How Much Do You Spend on Rent?
What % of your after-tax base salary goes towards rent or rent + utilities/internet + transportation?
Are you comfortable spending half of your base salary on rent + car + utilities if your company pays bonuses that are 100% of your base salary? Why or why not?
The general rule of thumb is 1/3rd of after-tax base salary is the most you should spend on rent, but curious if anyone disagrees with this in the scenarios where you have large bonuses and a solid net worth.
I pay ~45% of take home (after 401k). Since I’m still contributing to retirement plans I have guaranteed savings during the year, and then I barely touch my bonus (120%+ of base, last year I spent maybe $5k of it and invested the rest).
It’s not optimal, sure, and my bonus isn’t guaranteed, but it’s far more important to me to enjoy my life in my 20s and 30s than to save an extra $10-$20k per year - having a place where I can send packages without worrying about them getting fucked with, where I can sleep without hearing the streets, and where I have space to work and hang out are all major contributors to my mental health. I love living in Manhattan and don’t plan to leave, but part of what makes that easier is that I’m willing (and able) to pay up so that my housing is comfortable.
If you want to “put in your time” and make a mad rush for retirement then you should probably take a different approach, but everyone’s different and this is what makes me happy - I live in a city I love, in a space I’m comfortable in, doing the things that excite me - I wouldn’t trade any of that even for the world’s cushiest retirement.
I agree with this sentiment and am about to move into a place that puts me in that range. I feel like the 1/3 of base rule is not necessarily meant for the finance world.
The rule makes sense if you make $100k base + $10k bonus, but not when you make $150k base + $175k bonus
I'm in the same boat. Pay about 40% of take home (after 401k) and have zero regrets. In the past I had been paying 15-20%, but i quickly realized that extra savings doesn't move the needle when you save 100% of bonus.
I agree with this. Setting yourself up with a comfortable living situation is key because you're eliminating the stresses that are possible to get rid of, and you make your living and overall life better. Of course, though, we still have to be reasonable and make sure spending is within budget, and that we are not stretching ourselves too thin.
I'm at 45% after tax. I'm salty about it. I don't know why you'd want to spend more than 30% post tax unless it really makes you happy.
What’s your base/bonus though?
If you’re $200k base and no bonus, I’d understand the frustration on spending 45% of base. But if you’re $100k base + $100k bonus, spending $2500 on rent isn’t crazy
My mortgage, insurance, and property tax is about ~19.5% of after tax pay, not including bonus. With annual bonus, its probably anywhere from 10-15%. It should be noted that I split the housing costs 50/50 with my wife and this only includes my share. We are high income earners that bought way less house than we could actually afford.
Goals right there. Kids?
Not at the moment. We're still pretty young (28). We might adopt one eventually, but not for another 6-7 years.
I thought the rule was 1/3rd of pre-tax base salary not post-tax right? That’s why the NYC first year analyst recommended rent limit on here was around 2,000 (back when base was 85k). Anyway, I’m in a relatively LCOL (compared to NYC at least) and pay around 1,550 all-in for my studio. Costs more to be closer to the office so I guess trade off of higher cost.
All of these rules will depend on income level and bonus (as well as variability in bonus and stability of firm). As others have noted, early on in a HCOL area you probably need to be higher than that to get a place. Then if you have a mostly guaranteed bonus you will be more comfortable spending more; at the end of the day the thing that matters is how much you make each year and what % of your all in you are saving. Even then % go out the window at certain comp levels. I.e. I spend ~35% of post tax base, but 12% of post tax if I include bonus.
I would say early on, ~30-40% of post tax is fine. You really start to feel stretched as you get around 50%, I was more around 40% when I first started.
I’m just looking for someone to tell me I’m not crazy for doing the below. It’s hard to go to friends or family for this because I make a lot more than them:
$2500 for base rent + $500 for my car + whatever Internet and car insurance is = around $3200 in expenses.
$6,400 = monthly base post tax, 401k and healthcare.
Leaves $3200 for fun / spending (meals are covered on workdays). And then for saving, a $100k pre tax bonus.
