To those who grew up in a middle class family

How has your lifestyle changed after breaking into IB and getting paid so much? Does it feel like a lot of money? How financially comfortable are you? What has changed in your life? Is it generational wealth?

Comments (52)

Funniest
Jun 19, 2022 - 12:19pm
Arroz con Pollo, what's your opinion? Comment below:

urbanowlz_

I translated the proverb from my native language to English in my head, made sense to me. Fair or not, money doesn't define someone's class, and you could dress someone up with the most expensive clothes and all the money in the world, but their upbringing would play a factor in if they knew how to carry themselves or not. It's a very pronounced issue in the UK, where a lot of City firms discriminate against people based on their perceived "aura" stemming from their background. The American view of the "middle class" is for some reason people who don't have much and struggle? The continental view is that of people with a decent background with social capital.

Yeah you entirely missed what is being asked

Jun 19, 2022 - 1:00pm
conrad_candor, what's your opinion? Comment below:

Calling our socioeconomic perception "wrong" is very naive, we Americans have our own system of understanding class, wealth, and status. Would it be ideal if Americans judged each other by how we carry ourselves, our intellect, and our behavior rather than our pocketbook? Possibly, it is far more egalitarian and meritocratic. But this is not reality - Americans judge one another on a far more monetary basis, with regards to understanding "class". In this sense, the OP is referring to those families with a level of means between "scraping by" and "being comfortable". These are idioms that are uniquely American, and I think most Americans understand what "class" I am referring to by using those. The large salaries and growth opportunities that those coming from middle-class backgrounds receive, juxtapositioned to their parents(s)' income, most likely carries a greater deal of significance than those coming from a more privileged background. I am assuming this is the idea that the OP is referring to. 

And the "pearls to swine" proverb refers to giving something of value to someone or a group of people who don't realize its value. Idk how that applies here. 

Jun 20, 2022 - 11:10am
us_ski2022, what's your opinion? Comment below:

Honestly couldn't be more racist if you tried. Those fancy names and families in London got their wealth by robbing it from their colonies. Who gives a fuck if your great x5 grandfather stole shit in India.  You aren't entitled shit because you're born. 

Jun 20, 2022 - 11:19am
us_ski2022, what's your opinion? Comment below:

I know you didn't mean too but you basically just argued for why diversity programs should exist for top flight educational programs/ career opportunities. 

  • Associate 1 in CorpDev
Jun 19, 2022 - 12:53pm

The definition is not wrong if it works well on an absolute and relative basis. Part of the definition you are taking about is embedded in the American Dream and ideals of individualism. On the basis of the Dream, people flock to the US from around the world and we end up with the largest per capita successful entrepreneurs despite our terrible immigration laws. Now this result is not solely do to this idea but it's one driver. With regards to individualism, relative to other countries we judge people for who they are and not what their families did. This helps create more of a fair society when it comes social and economic mobility. And to be fair, there is plenty of familial judgement but not in the same way or as severe it is like in the developing world, Europe, or elsewhere.
 

Part of me thinks that this social structure exists because the United States is a young superpower that offers a ton of relative growth for its populace. If we were to decline over a long period of time, maybe the elites and middle class would adopt a similar, more rigid hierarchy as the British to maintain power. That's a pathetic outcome.

Jun 19, 2022 - 12:55pm
Arroz con Pollo, what's your opinion? Comment below:

Generational wealth needs defining - nobody in my family is a banker. As I grew older, my dad started making more money. We went from old used sedans to new luxury SUV's. I saw my FAFSA when applying for colleges and realized my dad made much more than I thought. This was around junior year college. People would sometimes ask me how much my dad made at the lunch table in high school and I would just guess and say "$100k probably".

My dad paid for my college and all expenses. Realized this wasn't necessarily the norm after talking to other kids. Also remember looking at apartments to live off-campus and talking about cost and my dad just saying to pick the one I liked and he would pay for it.

Now that I'm a working adult, I don't make as much as what I would at an equivalent position in banking, but with my investment income, I'm making a solid amount each year. I don't really worry about money but am still cheap.

