I get it: living in the Big Apple is costly. But is it really that costly, or are people just over-exaggerating it?
Sure an apartment can cost $2000+ and income taxes can take up 25%+ of your base salary + bonus, but many of you on this forum are making $120k+ straight out of college, some even $150k+, and this number only increases after each year (If you actually stay longer than a year...or even 7 months). Not to mention you all rarely have to pay for dinner.
So considering how much money you're all are making, is it still that expensive to live in the Big Apple?
P.S. I'm not factoring whether the money is worth it, because I already know the answer to that. I'm only curious based on pure finances, and a more recent perspective as costs of living change YoY.
Most people spend their base salary ($85k) and save their bonus. You also don't get the bonus until the end of the year (and you don't know how much it will be) so it's generally unwise to spend money throughout the year and count on your bonus to bail you out later.
So living on $85k, you'll lose about 40% to all taxes (federal, state city, payroll, etc) leaving you with $51k. Assuming you spend probably $2k/month on rent and utilities, that leaves you with $27k. Divide that by 52 weeks and you're looking at like $520 of spending money a week. 21 meals a week, you probably get 7 paid for a week so 14 meals a week @ $12 a meal on average leaves you with $352 a week. This needs to pay for your clothes/alcohol/other entertainment/other apartment expenditures/etc.
Yes I made most of these numbers up within reason, but hopefully you get the point that you can't really live like you're making more than $85k, especially the first year or else you will run into cashflow issues.
Considering many people make 60k out of school and live in NYC(maybe not Manhattan) i'm sure 120-150k should be sufficient to spend/save.
Everything is expensive. If you go to a nice restaurant its going to be over $100 for just yourself if you want alcohol to.
@investment_Wanking
$352 per week still leaves you with $18,000+ per year, not counting in bonus.
Also only $12 a meal? I suppose that's possible if you're eating from food trucks everyday, but I would've imagined anywhere else would be like $20+ per meal? Unless of course you are implying that you live completely on food trucks.
Banking analysts should be the last group of people worry about living cost. if you can bear sharing a converted one bed with roommate, seamless every night, rarely take vacation and only bottle&model few nights a year, NYC living cost is not high at all.
The real pain starts when you have partners/kids, have a life but haven't hit jackpot yet. 2 bed in a nice doorman building cost you 6000. Avg bill in a decent but not fancy restaurant is 40-50 per person. and fancy ones are easily over 100/200. Private school costs more than ivy yearly and last much longer.
True but I'd imagine many people on this forum would want to move into the suburbs when settling down. Plus I'd imagine in NY, you'd probably have to be at least at the VP level before settling down.
if you're single and live with a roommate, and only have your own expenses to account for (no live-in girlfriend etc.), you should eaaaasily be able to party and pretty much afford anything you want, within reason, on $120-150k gross salary. If you have to shell out 2-3k for your own apartment each month, things will obviously be a bit tighter until you receive your bonus. source: I've lived in NYC for most of my life.
I'm curious in general about new grads talking about $1800 rents in Manhattan: do you all plan on living alone or is that to have roommates?
When I was young and fresh out of school, and that was a while ago and I don't want this to sound like "when I was your age...", I didn't know anyone who lived alone who didn't have a trust fund or parents paying their rent. It didn't matter what their job was, IB where they made good money or advertising where they made shit, no one lived alone. Personally I moved across the country to SF, didn't know a soul and got two random roommates and never thought about living alone because of the cost, and I made good money.
I'm just curious when people on WSO talk about their rent expense, which is often, and why they don't just get roommates, decrease the cost and save money. When you're working 70-100 hours/week you're never there anyway.
getting a roommate(s) is always an interesting proposition, but there are several potential pitfalls. As a 22-23 year old, you are already somewhat shaped as a person and shaped in your world views, and have an idea of what you can and can not tolerate in another person you're living with. To that point, certain roommates can be immensely annoying, inconsiderate or immature, and generally make your time at home miserable, whether intentionally or unintentionally. When you've just completed a grueling shift or week, the last thing you want is to come home to another nuisance. You want to come home to decompress and recuperate. Many are willing to pay a premium for that option of solitude. Moreover, 1800 a month is entirely feasible on a first year analyst's salary, although you will be cutting a little into your "leisure" budget. Finally, you could potentially get lucky and get a really cool and grounded roommate, but taking the chance with a roommate is dependent on a) your risk tolerance in case you don't luck out and b) your personality type- be honest with yourself (you know yourself better than anyone else)
http://www.mns.com/manhattan_rental_market_report
Nowadays $1800 is far from enough to live alone in manhattan
Fuck. I haven't looked at Manhattan RE prices for a long time. So when everyone on here's talking about spending $1800+/mo that's splitting a one bed?
