Associate-Director Level Personal Finances/Savings Profile

C_SSGINV's picture
Rank: Chimp | 6

I'm curious to know how much you guys have been able to save after 1-5 years on the job. What is a good percentage of salary to put away in savings? Ideal blend of savings (I.e. CD, 401K, long/short, etc...)? Have you already made the move to a wealth management firm or sticking with a normal bank account?

Let's assume the following profile:

Late 20's
Living outside NYC (Dallas, LA, CT)
140K base + bonus
4 years into career, post b-school
Single

What kind of advice would you offer from a savings/personal finances standpoint?

At what point do you anticipate first real estate purchase and geographically agnostically speaking, purchase price?

New here and am trying to get an idea of what others are doing. Appreciate all of your input.

Comments (5)

Best Response
Aug 25, 2013

A good rule of thumb for those early in their career is to live off your base and save your bonus. This assumes that your bonus roughly equals your base. Also, if you're pulling in $200k+ / year, you should probably max out your 401(k) contributions every year (it's capped at $16.5k or something like that). After +/- five years on the job, you should have a few hundred thousand in the bank, assuming you didn't tap into the savings for any major expenses (student debt, car purchases, etc.). The decision to hire a wealth management firm is up to you, but I personally won't consider it unless I have $1MM+ of cash to invest.

In terms of real estate, I've seen many different approaches. A lot of people tend to buy a home immediately following b-school. Personally, I think it is best to wait until you're solidly locked into a role. Associates in IBD frequently strike out when it comes to getting promoted to Vice President, so I'd wait until you're a VP if you're on that track. I'd also be cautious about buying a house if you're single and looking to get married soon. Not only will your future wife be looking to have some input, but it would suck to buy a house and have to sell it a few years later because you need to accommodate a second person. As for price, really up to how much value you place on where you live. I'd suggest you go to one of those online mortgage calculators and see how much you can afford based on how much you want to pay monthly.

    • 2
Aug 25, 2013

Very insightful, and much appreciated.

If I'm understanding you correctly, whereas your base:bonus is 1:1 - save 50% post tax gross income, allocated as stated above. A few follow-up questions:

Living alone, what's the most you'd spend on rent per month? Looking more for a dollar figure, once again being geographically agnostic.

What does a decent per month food budget look like - eating at home or eating out or a blend? Could be a gross total or bisected by out/in.

Also another couple of more lifestyle related questions:

How often to workout and before or after work?
How often to drink?
Do you read often, and if so - what are the must reads?

Once again, appreciate your feedback.

Aug 26, 2013
C_SSGINV:

Very insightful, and much appreciated.

If I'm understanding you correctly, whereas your base:bonus is 1:1 - save 50% post tax gross income, allocated as stated above. A few follow-up questions:

Living alone, what's the most you'd spend on rent per month? Looking more for a dollar figure, once again being geographically agnostic.

What does a decent per month food budget look like - eating at home or eating out or a blend? Could be a gross total or bisected by out/in.

Also another couple of more lifestyle related questions:

How often to workout and before or after work?

How often to drink?

Do you read often, and if so - what are the must reads?

Once again, appreciate your feedback.

C_SSGINV,

Your understanding on the savings ratio is correct.

Not to sound snarky, but I fail to see how my personal spending and lifestyle habits will assist you in any way making your life decisions. Any absolute dollar amount of money I spend on rent / food will be meaningless because they are based on my own preferences and income level, which is likely to be quite different from yours. Same holds true for the frequency and time at which I workout/drink/read. The short answer is that I have enough free time and flexibility to do all three as frequently and whenever I'd like (within reason, I'm not drinking at/before work). All three vary tremendously in any given month. My rent has ranged from a low of $900 to a high of $3,500 at different points in my career.

Aug 25, 2013

Might hear different opinions, but I'd say a max of 25% of monthly income on rent is fair game.

Aug 26, 2013
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