The majority of rich people I know have pretty chill lifestyles. They work and watch tv and maybe go on nicer vacations and drive nicer cars and have larger houses, but that's it. Lots of these people are immigrants, and I see them spending money on stuff for their kids and family.

Jun 19, 2022 - 12:59pm
Arroz con Pollo, what's your opinion? Comment below:

In terms of financial comfortability, I do not nor have ever stressed about money. I live well beneath my means - sure, I could afford a 6 figure car, but I drive a basic sedan. I would rather know I can go buy a nice car than actually have that nice car.

Outside of rent, I spend less than $20k a year. Majority of that is eating out. It's probably closer to $10k a year on expenses, and much of that is just random shit. Sure, I would like to have a Lambo, but I'm not any less happy without one than I would be with.

Jun 19, 2022 - 5:18pm
Kevin25, what's your opinion? Comment below:

the answer depends on how much debt you graduated with, how much savings, and where you live. if you graduated with $200k in student debt, no savings, and got a job in NYC (rent ~$3k/month), then your lifestyle won't change much in the first 3-5 years if you're acting smart, cause you'll be paying down debt and investing what is left after paying for rent+food+transportation which is a lot of money in NYC.

on the other hand, if your daddy paid for your school and gave you $100k as a starting capital (that's what you probably imply by saying "middle class") and you got a job in Chicago, you can be balling from year 1.

  • Teller in Non-profit
Jun 20, 2022 - 2:09am

Ok where do we start. Started piss poor. Worked ass off, then IB happened. Savings grew. Portfolio grew on the back of one of the longest bull runs. Then expensive taste triggered. This was then multiplied by adding a wife. Wife added kids. Kids needed space, school, and support. FCF became increasingly dependent on new leverage. Fake recession happened, followed by impending real recession. Then the fuckitude by high inflation and high rates started. Tldr: no, still middle class af, still working on escape velocity. Probability is like back to being a sperm again.

Jun 20, 2022 - 10:26am
capex fairy, what's your opinion? Comment below:

Assuming you've stuck it out in IB/PE, being so bad at your money that your net cash flow hasn't improved dramatically through your career as you hit mid-six figures doesn't make you middle class. It makes you upper class and bad at managing money. 

Believe it or not, actual middle class people manage to make a fraction of what bankers make and support wife + multiple kids. 

Jun 21, 2022 - 11:23am
Synergy_or_Syzygy, what's your opinion? Comment below:

This is true, obviously, but it's important to point out that in VHCOL cities, "support" is a nebulous definition that has worsened considerably in the past 50 years. In SF/LA/NYC with a $100k household income (my assumption of what you mean when you say "fraction of banker's pay"), you aren't buying a house, you aren't saving for college, you aren't paying for health insurance, or saving for retirement. 50 years ago your one income middle class family was doing all of these things, now it is like a joke.

These families with multiple kids and high school diplomas are basically buying food, paying rent, putting cars and everything else on credit, and hoping for the best. It shouldn't be an acceptable definition of "middle class." 80% of Americans are effectively poor, and labeling them as middle class is not conducive to addressing the problem of income inequality and cost inflation.

Be excellent to each other, and party on, dudes.
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Jun 20, 2022 - 11:16am
bluecollarfinanceguy, what's your opinion? Comment below:

Here is my 2 cents as someone who came from a middle class background (maybe even upper middle class by definition - combined my parents probably make about $100-110k per year, and we lived in one of the poorest cities in the country, a left behind rust belt town).

Coming from a part of the country where there is 0 private sector, most of my friends growing up main ambition was to get a cushy government job with a pension. While noble, this to me would be like a life sentence. Little to no chance to be promoted, literally working on a fixed pay schedule each year, etc. Basically just punching the clock til you die.

I stumbled upon what "investment banking" was when I was 19 or so and knew that was my personal path forward to "getting rich" in my own relative terms. I'm not entrepreneurial and I didn't want to follow any of the other traditional paths toward money (law, medicine, etc.). IB was a good fit for me because you don't have to be a genius , just have to be able to work your ass off with a smile on your face.