Bullshit You can get a studio for $1800, and I'd say $1800-1900 is baseline if you want to live in a good area of Manhattan.
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This may be a really dumb question, but what is the difference between a doorman apartment and a non? Is the doorman just signify the quality of the building? What benefits do a doorman provide?
Forgive my ignorance, I have lived in a small area my whole life.
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It depends on where you live I suppose. My friend who worked at JPM split a 3-BR that costed $4500 ($1500 per person). But she was living in Chinatown, which is kinda dirty and gross.
But it looks like you'll pretty much have to get roommates of you want to [somewhat] control your rent expenses while also living a places that don't contain vermin.
I was paying $2200 for a one bedroom (more like a studio) in the LES. Got sick of it and moved back to Brooklyn where I paid 1800 for a one bedroom in Bed-Stuy and endured a lousy commute. But even now Brooklyn prices are skyrocketing, too. You can manage in Manhattan on 120K a year but likely won't be able to save-it will be almost check to check. Between rent and utilities, food & groceries, 401k contributions, health insurance, credit cards, student loans, monthly metrocards (even with the wageworks exemption)....it's a tough climb. And I assume most of you will want to date? You get the picture. Roommates will be a must.
The idea that you can't save as an analyst is really off the mark IMO. Certainly with the new 85K salary bump, you should be way in the positive every month unless you are spending crazy amounts going out. The things you mentioned shouldn't cost that much. Ideal rent is probably around $1800, utilities bring that to $2000. Groceries and food should be at most $300-400/mo, again, unless you're going nuts. The vast majority of your meals are at the office and are free. Getting the unlimited metrocard is not the way to go, you swipe on average maybe once per day, call it $60-70/mo. So we're up to $2500/mo in spending so far and have covered all the key bases. Cell phone, going out budget, clothes, etc conservatively bring you up to $3500/mo in spending. No time for vacation/etc so thats all you need to spend all year.
Unless your place pays shit or you go crazy going out, you should end the 2 years with close to or above 100K in savings [and 401K is savings]. I ended with way more than that thanks to the market, but 100K is achievable with 0% returns. This is if you want to save as an analyst - I'm saying it's possible. For most people, they will find ways to blow significantly more money, but that doesn't have to be you if you dont want it to be. There is a middle ground between illiniprogrammer and the guy who gets bottle service every weekend.
This. Are you guys going to Per Se and Ph-D every weekend, like seriously? This is WSO...not the NFL or NBA where people need mandatory financial literacy classes.
hahaha i love that casual reference to Illiniprogrammer
One question - aren't you forgetting about taxes? Assuming 40% tax:
$85,000 *0.6 / 12 months = $4,250 per month Assuming we spend $3,500 a month like in your example above, $4,250 - $3,500 = $750 Base Salary Savings in Year 1: $750 * 12 months = = $9,000 End of Year Bonus (45% taxed): $50,000 * 0.55 = $27,500
Total Savings after Year 1 IBD = 9,000 + 27,500 = $36,500
Not sure how you could save $50k unless you live like a hermit and eat halal for lunch everyday...
Fuck that.
I'm in London for 3 months studying abroad, and while I don't pay for my housing since it's included in the tuition I already pay, I think people overestimate living expenses a little bit. Granted, housing is the biggest concern for NYC/London. But in terms of spending money... I've seen over 10 plays, occasionally go out and eat, etc. and I haven't spent that much at all. I usually walk places instead of tube (which is way more expensive than any US transit) just because I like seeing and experiencing the city. If you're a frugal spender in college, odds are you will be after you graduate as well. Unless you're just one of those irresponsible people, who after obtaining some money, go crazy.
Well if I were working 80-100+ hopes a week is probably make impulse purchases to feel better about myself too, although maybe not the extent of some of my friends, like this one click who's currently at an EB whose parents tell me she spends $2000+ a month a jewelry, make-up and other products.
And that's another thing: how would you even have time to go shopping?
Something to consider,
When you start your career, you are making maybe 20%, often less, of what your peak earning power will be for the average person who does 10-20 years in our field. Although it is important to control your finances and learn to save/invest, one of the best investments at this stage of life is yourself.
