How have you guys been spending your paychecks?

oowij's picture
Rank: Senior Baboon | 214

Monkeys,

I'm going to be entering the working world as a first year analyst and was curious to see how everyone else spends their paychecks.

-What percentage of it do you invest? Where do you typically put your money if you invest it?
-Roth Ira/401(k)?
-How much do you allow for misc. usage?
-Bills/Rent?

All advice would be really helpful, not trying to blow my paychecks with some careless spending.

Comments (21)

Feb 20, 2013

Go with the 80-20 rule. Spend 20% and save 80%. Although that means you won't be eating luxuriously and you probably won't be buying new clothes.

Feb 20, 2013
LearningMan:

Go with the 80-20 rule. Spend 20% and save 80%. Although that means you won't be eating luxuriously and you probably won't be buying new clothes.

Lolz... It's cute that you think you can save 80% of your paycheck... It will end up being the other way around. You are forgetting that rent alone will likely cost more than 20%...

Feb 20, 2013
rufiolove:
LearningMan:

Go with the 80-20 rule. Spend 20% and save 80%. Although that means you won't be eating luxuriously and you probably won't be buying new clothes.

Lolz... It's cute that you think you can save 80% of your paycheck... It will end up being the other way around. You are forgetting that rent alone will likely cost more than 20%...

80/20 rule can definitely apply to paychecks AFTER your fixed costs are paid (rent, utilities, insurance, car payments, etc).

Best Response
Feb 20, 2013
D M:
rufiolove:
LearningMan:

Go with the 80-20 rule. Spend 20% and save 80%. Although that means you won't be eating luxuriously and you probably won't be buying new clothes.

Lolz... It's cute that you think you can save 80% of your paycheck... It will end up being the other way around. You are forgetting that rent alone will likely cost more than 20%...

80/20 rule can definitely apply to paychecks AFTER your fixed costs are paid (rent, utilities, insurance, car payments, etc).

Kinda misses the point then... At that point it isn't 80% of your paycheck, it's just 80% of whatever the hell is left after you pay for things that you are billed for on a regular basis...

EBITDA
Less: Capex
Less: Change in NWC
Less: Cash Interest
Less: Cash Taxes
Less: Recurring Cash expenses deemed "Unavoidable": (Includes: Cash Paid for Alcohol, Cash Paid for Late Night Pizza, Cash Paid for Sexual Services Rendered, Cash Paid for Student Loans, Cash Paid for Rent and Living Expenses)
= Free Cash Flow to Savings?

Free Cash Flow to Savings

    • 2
Feb 20, 2013
LearningMan:

Go with the 80-20 rule. Spend 20% and save 80%. Although that means you won't be eating luxuriously and you probably won't be buying new clothes.

The 80-20 rule is meant for bonuses, not paychecks. For paychecks, I think a good rule of thumb is to quickly save up enough to cover your ass if you get fired and are unemployed for 6-12 months. After that, it depends what your investing goals are.

Feb 20, 2013

D M, I definitely get your point in limiting cash outflows after fixed expenses, but my point was more that your fixed expenses, especially in Manhattan are likely to be anywhere between 50 and 80% of your income after tax.

OP - you should just aim to try and save 10-20% of your after tax income and if you can, you will be way ahead of the curve. Contribute to your 401K to lower your taxable income, and bank all of your bonus... you'll be fine.

    • 1
Feb 20, 2013
rufiolove:

D M, I definitely get your point in limiting cash outflows after fixed expenses, but my point was more that your fixed expenses, especially in Manhattan are likely to be anywhere between 50 and 80% of your income after tax.

OP - you should just aim to try and save 10-20% of your after tax income and if you can, you will be way ahead of the curve. Contribute to your 401K to lower your taxable income, and bank all of your bonus... you'll be fine.

Word, I gotcha, just wanted to make the point that after you've dealt with all your expenses that must be paid monthly you probably want to save 80% of what's left (which is probably close to 10-20% of after tax income for a first year analyst), just to be safe. We're on the same page, for sure.

Feb 20, 2013

Girls in NYC are expensive...

Feb 20, 2013

Read your contract/benefits and make sure to contribute the maximum amount to your 401K that your employer will match. 100% ROI.

Feb 20, 2013
SECfinance:

Read your contract/benefits and make sure to contribute the maximum amount to your 401K that your employer will match. 100% ROI.

Couldn't agree more... I have friends who are like "but I don't make enough money to contribute to my 401k." I then ask them if they are too rich to turn down free money and they look confused. Then I remind them that they easily waste 5k on booze and miscellaneous other crap during the year. Who cares if you go into ~1k of credit card debt when you are getting 5k of free money. Ratchet down your spending and pay that down when you get your next check... worst case you take it out with your bonus. It even lowers your taxable basis... there's no reason not to contribute unless you can't meet your fixed expenses... I completely understand that, and was in that situation when I first started, but I quickly got my head above water and made sure I hit the match.

