Honestly? It felt nice for a few days and then the feeling wore off pretty fast. The bonus is a good sum of money but it's not life changing at all. You're not rich, you can't retire with it. You're now maybe financially a year or 2 ahead of your peers in the same age group but that doesn't particularly move the needle much. As a 3rd year who's collected two bonuses now, it's nice to have a bit more financial security and safety net but you're going to need something other than just money to feel true fulfilment with life.

 

The only reason I want to get into banking and become an MD is so that when I get mad I can throw the deal toys into the wall out of rage and no one will say anything. I like throwing stuff at walls. Gives me inner peace tbh.

 

It was such a fleeting feeling. 

I was an analyst getting smoked so I smiled at first…then frowned once I factored in taxes and then realized it was back to work to eat more shit.

The anticipation was way more exciting than the reality because I realized “ok I’ll buy something nice, invest the rest and I guess we’ll do this next year?”

It was a bit unsatisfying because it was a nice amount to get paid at 23 but it wasn’t life changing money.

Having stayed in the industry now over 10 years, the compounding effects are clear and I’m very happy about my financial position. Oddly, I’d say the the annual bonus season / speculation has even less impact on my psyche now.

 

Haven’t gotten my bonus yet. I would assume that the feeling of security in a decade, two decades, etc would relieve a ton of stress and “life” anxiety for lack of a better term.

 

I identify with these same feelings. It's an OK amount of money and the taxes stink in the moment. But after you're at it for a few years and you realize you have more in your 401k than your peers and you're set up to do some nice things in the future and you've taken a couple of cool vacations throughout the years, it's a pretty good feeling. You just have to make sure you stay at it, don't go crazy with the money in any given year and just let it compound a bit and you'll be much happier overall. 

 

Agree with everyone else, nothing too exciting. Even if you get a huge bonus, as an A1 after-tax it's only $50-60k tops. Maybe someone who grew up in poverty or is first gen might have different feelings, but for your average IB person who grew up middle or upper middle class, this isn't a life changing amount of money for you. It's nice to watch your investment account grow, or spend a bit of it on something fun, but if you're getting crushed it doesn't really make it all feel worth it.

 
Funniest

For many, its the moment they become a republican(after they see the post tax amount)

 

we're all humans, nobody really cares about what a certain party "believes." Just a party that benefits them the most which is totally fair. 

 
Most Helpful

Lol these perspectives are really funny. As a first-gen college student from a low-income immigrant single-mother family (phew that's a lot of words) it'll definitely have a pretty big impact on me. 

1) Pay off a large portion of my student loans

2) Send some money to my mom to help support her with rent and living 

3) Go on a vacation where I don't have to worry about money / budgeting for the first time in my life 

 

I’m with you man. Literally same. Broke af my whole life, first gen, and parents washed dishes for a living. Bonus is going to make me feel amazing af. Only reason we work this job is for the money so wtf are you looking forward to other than bonus?

I’ll def be sending them money so they can rest a little, going to take a nice vacation, and buy something fun like a ps5? Save/invest the rest. Obvs not gonna be stupid with it, but it gets rid of a lot of stress and BS.

 

It's so disappointing to see analysts with this view point.

Yes, a lot of the analyst work isn't the most glamorous but the experience, learning opportunities and career trajectory is almost unparalleled for an entry level job. There really are a lot of people out there who want to learn and it's incredibly frustrating to see these people passed over for people like you.

 

Felt like a newly minted 19 year old sugar baby in my lap

 

First bonus also coincided with debt free. It’s like feeling hope for the first time.

 

The universal truth is that your feelings of wealth are largely based on relative terms, not absolute.  If you were surrounded by middle-income America and made 300k, you'd feel very pleased with yourself.  In banking, you may receive a large amount of compensation in isolation but you look around and you're at the bottom of the totem pole on your very floor, let alone the world of your clients where you'll interact with everyone from a community college grad selling his LMM company to a sponsor and pocketing $50mm to some rockstar 32 year old PE partner who has millions in vested carry already.  So you're not going to feel particularly like a baller with an analyst or associate (or VP etc) bonus.