You will likely be working a lot and building a foundation to take leaps forward in both your personal life and career. Having a sub-par living environment will not contribute to making gains in those two areas. I think it is a good idea to invest in your living environment and pay for a set up that works well for you specifically.
Don't go blow 6k/month on a 1 br penthouse rent or something stupid, but the cheapest living option is not necessarily always the best. Spending a few hundred more dollars per month to guarantee peace of mind and relaxation during the rare down time @ home you will have is well worth it, and will return itself in the dividends of happiness and increased focus at work over the next few years.
There's a lot of truth to this, and that's why I say you get the decent apartment in Manhattan close to work with 1-2 friends for $1800/mo versus getting a shithole for $1200/mo each in Washington Heights, or, to save even more, a place in Hoboken for $1000/mo each plus $4000/yr in tax savings. And why I say you allocate $1000/mo to clothes, going out, and other luxuries versus zero. It's all about finding a reasonable balance.
But I'll say that one of the most underrated forms of happiness is peace of mind, and in particular financial peace of mind. Life and work are a lot less stressful when you are living well below your means and your bank account is fat. You don't want to be in a situation where if you quit or got fired today you'd be on the street in a few months. Even a small amount of financial independence puts you in a much better position to take calculated risks in life and your career.
/thread.
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Nobody has said it's common. The point is that it is not only possible but very realistic with only moderate controls on spending.
Agree with the very realistic statement. In my office, I wouldn't even consider myself an outlier and I had easily way north of the numbers MK is mentioning saved after year 2. And I spent ~$2000 on rent, regular drinks but nothing outlandish.
Ppl forget that your effective tax rate will be ~30% if you do your tax plannings right. Max 401k, itemize deductions and state taxes are a deduct against your federal taxable income, claim all your deductions, etc. In the new paradigm, a lot of analysts will make north of 135k at good shops. Only one of our first years made less (and he did absolutely no work, really should have been fired). I'm not saying its the right decision for everyone (some ppl have loans, some ppl value spending when they're young more, or expect their salary to increase more over time) but it is far from impossible or even abnormal.
I suppose it comes down to personal preference on where you like to spend money and how that makes you happy-for some it's having a nice place, for others it's blowing money at bars/clubs and for others it's having expensive silk towels to jerk off into (I spent a small fortune in linens in my youth...)-but when I was younger I always tried to keep my fixed, contractual expenses down, the biggest one being rent when you're first out of school. If CF ever gets tight for whatever reason-your spending projections were off, bonuses sucked (it happens), unexpected cost comes up somewhere in life, you want to quit your job and take a few months off or whatever-you can always go back to ramen noodles and PBR, not buy new clothes or electronics or paper towels instead of silk cum rags- but you can't just stop paying your rent, or as you get a little older or move somewhere one is required car payments and things like that.
I never lived in cockroach infested studio above a whore house in Chinatown but it's just something to keep in mind. And the problem with real estate is that if you start with something nice you're never going back down again and more likely with each increase in income it will be in your head that you should now get a nicer place.
People keep ignoring state and local taxes in the NY... which are huge..
I never spent more than 3k/mo as an analyst
SF is way more expensive now
http://streeteasy.com/building/308-west-98-street-manhattan/3f - $1,875
http://streeteasy.com/building/930-amsterdam-avenue-manhattan/3 - $1,895
http://streeteasy.com/building/842-amsterdam-avenue-manhattan/5 - $1,900
And these are just what's on streeteasy; also notice how I didn't put anything that was much of a walk, if you're willing to walk, there's many more. If you look you can also find deals better than these I've posted - I pay 1825 and live in an elevator building right near the train in Murray Hill/Kips Bay - it ain't that hard.
Now if you want to go living in a doorman building or only a building w a fitness center or only laundry, blah blah blah, ok, yeah, you're probably gonna have to pay more. But if you're smart, you'll try to save money on rent. I could go rent an apartment for more than I'm paying, but instead I save the money and I'm totally happy with what I have.
agree with @ming1992
I was talking about doorman building below 60th and between 9th ave and 2nd ave. Of course you can always find cheaper options outside prime locations. I don't think 100th st is much different than queens/brooklyn (not saying they are not good for living. I live in Brooklyn).
Second link... that is one ugly bathroom
OK, fair, I guess our definition of "a decent studio in an OK area of Manhattan" is just different. I would not include an apartment in a bare bones building @ 105th Street in that category.