Whether you want to max it out or not is more of a judgement call, but you have to grab free money when offered.

Feb 20, 2013
rufiolove:
SECfinance:

Read your contract/benefits and make sure to contribute the maximum amount to your 401K that your employer will match. 100% ROI.

Couldn't agree more... I have friends who are like "but I don't make enough money to contribute to my 401k." I then ask them if they are too rich to turn down free money and they look confused. Then I remind them that they easily waste 5k on booze and miscellaneous other crap during the year. Who cares if you go into ~1k of credit card debt when you are getting 5k of free money. Ratchet down your spending and pay that down when you get your next check... worst case you take it out with your bonus. It even lowers your taxable basis... there's no reason not to contribute unless you can't meet your fixed expenses... I completely understand that, and was in that situation when I first started, but I quickly got my head above water and made sure I hit the match.

Whether you want to max it out or not is more of a judgement call, but you have to grab free money when offered.

Also couldn't agree more with you two. Set your 401k to the maximum amount the company will match. Ill be thanking myself when I'm retired and can buy an extra bag of schwag and bottle of booze that week.

Feb 20, 2013

Thanks everyone! Really appreciate all of your inputs, super helpful.

I think I'll be aiming at a goal of 10-20% savings of my after-tax and after-fixed expense paid income. I definitely want to throw in as much possible into my 401k. Aside from 401k, where do you guys put the rest of your savings?

Feb 20, 2013

I went deep into debt so I can stimulate my economy today and grow my way into prosperity in the future. I'm so far in debt that I'll prolly be a billionaire by 2017.

Meanwhile y'all suckers be savin' lol.

Feb 20, 2013

I have gone to laborious lengths to figure out what I'll be saving when I start as a first year soon. SO hopefully this will help.

I have figured, given my circumstances, tax bracket, std. of living etc. that after taxes I will be saving 26% of every paycheck. This allows for X amount to be spent in discretion everyday, groceries, travel, etc etc. I will be saving 54% of my signing bonus (12k). All together that comes to just shy of 20k, with employer contribution to a 401k i figure ill be just over 22k.

I will be doing consulting in NYC and my total comp (minus signing and any really small yearend bonus) is 72k.

So that should give you a realisitic goal OP. Keep in mind though that i've lived here a few years now and so i know how to rent/shop/socialize on a smaller dime than someone who is just moving here. it makes a big difference if you know where to go in nyc.

My drinkin' problem left today, she packed up all her bags and walked away.

Feb 20, 2013
Kenny Powers:

I will be saving 54% of my signing bonus (12k)

Signing bonus, gets taxed at like 40%. So you will be spending only 6% of that for all the moving cost, etc.?

Feb 20, 2013
abacab:
Kenny Powers:

I will be saving 54% of my signing bonus (12k)

Signing bonus, gets taxed at like 40%. So you will be spending only 6% of that for all the moving cost, etc.?

The tax rate is ~34% for that signinng bonus but ignoring that I don't need to move or anything so it's not an issue actually.

Also, word of advice. If you're moving here after school, there are 0 reasons why you need to hire a moving company, you don't have anyhting valuable/big enough to warrant professional movers.

My drinkin' problem left today, she packed up all her bags and walked away.

Feb 21, 2013
Kenny Powers:

I have gone to laborious lengths to figure out what I'll be saving when I start as a first year soon. SO hopefully this will help.

I have figured, given my circumstances, tax bracket, std. of living etc. that after taxes I will be saving 26% of every paycheck. This allows for X amount to be spent in discretion everyday, groceries, travel, etc etc. I will be saving 54% of my signing bonus (12k). All together that comes to just shy of 20k, with employer contribution to a 401k i figure ill be just over 22k.

I will be doing consulting in NYC and my total comp (minus signing and any really small yearend bonus) is 72k.

So that should give you a realisitic goal OP. Keep in mind though that i've lived here a few years now and so i know how to rent/shop/socialize on a smaller dime than someone who is just moving here. it makes a big difference if you know where to go in nyc.

Whoa this is perfect. I too am going to be looking at a very similar total comp amount with a slightly lower bonus. I'm going to be in San Francisco or San Jose and the living expenses there are pretty high as well.

If you don't mind me asking, where did you find out all the information for your tax rates and etc.? I think I'm going to sit down and calculate everything as well just to get a visual amount in my head.

Feb 20, 2013

I thought signing bonus (10,000) was taxed 50%?

Feb 20, 2013

Invest in 401k, etc. up to the point the firm matches -- doubling your money...your future self will thank you one day.

Feb 21, 2013
Comment

My drinkin' problem left today, she packed up all her bags and walked away.

Feb 21, 2013