 

Actually with bidens hyper inflation even a 300k bonus doesn't impress me.  Wow...180 post tax.

Every home i wanted to buy is like 200k more expensive vs last year.  This bonus basically gets me back to where I was financially last year.

Thanks biden.

 

Pretty much the effective rate in NYC for our professions

 

With your understanding of inflation, you should be grateful you even have a job in finance.

a.  Price control / inflation is the job of the independent Fed.  Not sure if you noticed but Powell has been around since Trump and every Fed chairperson since the dot com crash has been complicit in keeping rates lower than they probably should've been

b. The M2 money supply expanded the most rapidly in 2020; who was president then again?  https://fred.stlouisfed.org/series/M2SL

c. The monetary stimulus was non-partisan and Trump went on record saying he wants more :  https://www.cnbc.com/2020/12/22/trump-calls-covid-relief-bill-unsuitabl…

Not that I think Biden is an economic mastermind because he's basically senile at this point but blaming him for inflation just smacks of either deliberate or inadvertent stupidity.  Is Biden to blame for UK's inflation?  https://www.theguardian.com/business/2022/feb/02/uk-shop-price-inflatio…;  What about Canada? 

 

Fortunate to have graduated without debt, but started FT with nearly zero in the bank account. It felt fucking fantastic, even post-tax. The most money I've ever actually seen coming to me or my family. I had a list of shit to buy -- watch, clothes, vacations, taking parents out, etc. After that fleeting moment, realized that I was still getting fucked in the ass from work and never really had time to do much on my list and just saved. It was really sobering and kind of depressing, especially when I told my parents - they were proud, but also sad that I wasn't prioritizing my happiness or well-being. Had a long conversation about how even though we didn't grow up with a lot of money, we were still happy and supportive of each other, which I wasn't getting despite having a significantly higher income than my family ever grew up on. 

The fact that I'm still doing this shit a few years later just goes to show how lost I am lol

 

OP here - thanks for your perspective. Similar background and I imagine I will have a similar experience. Trying not to get sucked into it though and thinking about leaving afterwards.

Sorry to hear you are kind of trapped now. I have older friends who are in similar positions where they almost can’t walk away anymore because the huge pay cut they would have to take by moving to a better WLB job.

 

Yes, it's the mental trap that gets everyone. Could theoretically walk away and live a great life for several years unemployed, and then find a decently-paying job in a different field with better WLB, lower pay, and still would be fine. Unfortunately, not a lot of people can pull trigger on that plan despite day dreaming about it. Instead I'm paying big bucks to go party at B school and kick the can down the road, lmao

 

U.K. fella here - how do taxes on bonuses work in the U.S.? Are you taxed as if it was simply part of salary and hence whatever sum (comp + bonus) that makes your total income for the year is used to place you in a (presumably higher) tax band?

 

Maybe I am different than you all, but contextualizing the bonus felt great. The amount should be life changing if you behave properly and are rational. I fortunately had no debt, but going from 0 to having 120k+ in my bank account by the end of 1.5 years was a crazy feeling. I remember an analyst during my internship saying, “the best part about banking is you work so much you can’t spend the money you make because you have no time”. I wasn’t the most frugal, but I def saved a lot and I remember talking to my parents afterwords and them explaining that that could be the down payment on a 6 bedroom 5 bath home in an upper middle class neighborhood. Or put another way, it’s 2k rent for 5 years. 
 

Making this amount so early allowed me to travel on a a vacation with friends and spent several grand without worrying. It also allowed me to take more career risk because I knew if all else failed I had a nest egg to live off for ~2.5 years even if I was bringing in 0 income. But honestly if you do the math and expect you can bring in just 3% of 120k that’s 3,600. Post tax, you should be close to being able to live off a month each year of just passive income if you live below your means and maintain some frugality.

 

Lol, typing off my phone and forgot “ a month”. Point being, from my perspective if you don’t take the bait of lifestyle creep, it felt to me like life was setup on easy mode post that first bonus and I was just gaining on everyone around me. Getting passive income so early that compounded was wild. If you live below your means, life can be incredibly freeing.

