completely when I start this summer

 

Yup, exactly what my and my friends situation looks like. Graduating with no debt and then just living within means.

 

I think this is the most common situation in this industry — graduating without debt and being supported through college, but being on your own once you begin the job. Perhaps family exists as a theoretical safety net if something really terrible happens, but, in general, needing to cover all day-to-day expenses (including rent) without help.

 

Kevin25 is spittin facts. Its good to confirm this now so you dont become frustrated at the things your peers are acquiring over the next 15 years. I remember being incredibly frustrated when my Sr. Associate comp was just barely cutting it after rent, student loans, sending money home etc, while my peers were buying 2-beds and taking 6 trips a year. Later on I realized, they were getting significant help. 

I've said this in previous posts, I know 1 guy that is genuinely bootstrapped and crushing it. 1 guy. Everyone else is slogging it or those that are "crushing it" are crushing it on mid comp with a significant advantage (trust, no debt. no housing costs)

 

Went to a private uni, parents helped out with tuition but i still have ~$40k in loans. Not a mountain, but not nothing. None of my family or friends had contact in the industry so I had to pave my own road here.

Go all the way
 

I have great parents, but they didn't have the financial means to give me anything. I took out $70k in loans for my undergrad. I worked in school and would pay the minimum payments. I paid off most of that $70k with my first bonus and the rest of it with my second bonus. I'm doing the same thing with my MBA loans which are at $120k right now - paying the minimum payments each month and then dumping the entirety of my bonus into the loans each February. Will probably only take another 2-3 years to get it all paid off. 

 

I went to college on scholarships and graduated with zero debt. I also made a lot of money during college so I had my own safety net. I haven’t received a dollar from my parents since high school. Granted, I left college over 20 years ago so things were cheaper. 
 

My take aways:

Yes, there are a lot of rich kids/trust funders in finance. Most still pay for their own living expenses. They just take better vacations and can go to their parents’ Hamptons house. Just go along with them. 

Seeking prestige is stupid. Just find some good friends and hang out. My buddies and I mostly went to dive bars. Once you go enough you basically drink for free. 
 

I did have friends who were trendy and did bottle service a lot. I’d go occasionally. Most of these kids were either taking some money from their parents or pre-spending their bonuses, which I have no idea how that works out if you lose your job. My cousin had a mentality to always “lever up” to afford things. I couldn’t bring my self to do that. 
 

Have several roommates - I lived in a massive loft in tribeca with 4 other guys. We had a half court basketball court in our living room and a bar/tap system that we got for free from an old restaurant that got renovated. We had people over to our place to party constantly and didn’t pay much rent. The place was massive, but certainly crumbling around the edges…non-functioning kitchen, one poorly working bath room, etc. We had a giant rat we called squeaky. My roommate killed it with a hammer he threw from around 30 feet away. Squeaky lived with us for ~2 years and got around many traps we set. RIP. 
 

I had a ton of fun and lived off just my salary. I found cheap date spots that were still cool. My cousin would take first dates to Daniel - what’s the point with someone you just met? 

 

TechBanking

My cousin would take first dates to Daniel - what’s the point with someone you just met? 

This comment made me chuckle and definitely proves you graduated college over 20 years ago! I too am old and remember taking a serious girlfriend there ~15 years ago and it being a special occasion, but I don't think I've heard Daniel mentioned in like 10 years (wonder who is going there now as I know it is still trucking along).

Only restaurants you could have mentioned besides Daniel that would have brought back as much nostalgia would have been like WD-50 or Spice Market.

 

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My cousin would take first dates to Daniel - what’s the point with someone you just met? 

This comment made me chuckle and definitely proves you graduated college over 20 years ago! I too am old and remember taking a serious girlfriend there ~15 years ago and it being a special occasion, but I don't think I've heard Daniel mentioned in like 10 years (wonder who is going there now as I know it is still trucking along).

Only restaurants you could have mentioned besides Daniel that would have brought back as much nostalgia would have been like WD-50 or Spice Market.

LOL…I remember Spice Market but WD-50 may have been after my time! No idea if it’s good to be dated like this. It was a fun era to be young and single in post-tech crash Wall St. 
 

I took my wife to our first date at Otto. 