Anyways, won't give you the whole story but I finally broke into an analyst spot at age 25, and am now a 2nd year Associate in a product group in a T3 city and pushing up on a $1mm net worth.

The first thing I'll say is that when I got the job I definitely felt out of place. All of the seniors I work with have second homes, boats, play golf/tennis, go on ski trips, etc. for me growing up my family vacations were to Myrtle beach and amusement parks. Really couldn't relate. With that said, no one cares or gives a shit. As long as you work hard and prove yourself, no one cares where you come from or what your hobbies or interests are. You are there to work and help the team meet its objectives.

There are a lot of posts on here about how shitty banking can be (and don't get me wrong, it can absolutely suck as a junior sometimes), but if you can grind it out it truly is a life changing opportunity. A top bucket analyst can make close to $500k in their first 2 years. Really nowhere else you can do that at such a young age. If you stick around to become an Associate and beyond, the comp only increases exponentially. Back of the envelope, if you can make it through 2 years as an analyst and 3.5 years as an associate, you'll be looking at total comp of over $2mm is just over 5 years. That is more money than most people make in an entire lifetime.

To me, the grind is worth it. My goal was to build wealth, and it has helped me do that. I could stop working tomorrow, and even if I never saved a dollar the rest of my life, I am guaranteed to become a decamillionaire by virtue of compound interest.

My observations from WSO is that the kids who say that the trade offs aren't worth it are those who already come from wealth. And maybe to them that is an accurate assessment. If you already are well off, it probably doesn't matter. But I don't have that luxury.

Jun 20, 2022 - 11:50am
big monkey feet, what's your opinion? Comment below:

Thanks for the response. I can't agree with your post more. This encourages me a lot. I feel like most of the people who complain about banking already had it made from the beginning. My mindset going into banking is like yours.

Jun 21, 2022 - 12:29pm
jonkemp, what's your opinion? Comment below:

In what bank is a 2nd year analyst making $500k? That's VP level comp. 

  • Associate 1 in IB - Restr
Jun 20, 2022 - 10:47pm

Bolded parts answer your question - the rest is me detailing aspects of my crippling depression.

Grew up poor - AN1 salary + bonus (before COVID increases happened) felt like other worldly money to me.  Fast forward several years, money, like everything else, means nothing to me.  I not infrequently blow large amounts of $ on hookers or gambling because it makes me feel something sometimes.  Your salary and bonuses won't be generational wealth, but it becomes enough to live comfortably and give kids a comfortable upbringing.  At the end of the day, I'd probably be happier if I'd gone for the underwater welding cert and maxed out at ~$150k, but it becomes increasingly difficult to walk away from IB comp the longer that you stick around...and frankly I don't know how to operate in a normal working environment at this point. 

Briefly exited to a lifestyle corporate job - hours were great, comp was more than 90% of people make, but I found all of the people I worked with to be unmotivated, gooberish, pussies because they were regular people who didn't demand perfection and instantaneous production of deliverables at work.  Went back to banking and will remain until I hit a $ that allows me to buy a hunting ranch in the middle of nowhere and spend my mid-30s ownward with my wife, kids, gods, UTVs, & hunting gear.  Going off the grid ASAP.

  • Analyst 1 in IB - Gen
Jun 21, 2022 - 12:45am

Went back to banking and will remain until I hit a $ that allows me to buy a hunting ranch in the middle of nowhere and spend my mid-30s ownward with my wife, kids, gods, UTVs, & hunting gear.  Going off the grid ASAP.

Do you think by mid-30s you will have enough saved to do that? Like do you do any extreme form of fatFIRE or are you like really frugal or am I just underestimating IB comp?

  • Associate 1 in IB - Restr
Jun 21, 2022 - 7:59pm

If I avoid burn out and am able to stick around that long, yes.  I don't know what the fuck FAT fire is. 