105th on the West Side is right around Columbia - you have the 1 train right there at 103rd. How is that not an ok area? What do you smoke? Please stop giving bad advice to this people
There is no need for name calling. I stand by my statement: a decent studio in an OK area of Manhattan will cost you $2,100. Sure you can find a place in Manhattan for $1,800, I never said you could not. Hell, you can probably find something for $1,500 and then have a gas explosion kill you East Village-style but if you are this cheap then the best advice is to forego the studio altogether and split with other people.
I am glad that you are happy in your $1,800 apartment and think that 105th street is a prime location because there is an underground stop there and Columbia is not far away but it does not mean that everyone else should agree with you.
If anything, you're the one spewing complete garbage. I honestly don't know any young professional in NYC who would consider anything remotely close to Columbia as "prime location". Sure it works for some people who need to save money, but from the perspective of a young finance professional this is absolutely garbage. It's far from work and far from the relevant social scenes.
The best move is living somewhere below the park. Keeping below the $2,000 mark, you can certainly find a flex 2-4 bedroom apartment in a doorman building or a true 2-4 bedroom apartment in a walk up for under $2,000 a person. These options are significantly better than living in no man's land near Columbia.
At 120-150k a year you can save and live in NYC without any problem at all unless you go out 7 nights a week and spend like an idiot. Tons of kids make 40-50-60k (on average) out of school and live in NYC fine. Yes they don't save much but still can live. Im not sure where you think the idea of minimum 2000ish a month for rent comes from. Tons of apartments in the 13-1500 range if you have 1 or 2 roomates and are willing to compromise a little on size and location. ITs easy to get around nyc. Why would you want to spend 2500 a month on rent in the WEst Village hwen you can be on the upper east side (still a fun area) for 1500?
How accurate is the CNN Money cost of living calculator? Couldn't post the link.
NYC can be cheap if you know what you're doing and don't buy stupid sh*t...
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Ok so where is reasonable? Please tell me exactly what area is what you consider reasonable
Having worked in three major cities across two continents, I have to say that there's a lot of defending living preferences here and not enough talk of what is "achievable". At the end of the day, saving a decent sum of money while living in NYC is achievable, but you have to sacrifice for it. Spending income is a question of priorities, and for some a smaller place or longer commute is worth the long-term financial stability; for others, it is important to have convenient access to work or fun, at the expense of a six-figure nest egg after two years. This is simple opportunity costing. I shouldn't have to tell a bunch of finance and economics wizards about that.
Personally, I prefer to save money over spacious, doorman-building apartments, but I know it's also a spectrum. I need a lift and a window, but I don't need a short commute or basically any space. (I once lived in (and enjoyed) an 8x10 room with another person for half a year, though obviously not while in investment banking.) So I won't be getting the $1500 studio in Crap Point, but I also won't be splurging on the lush $3500 one bedroom doorman in West Village. Not everyone has the same preferences, so you obviously have to compensate your expenses for the amenities you need.
Investment banking is about sacrifices: you sacrifice your social life, your sleep, your ability to calmly read a Powerpoint, and in the end you're typically sacrificing two years of your life. But you get great pay packages, unparalleled connections, and deep knowledge of the industry. The reason people are skipping to tech, private equity, and hedge funds is they're coming to terms with the idea that it's okay to say that benefit doesn't match the cost of the sacrifices. Your expenses are the same way: You can keep that $50k/year in savings, but you will sacrifice convenience, sleep, access to nightlife, and a lot more. It's okay to say that you're not willing to give up those things, but the beauty of this paradigm is you have control over the spectrum.
What does that mean for the original poster? Well it means the final answer is that it depends. If you're looking to know how much you'll have left each year, it's likely somewhere between 0-$50k a year, depending on the type of lifestyle you want to lead in the city. A reasonable person could easily get to saving $25k a year, especially by playing the right tax games.
This seems like the most reasonable savings on this thread. I find it pretty hard to believe people are saving 50k+ a year on analyst salary and bonus.
In that vein, more detail for you.
Let's say 150k year 1 comp. 17.5k 401k contribution (lets call that savings, even though pre tax - beauty of tax deferral). 33% effective tax rate -> $50k taxes.
150k topline (-) 50k taxes (-) 17.5k 401k (-) 24k rent fixed expenses ($2000 a month) = 58.5k
Say you want to save $50k total in this year, thats an additional $32.5k off of the 58.5 so now you have $26k to spend. Lets round and thats about TWO THOUSAND DOLLARS a month on other stuff. It really becomes an exercise in paying attention to what you're buying and what kind of lifestyle you want but tell me how one cant survive on $2000 of play money a month ...
And then of course, it only goes up from there
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