 

Actually went to Daniel last year with wife. Crowd was mostly couples and some families. Service and food was great but just not the happening vibe of Via Carota, etc. but you can easily burn 3-4 hours. 
 

Fun Fact: It’s like the only “great” restaurant in UES. It’s a restaurant desert around here and after congestion charge, driving down to West Village will be another extra drink cost. 
 

And oh I had no parental support. Don’t think I ever even thought of it this way and felt bad in my 20s. 

 

As a recent college grad as well, I think many of us are disillusioned by the idea that acquiring a full time job is a reset button for social class and lifestyle for our group. Unfortunately not the case. 

I know people making 60-70k but come from rich families - got a brand new Audi, BMW, etc. thousands of $ in graduation money from well-off extended family, and having their rent paid for over the next few years by their parents. I also have a close friend of mine who comes from poverty, and while he'll be clearing 120-130k his first year out of college, he's also taking on a lot of debt from school and a hospital bill he paid off with his SA hourly. 

I have rarely ever seen a person who comes from a VERY affluent background live below their means unless it was by choice. Live comfortably, spend within your means, and if you see yourself saving for an MBA or a house in the near future, then budget to have money put away. 

 

From an upper middle class family. I can live at my parents rent free if needed so an emergency fund (while being unemployed) is nice to have but not really a necessity. Although my parents do legitimately try to expand their professional network, as business owners they never really had the need to. That being said, they've surprised me a few times with the impressive professional contacts they're able to get from their friend circles.

 

Word of advice, don't prioritize the lifestyle your first several years. Pay down your student loans and save as much as possible. You should never spend bonus money, that's saved/invested/debt repayment. Sure you might not do as much flashy stuff right away but there will be plenty of time for fancy trips/bars/restaurants. I get it, its nice to get a taste of money and seeing people rip through but getting a war chest to buy property and pay down debt is where you should be focused. 

Also, its kinda irrevelant if people have parental support or not. Control what you can control. 

 

In my experience having gone to business school the people who receive assistance usually fall into two buckets.

1. UHNW Family 

Self explanatory a lot of these types went to business school for the credential and branding. They mostly work for fun and to get out of the house rather than a need to build a life. They mostly have homes purchased for them by family or live rent free at properties they own.

2. Upper Middle Class Types

These people’s families usually have one or both parents in C-Suite positions/MD/Director/Principal at PE Fund/etc. Biggest advantage is being able to graduate college without debt (both UG + MBA). Once they graduate depending how well off they are maybe they get help with a down payment on a house or assistance with a large medical bill, rent if laid off, etc.

I personally am able to live a pretty good lifestyle due to graduating debt free and having friends whose families have houses in cool places. The latter is awesome because I’m able to stay for free anytime I go to somewhere like London, Aspen, etc. which enables me to take cool vacations 3-4 times a year for the cost of a plane ticket and buying dinner for their family a couple of the nights. 

 

Lol category 2 is upper class...just not independently wealthy. You're talking top 3%, mostly like top 1% earners. This is not in the stratosphere of upper middle class. 

This concept has actually been studied and written about....people in this category, heck even top 10%, view themselves as upper middle class just because they are so far away from real wealth. But make no mistake...this category of earners is upper class by any metric. 

 

That’s fair and my viewpoint is a function of growing up in a T1 city as well as the insanely high housing costs needed to buy these days.

I’m not one of those people who thinks you need to make $500k to survive in a T1 city but $250-300K seems table stakes for having a chance in hell to buy a house. Once you have the house paid off $180-200K seems somewhat reasonable assuming you have no more than 2 kids and you’re not sending them to private schools. 

For added context, the median home price in my city is approaching $2M and those places often need renovations. It’s even become common practice now to pay $1.5-2M for a house and immediately knock it down to then build a 3-5K square foot house for some HNW person to buy as a 2nd home, which is only exacerbating the low supply issue. 

Have family members who are dual income with 1 kid making $400-500K and are struggling to buy a house right now. They can’t afford anywhere within 90 minutes of where they currently live because everything in their price range is sub 1K square feet and they want to have a second kid. 

 

More like top 0.1%. Top 1% is like 500k household income (half that in the UK) and top 0.1% is like 2.5M (quarter that in the UK). I grew up in a decent household but in a poor region of the country and would have considered myself middle to upper middle class (think parents are senior level teachers/drove an entry level mercedes/$150k household income) compared to rest of my peers from home, but MD money is completely bonkers to me and would be to everyone where I'm from. Would be enough to move my parents into a mansion where I'm from.