ETA:  No FATfire.  Land, land management, high-fencing, deer purchases, and UTVs, & hunting gear will be large expenditures off the bat.  After that, I'll be harvesting the majority of my food, living in one of the lowest COL areas in the country, doing my own property upkeep (which is mostly land management), and engaging in 0 extravagant spending.  Passive income should be more than enough to cover living expenses.

Jun 21, 2022 - 5:35pm
IcedxTaro, what's your opinion? Comment below:

Associate 1 in IB - Restr

Bolded parts answer your question - the rest is me detailing aspects of my crippling depression.

Grew up poor - AN1 salary + bonus (before COVID increases happened) felt like other worldly money to me.  Fast forward several years, money, like everything else, means nothing to me.  I not infrequently blow large amounts of $ on hookers or gambling because it makes me feel something sometimes.  Your salary and bonuses won't be generational wealth, but it becomes enough to live comfortably and give kids a comfortable upbringing.  At the end of the day, I'd probably be happier if I'd gone for the underwater welding cert and maxed out at ~$150k, but it becomes increasingly difficult to walk away from IB comp the longer that you stick around...and frankly I don't know how to operate in a normal working environment at this point. 

Briefly exited to a lifestyle corporate job - hours were great, comp was more than 90% of people make, but I found all of the people I worked with to be unmotivated, gooberish, pussies because they were regular people who didn't demand perfection and instantaneous production of deliverables at work.  Went back to banking and will remain until I hit a $ that allows me to buy a hunting ranch in the middle of nowhere and spend my mid-30s ownward with my wife, kids, gods, UTVs, & hunting gear.  Going off the grid ASAP.

FYI, the folks who I know do underwater welding makes as much as doctors are - former shipyard worker here. They get flown around the states to various work places (free), free lodging, and they get a daily stipend for food.

Not a bad gig with just training and certs. However, these guys grind it out and make bank, too.

  • Associate 1 in IB - Restr
Jun 21, 2022 - 8:54pm

With blue-collar jobs, there seems to be a correlation btwn how integral a navigable body of water is to the job and how much you get paid.  Union stevedores make ~$200k/yr, which is an absolute bag relative to the difficulty of the job.  Unfortunately for those guys, there's increasingly no place for the Sobotkas on the waterfront - those unions have been dying out for a while.

Jun 21, 2022 - 1:58am
ASEANalyst, what's your opinion? Comment below:

I come from a former middle class family (probably even upper-middle class relative to the city i live in)

Yet during HS, all the the wealth my parents had was gone (combination of bad decisions and economic climate). So i think i have a unique perspective of having two different lives in 2 different socioeconomic condition (We really struggled to a point of we ration out food and getting debt collectors harassing us daily).

The money is nowhere close to be life-changing for me personally, but it definitely keeps us afloat comfortably. Mind you i do have to support my parents, grandparents and to a lesser extent my aunts family whose also live with me. The money is definitely life-changing if i didn't have the responsibility of sustaining 8 elderly people, but it goes fast especially when someone is sick.

But i'm grateful that now we barely have to think about how to survive, so it is definitely life-changing for us.

Jun 21, 2022 - 8:54am
NPV123, what's your opinion? Comment below:

IB analysts are still middle class in today's dollars unfortunately. Associates are upper middle class.

Jun 21, 2022 - 9:44am
Arroz con Pollo, what's your opinion? Comment below:

NPV123

IB analysts are still middle class in today's dollars unfortunately. Associates are upper middle class.

If you truly believe this then you're an idiot

Jun 21, 2022 - 1:40pm
gufmo, what's your opinion? Comment below:

Grew up fairly middle class in an extremely wealthy area. Mom did not finish college and my dad was the first on his side of the family to do so (grandfather did manual labor, etc). By my second year out of college, I was making more than my parents ever did throughout their combined careers. Some observations.