Am I crazy for doing that? I feel like $3200 a month is plenty for fun / spending and saving $100k pre-tax + 401k is not bad at all.
I also have $x in savings if that changes anytbing.
Seems totally fine, I would do similar if I were you (I would want to have a nice apt). As long as you aren’t spending crazy amounts on fun, etc you should be more than fine.
Congrats on the savings. that is solid.
Spending 1750 on rent. Pretty comfortable with it on a first year analyst salary.
Neighborhood? Roomates?
Midtown East and yes 3 bedrooms/2 roommates. Midtown West/Hell's Kitchen had similar options.
You getting that in NYC and is that all-in?
Replied above but yes Midtown East. And no only water covered so add another ~$100 all-in.
Yup this makes sense. Different poster but in my first year I was living with 3 roommates (so 4 people total) in a converted apartment where the smallest room was pretty much part of the kitchen. I think he paid like somewhere around 15-1600, I was paying 1800, and the other 2 were paying around 2-2.5k each. Also in Midtown East. Utilities and wi-fi were not included so probably about ~90/mo and $15/mo on top
I grew up in UES so I fully understand the rent prices there. Very crazy how much it varies city by city. I work in LA and live in SM paying 1750 all in for a 2bed/2bath apartment with a few amenities as well (parking, pool, small rooftop hangout)
I assume you’re splitting with a roommate? I’m looking for one bedrooms in Santa Monica for ~$2300-2600
I don't really budget, and don't track most things as long as the CC isn't outrageously out of line each month. I also have never had a car payment. (everything's been bought cash out of my own pocket) Let's call it 1/3 of salary for fixed expenses living modestly in a nice (but small) place in a doorman building with amenities. I'd put another 1/3 on basic living stuff like food, clothing, gas, metrocard, etc. The last 3rd? Savings or whatever. Knowing what you could do without batting an eye to cost is better than actually doing it.
I’m paying $2100 for a luxury building in a LCOL city, but inflation has been insane in my building in the past 6 months and current similar units are for $2350, so I might get a big hike when I renew my lease in a few months.
My wife and I combined are ~45% fixed expenses as % of after-tax take-home (post-401k) in a high COL city. We are in a really nice but more expensive place in a great location that we are looking to grow into eventually and stay in for at least a few years. We are both due for promotions & significant salary bumps end of the year, so this 45% should go down pretty substantially since our expenses won't go up until we have kids. I'm definitely of the mind that it's worth paying a bit extra to live in a more comfortable place vs. pinching pennies and living in a box in an effort to accelerate retirement. I believe most of us are in careers where income scales fast enough AND the job itself is stressful enough such that it's really important for reasons others discussed (such as mental health) to live in a place you enjoy and not worth it (from a utilitarian perspective) to try to save an extra few grand a year.
How much in rent if you don’t mind sharing?
Haven't rented since college, current mortgage is ~10% of my gross annual income.
For anyone who gives a shit about London. I do 20% on rent, 30% on monthly spending, 5-10% on annual big spends like holidays or if I’m dumb and feel like buying fancy shit that’s probably useless. 40-45% savings/investments. Save/invest my whole bonus (100% of base). Am single, staying with a mate. Honestly the best part is knowing you can spend whatever you want and you’ll be ok if you don’t touch your bonus.
Aren’t London salaries much lower than the US? How are you only spending 20% on rent?
Good on you for saving so much, just confused as to how the numbers come out. Saving half of your base salary and 100% of bonus is tough even if you make 400k
Work at US PE fund getting paid in USD. Post tax base comes up to $7-8k per month in dollars. Maybe rent is alot cheaper here but I’m not spending much more on rent (or anything really) than when I was in banking.
I'm working at MBB next year (100k base, 20% bonus) and I've talked to people and they all say ~2k/month in NYC (rent+utilities) would be reasonable. That would be about 36% of post tax (pre-bonus), but I also will not have a car so that saves a lot. That would still leave me ample income to save (as I am a heavy saver + investor). I see my budget very lopsided with a lot of money spent on Saving, housing, and fun while very little is spent on other things.