 

remember, the average IB analyst comes from a background that thinks their parents who make 400k is middle class. Be careful asking questions like that to such a skewed demographic, a lot of "eh it was whatever" answers COULD come from that upbringing -- not saying thats always the case.

 

I actually have a pretty decent answer/experience. Got my first bonus in NYC and it really didn't feel like much since I was practically living off my base. Now with the same comp in a LCOL I feel like a damn king especially relative to others my age around here. In other words, screw NYC idk why that city is so pushed on here. Life got better in both WLB and comp ever since getting out...guess I'm missing on all those "prestigious" exit opps which consist of taking a paycut to go to PE...lmfao this forum is ass backwards

 

I was top-bucket as an analyst so got our best comp. However, ranking ignored, I gotta say the first bonus was a sweet feeling without a doubt. Having been dead broke throughout college and having done jobs such as waiting tables for restaurants to help support myself during school, having that much liquidity really meant a lot to me in terms of feeling financially free. It was totally an awesome feeling and I felt great about it. And sure, I did spend a lot of it irresponsibly given I didn't have an opportunity to do so before. But thanks to my staying in the high finance track, that first bonus was the least amount I'd ever make to date in my professional career so net didn't matter.

Now I'm not saying that's how you should view your comp progression given everyone's career track is different and will deviate at any given time, but that's how I viewed mine.

 

Couldn't stomach reading the whole thread. My 2cents (from someone who has made quite a bit and received large commissions based on transactions). A few things:

1. When you figure how much you will make on a large deal or as a bonus, initially I used to think this was great. How can they pay me 50k for doing X when X is my job?

2. Then, it became I'm not getting paid anywhere near enough for all I had to do to generate X. In my case it was always the back and fourth between client, his CPA, his attorney, my firm, etc. Keeping a deal on track, getting past hurdles, reselling it again and again and again. may take a yr or 6 months to get to closing. And then i get a check for 75k or whatever. Seemed like a bunch up front but was peanuts when it was all said and done.

3. You need more than the money as a motivator. The money will never be enough to motivate you. Once you get to a certain point, if you really aren't jazzed by what you do to earn your keep, you just won't do it. Easier to settle for less if you don't like it. Find something you really enjoy, are stimulated by, etc. I won't stay find something you love because that's way overblown. Little secret - most of us would rather be playing golf or setting sail or hiking in the mountains or fly fishing than doing what we're doing. But if you have to do it, at least find something you like and makes you think.

 

It would have felt fantastic from a pre-tax perspective, not so much post tax. Made me more conservative and just generally disgusted at people in NYC and Washington lighting my money on fire.

 

Don't you get a decent amount of it refunded by the IRS? Because don't they tax the bonus at the annualized amount? Like if you get a 150k bonus as an associate, IRS assumes you make like $1.8 million annually since you get the lump sum in one month. You might only get 40-50% of that initially, but I would hope that you'd still be able to maintain 70-80% of the gross bonus after the refund. Or am I just completely off? Obviously from a time value of money perspective though it sucks to have to wait for a portion be refunded by the IRS.

 

Don't know if it's that dramatic, but yes, you are taxed as if this was ongoing income, not a one time thing. Ultimately, you will get a chunk of it back (IRS refund) consistent with your actual tax return which considers your ordinary income, dividends, cap gains, etc. Assume decent size refund. What sucks is they have your money for more than a yr (if you received the bonus in January. If you got it in December, you'll get it back within a few months. 

As you age, you'll come across many folks who relish in their tax refund. Never fall for that. your goal should be to not receive a refund because that means you didn't over pay. Actually, if you owe money that's good because it means you underpaid. Never feels good to have to come out of pocket, but that's what most business owners do. I've owed money each yr for over 25 yrs. Had more use of my money throughout the yr so that's good. The trick is planning for it so you're not caught off guard.

 

Felt pretty good. I come from a blue collar family, not poor by any means but not well off enough for my parents to pay for college, contribute to any expenses while in college or be any kind of safety net for me. When I got my first bonus it felt like a weight had been lifted off my shoulders as I finally felt like I had some financial freedom and security. $50/$60k might not be life changing for most of the folks that go into IB but for people who come from modest means and have never had a safety net before it really is a massive difference on one's state of mind.

 

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