Education. I didn't know anything about applying for college because my parents didn't know anything about applying for college. Never occurred to them that SAT prep classes were a thing, no concept of alumni networks and "prestige", all about the quality of education. I ended up attending a decent state school with zero brand recognition and an atrocious alumni network. We compromised on that because the price tag plus scholarships meant they could help with the lion's shares of the costs (the gravity of which still is not lost on me). What that did mean is that I had to claw my way into IB and PE in a way that is frankly impossible for 99.5% of people. People underestimate the value of generational understanding of "the system", and having people that can tell you what to do to get into good schools, how to network, etc. Not to say you can't learn it yourself, but it was hard for me, and involved a lot of trial and error that delayed my career.

Money. My parents are extremely frugal and I grapple with what / how to spend money. Since bailing on IB and settling into a more relaxed schedule, I have been traveling aggressively and taking up tons of hobbies to "make up for lost time" and see more of the world. I generally don't spare expenses while I do that. And despite what I perceive to be an extremely high rate of expenditure (I guess based on my upbringing), my advisors still tell me I save a higher percentage of my income than more of their clients. Beyond that, despite having roughly $1MM in net worth in my early 30s, I am still constantly freaking out about money and the ability to retire. There's no safety net. I believe strongly that my parents' money is their money and they should spend every penny of it, but the notion of having no backup if shit goes sideways and no inheritance has meant that I feel much more constrained and unwilling to take risks than others that I have worked with. 

"Fish out of water" syndrome. While in IB and PE, I always felt a little isolated. As we're all aware, alumni networking is a huge deal, and I was never able to participate in recruiting events or attend lunches because I didn't have the network. Beyond that, I never felt like "one of the group". Admittedly probably partially a symptom of insecurity, but it always was hard for me to relate to the lives of other Analysts as they described them. I spent most of my IB and PE years penny-pinching and building savings, and it precluded me from participating in a lot of extracurriculars and some of the more exotic activities that my peers tended to be involved with (that were also often subsidized by family wealth). 

I guess the main thing is I still just worry a ton about finances, despite probably not needing to. While others count on inheritances, my assumption is that I will need to financially support my parents in their old age. While others' parents take them out for dinners / on vacation, I am usually doing that for my parents. I don't have an issue with this. They raised me as best they could using the tools they had at their disposal, and contributed massively toward where I am today financially and emotionally, but the role dynamic I have with my parents is vastly different than that of most of my peers, and it's something I notice. 

Jun 21, 2022 - 2:44pm
TimesNewMoney, what's your opinion? Comment below:

I make more than both my parents combined and they still live waaaayyyy better than me off of probably $200K/year because of how much COL has exploded disproportionately to wages. 

Back when they bought their house in the 1990s, they got a four-bedroom home for ~$300K with something like a ~$1,100/month mortgage. That same house would sell for ~$800K - $1M today (ultra high-growth Southeast submarket). So they get to live in a nearly $1M house, with fixed costs of something like $1,500/month when you include taxes/insurance/HOA fees.

I on the other hand, will probably make about $250K this year, but pay $2,500/month for a 500 SF studio apartment. In other words, income-wise I surpassed my parents almost immediately out of college, but because of inflation and real estate prices, will not catch up to their quality of living for another 5-10 years. 

  • Analyst 1 in IB - Gen
Jun 21, 2022 - 9:47pm

Grew up middle class (parents make a combined ~100k) in the Midwest. They always pushed living below your means and the value of an education. Ended up going to a top day school on close to a full-ride surrounded by very old money.

Wrapping up my first year and have 6 figures saved without trying (from previous internships, work study, etc) Fortunate to be in an industry that pays so much yet I practically do nothing (compared to my dad's labor intensive  blue-collar job). I lateraled midway through my first year and my parents thought I was crazy looking for a better job given we are paid so much. Only thing's that have changed since starting this job is I'll now order appetizers at restaurants and pay for my siblings flights to NY to visit me.

(Before anyone comes at me for not having fun / spending money, I travel literally every holiday weekend go to sporting events and concerts on the rest. I just take the train to the airport instead of ubering and get the cheapest tickets to the Yankees games etc)

Jun 21, 2022 - 9:51pm
big monkey feet, what's your opinion? Comment below:

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  • Analyst 1 in IB - Gen
Jun 21, 2022 - 10:22pm

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