 

From my experience a decent amount of my analyst class had parents in finance, some were MDs at other banks. My parents paid a third of my rent throughout my first year and allowed me to graduate debt-free, so I'm living very comfortably on an analyst salary. Am I a spoiled brat? Probably but who could say no to that deal? Lol

 

I’m going to give you a massive piece of advice that most people will just ignore.

Use comment sense… if you have student loans, live a modest life and get rid of the debt. Do not finance your lifestyle with credit cards.  Always pay yourself first and keep healthy savings and investments.  You are just starting your career and sacrifice is necessary for anything in life.  Finance has some of the most financially irresponsible idiots I’ve ever seen, toxic personalities, out of touch spoiled brats, and last but not least… way too many followers/sheep that want to simply conform.  The industry does not encourage prudence in any way but does encourage flashiness.  Learn to enjoy spending time on your own and others outside the industry as much as possible.  

 

You are right that Finance is a field that one benefits from by being wealthy already. This is a fact of life and will never change. 

What is changing though for the better since the 2010s (and this is all anecdotal and in my honest opinion) is as follows: 

1) One key advantage of the CFA / FRM / and other certifications and designations, and their emerging prevalence, is that at least everyone (regardless of schooling) takes one test. There are opportunities to score higher percentile-wise than the competition in a more class-blind environment. I do suppose the richer kids may have more resources, however, I bet this is counterbalanced by the fact the richer youth are more likely to spend money on an Arts degree so they can party. Therefore if one goes to College for something quantitative out of practical necessity one may have more hands-on experience doing Mathematics by contrast before reaching this academic level. 

2) Social Media has made Networking easier for lower-class people. There are more tools Online today that are accessible through Credit Card Subscriptions to learn Math/STEM/Finance than ever before. 

3) I am from the West Coast in Canada/USA. Due to the housing crisis, societal inflation, and COVID-19 royally screwing over the younger generation for work and schooling, it is more understandable to live at home during College and University. Furthermore, there is less stigma to academic upgrading in Math at Post-Secondary given how behind everyone this generation is due to the pandemic (there are some classes you need pens, pencils, and paper to test for, all for example). Due to this reality, the costs of a Bachelor's Degree can be reduced whilst the academic knowledge is better retained anyway. Ie: Is it better to have an A+ in Senior Year Math from a dipshit public school (where the final is like 20% of the Final Mark) or a C+ or B in an academic upgrading course (that is 60%) where one is more likely to be held to private college test-taking standards anyways. This shift away from trusting High School Grades in the long run should save people time and money too. 

4) Referencing point #1, poor kids have more incentives to avoid bad degrees and thanks to YouTube there is more info about avoiding said paths. I would also say that the rich are getting the realization as well that Liberal Arts Degrees are more of a waste of the actual time spent in school. All with this mattering more than the money per sea. 

5) Referencing point #1, and #4, I personally think that whilst extra private tutors are helpful in the long run knowing how to teach yourself is more value-adding for your career which poorer yet educated kids are better at. 

6) Finance Careers due to AI, Robotics, and Automation will become more Math/Stats/Computer Science orientated anyway. All where these subjects are actually about what you know versus who you know. I would also add to this in the area of commodities (please look up my other posts on AI) people with a Science or Technical Undergraduate Education with an MBA or CFA are more valuable due to the Science knowledge they need for certain industries. Think mining in Canada or Australia for example. 

7) I will speak up for richer youth in this one respect whilst also making the point that class matters less now. If a kid from a richer family does the right thing and builds on what their family has given them in terms of support they deserve to be successful. I mean it isn't like they are drug addicts on their parent dime or something like certain celebrities are. 

8) In a workforce/adult environment one can always pursue Entrepreneurship which midgates class in some sense. Much easier to do this with Social Media Marketing than anywhere else. There are also newish breakthroughs such as Crypto out there to pounce on early. 

9) People with rare yet useful language skills (this includes immigrant backgrounds) have more flexibility careerwise. This is self-explanatory so long as your English is also good. 

So yeah, my point is that it isn't easy being poorer and pursuing a career. However, it isn't as unfair as it used to be. 

 

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