Life hack move to chicago pay half of the rent of NYC and double the sq footage.
Life is too short to live in a place you don’t love. Chi-town is not for everyone. EG I’ll only live in warm cities with the exception of maybe NYC for the right opportunity
Pay 1700 pm in Brooklyn for a true 2 bed 2 bath
What neighborhood and how did you find the deal?
4K 2BR UWS
What’s your base and bonus? Do you split that with anyone?
Wife and I are combined ~500K gross
I spend 10k a month and my combined income is close to a million. So approximately a little over 10% pre tax.
Currently living in Singapore, paying extremely low taxes. Rent is around 20% of post-tax base, living alone in a nicely furnished, two bedroom 700sqft apartment in a central area. Have two metro lines within 10 minutes walk, multiple supermarkets, food courts, a big mall etc. Life is pretty sweet.
However I'm about to move to a very high tax country in Europe soon. Even downgrading to a 1br I'm going to end up paying about 40% of post-tax if I want to live alone. Gonna be painful but worth it for the job.
I was going to say you should have sublet the other room, but the comfort of living along can't be beat.
Yeah I mean I guess from a pure savings point of view it would have been the right move, but when you're paying almost no tax and saving 60% of your gross income without even trying it's just not necessary. Plus the second bedroom is pretty small and really more of an office, which was perfect for WFH for the last 18 months and counting.
About 45% of my+wife's post tax salary goes towards mortgage + property taxes. All about the bonus.
~3500 rent+utilities as a first year analyst
How bruh, unless you're banking on your bonus or have parental support
Any analysts here live in LIC?
Please don’t live in LIC as an analyst. You’ll save $200 in rent and then spend an extra $200 per month ubering back and forth from your friends places in Murray Hill + ubering back alone from LES while your Murray Hill bros can share
Non-principal mortgage monthly costs come out to 45% of post tax, post 401k base salary. 45% seems to be the magic number around here! I think this should be a good range for anyone with over 100% bonus.
I made a big mistake of going all in on proper bull market 1-bed flat in central London (50% of base) before the bonus round and the end of tax year. After receiving a "good" check at Christmas (I say good, because I was expecting double than that but got screwed with the discretionary clause in my contract) my taxes got bumped up to the next level and now I am basically paying 70% of my after-tax base in rent. If you do, make sure you take this variable-payment into account and how it will affect your taxes. In future, I would still go for a bullish apartment but probably share it with a like-minded individual.
Wtf. Were you staying in Mayfair alone? How much was your rent?
hah this is the thing, 2.5k£gbp / pcm (water , electricity and council tax another 200£) in 1 gives you a good place but I barely spend any time there, so besides the convenience of walking to work or out, there is very little added value. Hence, after my contract ends - will consider moving in with somebody.
I pay 29.8% of my after tax salary for rent, and I rent a 4br 2.5ba house with a 2 stall garage and a personal swimming pool. NYC may have its draws, but "tier 2" cities really let you bankroll and live large. I also drive a nice v8 muscle car and have a personal gym in my garage. Life is good.
You must be deep suburbs of Tampa or something assuming you’re on IB analyst base
About 15% of monthly take home (after maxing 401k, etc)
Nothing because I live with my parents. You all fell for the rent trap.
You're unemployed though.
So you're basically spending 100% of your salary on living expenses.
.
Seems totally fine. Just do the math, conservatively $125k is $75k after taxes and other pre tax contributions (pretty conservative, but guess it depends where you are). So after paying rent $46k leftover. What other expenses do you have, even spending $3k a month on entertainment leaves you $10k in cash without touching your bonus. Just depends on your lifestyle and what you spend money on, $3k a month at that point of your life seems like more than enough.
about 33% of after-tax for mortgage, which I'm planning to possibly refi when I go to grad school which I'd have to move away for
Mortgage + property insurance + home owners is 45% of my after-tax base pay. But since my wife covers ~40% of mortgage + property insurance + home owners, my piece is ~28% of base pay.
Have a pretty nice house about ~15 minutes from downtown.
Home insurance, not home owners.
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