Reasonable An1 London rent

Hi, starting an offcycle IBD internship this winter. Tube stations are Bank, Liverpool Street, and Moorgate. Salary is prorated £60k (£5000 monthly, after tax £3500). I've budgeted around £1200 for paying off student loans, so around £2200 leftover for everything else.

I've budgeted around £1200-£1300 for rent with a max of £1500, looking for a room in a shared place with 2-3 other people. Is this reasonable as an offcycle analyst (no bonus yet) or am I spending too much? I'm looking to rent in these areas: Angel/Old Street, Shoreditch/Whitechapel, Waterloo, Canary Wharf, Stratford East village. I don't have a preference where, although if anyone has a suggestion for one area vs another please let me know. 

 

It’s up to you but that’s a big chunk of your disposable income. I pay roughly the same as you do and make 4-5x more

I would say 1.5k ex bills is definitely too much. It’s not bad to not live in the best house as an analyst as you’re barely there anyway. Or maybe you can move further out. You’re on the bottom of the ladder so you won’t find something satisfactorily comfortably within your budget in zone 1/2, such is life. Unless you say you’re happy not to save anything and just want a nice place for a few months

 

What percent of take home after tax is considered good to save? And does this include bonus or not? I’ve been planning on: live using almost all my salary, don’t touch any of the bonus. But I’m not sure if that’s smart

 

Bad way to look at it. 1. Contributing all at the end of the year to savings/investments imo denies you gains. I don't have the maths to back this up but I'm like 80% sure the maths would check out 2. Don't think about what % of income is good to save, work backwards from your goals and save what you should save to meet those goals and spend whatever you have left. When you have as much disposable income as we do in finance, you're in the privileged position of being able to view your finances like this and not see much impact on quality of life.

 
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Idk about that I make about the same and could afford to rent that easily and still save a very good amount.

3.5k after tax (for me this is after pension contribution + student loan repayment too).

Actually did my budget yesterday and figured I could save 1.5k a month if I wanted to. I pay £1k in rent rn (outer edge of zone 2) so could easily pay £1.5k and still save £1k a month (excluding pension + bonuses).

My rule of thumb that I think roughly works is 1/3 of pre-tax salary on rent and bills max. This becomes a bit more painful the further you get into the higher rate so it's a cap not a target.

 

Also worth noting that if you haven't looked at the rental market in the past 6 months, your views would be way out of wack. Rental market is even worse than it was at the start of the year. Apartments I was looking at in December 2021 are now going for like 30% more than they were back then and people are still being outbid.

 

Up to you. I’ve lived and worked here quite a few years. I think you’ll find life is more expensive than you anticipate. £500 pm set aside for vacation budget, £1500 pm general living expenses, £1500 for housing -  now you’re out of budget. If you have additional student loans etc you’re over budget by a bit already and have started to eat your bonus

 

How was that area? I'm looking at a few things near King cross. 

 

1) btw net should be higher as UK tax year runs april to april and you get full allowance starting mid tax year.

2) Also if you live within half an hour's walk you will save on tube and get some much needed daily exercise as you will be working long hours. I lived under half an hour on foot this summer .

3) its all doable on your budget ,probably worth going close to the  higher end of your rental budget so you sleep well in comfortable enough surroundings

 

1. So this means that my tax rate will be lower from Jan-April?

2. That’s something I’ve been looking at, I imagine the daily walk would be the only sport for the day. And I guess that would be ~150 /month.

3. Yeah I’ve read that it seems worth paying a little extra for peace of mind when you’re working such long hours, you don’t want some idiot waking you up or having to deal with a filthy shower.

 

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