I cant save money

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Third year analyst here at an EB in NYC. Title says it all: I cannot save any money in NYC!

Not blaming this on the cost of living here, although very high, my spending habits are also very poor. How do you guys manage to save money here, and for those that do, how do you keep your sanity?

Sad to say but I like to think my spending is a function of not enjoying banking very much and it keeps me entertained. After being in the industry for two years, I only have about $20k saved (embarrassing, dont remind me), not including my 401k.

Now that I am aware and have had an intervention with myself, what is the best way for a single guy to go about saving some money here? Are these posts about being able to net $60k+ in a year after tax realistic at all? Also keep in mind my rent is pushing $1,900 nowadays...

Curious about tips for how to save without living frugally.

Mod Note (Andy): Make sure to check out these related posts: "Managing Your Money, Building a Personal Financial Model", and "Personal Finance Budget Template"

Comments (126)

 
Oct 31, 2016 - 7:55pm

I didn't do banking in NY, so I cannot offer an first-hand advice other than the obvious "have you considered a roommate". What I would do, and what really helps me, is to track all of your expenses for a few months to see where the money is going. You can use something basic like pen & paper or Excel, or you can use a website/app like Mint. Your last sentence is your problem, though. You need to cut back. You're making a ton of money, but you're living in a very expensive city.

 
Oct 31, 2016 - 8:05pm

Sil:

I didn't do banking in NY, so I cannot offer an first-hand advice other than the obvious "have you considered a roommate". What I would do, and what really helps me, is to track all of your expenses for a few months to see where the money is going. You can use something basic like pen & paper or Excel, or you can use a website/app like Mint. Your last sentence is your problem, though. You need to cut back. You're making a ton of money, but you're living in a very expensive city.

Thanks. It hurts to say but most of it is for random weekend trips, going out on the weekends, and going out for nice dinners, especially if its a date. I also did two trips to Europe in my two years here (over a week each time), ski trips out West, multiple trips to Vegas, etc. That is where most of it went. Its not a good answer, but I need to cut back my lifestyle. Maybe a girlfriend would help...

 
Best Response
Nov 11, 2016 - 3:38pm

Zosa:
Thanks. It hurts to say but most of it is for random weekend trips, going out on the weekends, and going out for nice dinners, especially if its a date. I also did two trips to Europe in my two years here (over a week each time), ski trips out West, multiple trips to Vegas, etc.

Food $400
Phone $150
Rent $1,900
Vacations $40,000
Utilities $150

can someone who is good at the economy please help me budget this. my family is dying.

 
Nov 1, 2016 - 4:01pm

just read this, it's not just due to random trips, it's the level of random trips. when you go to a random weekend trip, you're going skiing, to Vegas (likely w/bottle service), Europe, instead of catching a college football game in Ann Arbor or going to a concert in Nashville. you can still have fun without spending thousands on the weekends, you just need to change your perceptions of what can be fun.

 
Nov 1, 2016 - 10:17pm

A GF CANN help. Just depends on who that GF is. If it's one of the coke whores falling out of her skirt in the Meatpacking District looking for a banker chances are she's going to be more expensive to keep around (albeit, pretty fun as well).

But if you can find a girl who enjoys Netflix n chill, checking out freebies in the city, and making dinner together at home then you're golden. She will know the money is there just not need it.

 
Oct 31, 2016 - 9:43pm

This is a good idea. When you have online banking (and buy everything through a bank card), you can review your monthly statements to see each purchase by date, amount, and item. I would run through each purchase, record them in Excel and then group them by type of expenditure (food, clothes, transportation, rent, etc.) so that I have an idea of what should be cut and then can track my progress. You want to have to be able to actually see your savings goal.

 
Nov 1, 2016 - 12:43am

Pay yourself first.
Pay yourself first.
Pay yourself first.

Set up automatic transfers in your online bank accounts to transfer a certain amount of your paychecks into your savings. I get paid on the 15th and 30th of every month, and I have automatic deposits set for the same dates to transfer a specified amount of money from my checking to my savings. That way, I don't even have a chance to stop myself from saving. The rest goes for bills and spending money.

As for vacation spending, I do the same thing as Sil. I have a separate vacation fund that I contribute to every month (also as part of me paying myself first). When I go on my trip, I strictly use that money to pay for everything. Sometimes I'll go over budget and end up using my regular spending money, but never by much. I can go on trips completely guilt-free and don't come back broke or maxed out.

I get the temptation to want to travel and eat in nice restaurants (especially if your friends are doing the same), but is it worth it when you're this stressed about money? This kind of problem won't go away when your salary and bonus get higher down the road; it would only get worse. Having control over your finances can be a really empowering experience, and it's a great habit to have now in order to have a better future and retirement. You really DO have the rest of your life to travel and live well; don't give in to thinking like you have to fit all of life's experiences into a short period of time.

P.S. A girlfriend would only make this worse, so....maybe she comes AFTER you take control of your $$, ya feel?

 
Nov 1, 2016 - 5:38am

Your rent is far too high. Share a 2 bed with someone or move somewhere cheaper. You should realistically be saving 40-50% of your net salary every month, plus 75%+ of your bonus. As others have said, any rise in base goes straight to the savings account, rather than accommodating lifestyle inflation. Holiday-specific accounts are a superb idea and one I use, although I also use this separate account for any one-off spending (new laptop, headphones etc) so I can purchase guilt free.

