Rent as a PE associate

I pay $3200/m for a nice one bedroom in SF near my job. This was the top of my range but I decided to pay up for the amenities. It was tough for me to find anything quality below $2800/m. The market was so competitive I missed out on my first option and had to close on the second same day. I make slightly below you with carry but don't have any other large expenses. If you manage a budget and spend responsibly each month you should realistically be able to afford up to ~$4k if you really wanted (although I wouldn't advise). Any new bay area associates that want to split a Club West Gold membership at the bay club, PM me

$3-3.5k ish is totally fine

I would calc it off your base salary and divide that by 40x for a top number. PE bonus is less variable than IB, but it's just not good practice to get used to living off your bonus - and if you get much over 40x you would start having to put more than 1 paycheck to rent per month, things would be very tight cash-wise until bonus. Doesn't sound like you're considering a wildly expensive place, just something to keep in mind.

You should still be plenty comfortable budget-wise around $3k or a bit more, I wouldn't skimp out at this point. Get a decent place that you're happy living in.

It’s going to sound ridiculous but in Manhattan at least: you need to spend close to 5k for a nice 1 bedroom. Wouldn’t recommend that on 300k all in so will trade off with a less luxury type type of place at 4k.

The rule of thumb you'll read everywhere is to cap it at around 30% of your gross income. That would obviously suggest that you can "afford" $7,500 a month. Personally, I think that rule breaks down a bit when you are making decent money, and 30% of gross seems excessive that early in your career. I think the better approach is to figure out how much you want to funnel towards savings, how much you need to funnel toward fixed costs, and how much you will feel comfortable with spending on "fun." 

For points of reference, when I was making around $300k I was probably spending around $2,700 on an apartment (my portion of a 2 bedroom / 2 bathroom with a roommate). Right now, I am making around $700k (+ carry but I just view that as an investment cost right now since I have to contribute and won't get any payments for years). I spend $4,500 on rent (live with my girlfriend so total apartment is $6,500). I target around 50% of my after-tax income toward savings and investments (including carry investments, and taking account of the need to save up for some longer term goals like a down payment), 35% of my after-tax income toward "fixed costs" (which includes housing, vacations, gifts, and then other non-discretionary things and big purchases), and the last 15% toward whatever I happen to want to spend money on (restaurants, random entertainment, whatever). 

So long story short, it really depends on what your goals are. You could absolutely, easily spend $5k on an apartment, you'd just have to save less than the extremely high levels that I do, but the standard "guideline" of a healthy saving rate is 15% - 20% of your after-tax income, so it's really a question of how aggressive you want to get.

One other point to consider is whether you have high conviction that you want to stay in this career, or a career with this sort of WLB and earnings profile. If you think that a couple of years from now you're going to leave PE and move into a lower paying corporate development job, I'd suggest not putting yourself on the hedonic treadmill - it will be much harder to swallow a downshift in your income if you've acclimated to spending as if you'll be making this kind of money into perpetuity. If you are a high performer and feel really strongly that finance is a long-term solution for you (with the recognition that you truly have no idea how you'll feel five years from now), then it's a bit safer to get used to the nicer lifestyle.

You can easily spend 4-4.5k don't sweat it too much. The job is a grind and it's nice to come back to a good house. 

A good max to spend would be 3,750 - your base/40. But, also consider what it’s going to take to make you comfortable and happy. Unlike someone making 100K who would be unable to afford necessities if they paid over base/40, you have more wiggle room. I wouldn’t pay above 3,750 for luxuries like a nice view, unnecessary sq ft or a rooftop lounge, but if it means a safe location, close to work, good AC, new enough that you don’t have to worry about shit breaking or not working well, I personally think it’s money well spent.

As someone who was just in the market, it’s tough to find a nice studio / 1BR for below 3k. Honestly think 3-4K is a fine range in this market for 300k salary, depending on how much of a cushion you want until bonus time. I think you will be a able to get either a really nice spot in an okay area or a decent spot in a really nice area without breaking the bank for that range. Need to figure out which is more important to you and make some sacrifices unless you want to pay up above that range IMO

This is making me want to make the thread I’ve been writing about saving and budgeting. Bringing back the same comment I said in another thread because it’s very relevant:

If you look around at others for budgeting and finance decisions you will end up in serious trouble. The main reason being, there are 3 types of people:

1. People who are on their own and budget
2. People who are on their own and don’t budget or don’t have the ability to
3. People who are backed by their parents

In my observations a vast majority of people are either backed by their parents or non-budgeters. In finance, I think a substantial amount of people in finance have highly educated and wealthy parents that paid for their school and have some degree of support they will provide to their children at some point.

The answer to this question really is which group do you fall into? If you aren’t in student loans, you could easily justify paying more in rent and being ok. If not, you should probably be living more cheaply than those around you otherwise you are just mortgaging your future ability to spend. If you want to buy a large house and don’t have parental support, you should live cheaper than those around you in finance who likely will get loans or funds from their parents for their living.

The 30% rule is good as a boundary. You shouldn’t exceed 30% of your gross income on living expenses. But, I think being responsible is keeping in the 10-20% range without being overly frugal (barring you are in debt or have some other major expenses coming up). So for 300k that’s spending 30k-60k on rent which is somewhere from 2.5k-5k on rent. Now as others mentioned, this assumes normal expenses that you aren’t spending more or less than others. If you are, you should adjust accordingly. 
 

The guy above who has a high ranked comment as you can tell has his life together and lived below his means along the way. While I don’t make that, I can tell you I would be in his boat and as an analyst and associate paid less than 2k, but I was in a low cost of living city. That said, many around me were paying $500+ more a month virtually every step of the way.

It all depends how you want to live and budget, but it makes getting older easier if you have savings. Saving when you are young is relatively easy, when you are old it’s near impossible to reverse. Also, it’s very painful going backwards in lifestyle, but living a little below your means until you have kids really isn’t a big deal since you don’t know any different.

$3k is exceptionally affordable at your comp level...

bump

Life hack: Have a long-term girlfriend. You can splurge on a great apt in the 5-6k range.