 
Jun 21, 2017 - 11:52am

How does anyone save money in NYC? (Originally Posted: 04/26/2014)

Now that I will be an SA at a BB this summer in NYC, I have been thinking what the first-year would be like if I received a return offer. Please help me figure this out because I am starting to wonder how the hell people actually make money in banking. According to my calculations, I will LOSE money by working in banking....

Salary has been stated as $70,000 per year not including bonus. Thanks to NYC's new bullshit-tax rules, 40% of that will go to Uncle Sam. Net of taxes, that is about $3,500 per month.

This is mind-blowing because my rent with utilities and internet included equates to about $1,500 per month (Midtown East). This leaves me with roughly $2000 per month to spend, however this does not include food/living costs which I figured out could be around an additional $400 per month for food. This doesn't even include any morning travel to get to the office, since evening travel is usually expensed.

So with that, that leaves $1600 per month for me to enjoy.100-hour weeks, and I can enjoy $1600 per month to joyfully spend.... Does anyone else find this ridiculous? This of course does not include nights out, which I don't know about you, but I typically spend around $100 per night in Manhattan (and that is when I am being frugal).

AND that does not include any miscellaneous purchases that may randomly happen that we cannot budget for. All-in here, I have close to nill to save per month. This ALSO does not include my cell-phone bill, student loan payments etc which would be coming from my bonus which would again, be taxed at a whopping 40%.

My final question... HOW THE FUCK does anyone make any money in banking in NYC? I mean I am starting to think that the hours and lack of a social life that is in the near future is a waste of time since I still might have to have my parents fund certain things. Please give me some reassurance here because I am starting to debate this lifestyle.

 
Jun 21, 2017 - 11:54am

wtf lmao you'll get like 3800-4000 net of tax monthly. Also rent/utilities/internet will likely be 1700. That leaves you with 2100-2300 to blow/mo. It's ok if you blow your salary anyway. Save all your bonus money.

Also, 100 a night? Pre-game a lot, go there in the subway, and only cab it back if you're wasted. You can easily spend 50 a night or way less.

 
Jun 21, 2017 - 11:55am

wellendowed:

wtf lmao you'll get like 3800-4000 net of tax monthly. Also rent/utilities/internet will likely be 1700. That leaves you with 2100-2300 to blow/mo. It's ok if you blow your salary anyway. Save all your bonus money.

Also, 100 a night? Pre-game a lot, go there in the subway, and only cab it back if you're wasted. You can easily spend 50 a night or way less.


Yes, I made an error. I fixed that. Either way, it is still not a lot at all once you factor in my cell phone bill and student loan payments. Also, lets be honest, being cost-conscious when you are drinking with a group of girls does not happen. If its a night out with the boys, sure $50 is reasonable. If not, $100 is at the low end of the spectrum given that I almost always buy a few drinks for girls I am with. That's just how it works.

I just don't see how anyone saves any money here

 
Jun 21, 2017 - 11:59am

Why would you save money as a first year analyst? You are - of course - not going to be rich straight out of undergrad. You are playing the long game here. Besides - what makes you think that you are worth more than the +$100k you would already be getting? You are getting more than twice the median household wage. Bitching about it is not a great look for you.

 
Jun 21, 2017 - 12:01pm

TheSanchize:

Why would you save money as a first year analyst? You are - of course - not going to be rich straight out of undergrad. You are playing the long game here. Besides - what makes you think that you are worth more than the +$100k you would already be getting? You are getting more than twice the median household wage. Bitching about it is not a great look for you.


I completely agree with you here, and that is exactly my point. Six-figures out of undergrad is great, but my point is that $100k in NYC is not what most people make it out to be. Maybe the same amount in a different region, but most of this income gets diverted to rent/food/transportation/taxes.

The point is, that when thinking of making $100k, you would think that I should be able to save some money? That is what I want to do, but after looking deeper into it, it just doesn't seem possible.

 
Jun 21, 2017 - 12:04pm

JeffNyc7:

Your lucky to have that much In New York the average rent in Brooklyn is moving up to 1,400 per month n most ppl live pay check to pay check consider yourself lucky or just move to New Jersey and transit to the city every morning you can bank an extra 7-$500 a month


I considered this, but I was always told that while doing banking hours you should try to live in close distance to the office. The product group I am in is known for some heavy hours too
 
Jun 21, 2017 - 12:10pm

U mad bro? I made 21K pre tax in my BB stint last summer. Got most of the taxes back on my refund, ended up netting around 19K for 10 weeks work. How much money do you need when you're 19-20?

When you go fulltime, you'll have a 30K post tax bonus to work with. Your friends working in bitch consulting in New York will also survive....what are you complaining about?

 
Nov 1, 2016 - 5:44am

A lot of experiences can be had without spending a bucket load of cash. Your travel to Europe doesn't have to be super expensive - there's no need to stay in a four or five star hotel if you visit Paris, London or wherever you are going, because if that's what you do of course you'll go broke spending 500 a night. I usually go for hotels in the three star range that are close to the city center (100 a night + save travel time). Also when traveling don't fall for every tourist trap (don't pay 50 to see something you don't really care about), just having a coffee in Milan is an experience in itself. Also when traveling, travel with a plan. Know exactly what you want to see and read up on it, plan in advance and you'll probably find cheaper/better ways to see what you are interested in. The experience will be much richer and planning for big trips can be enjoyable (for some).

Find something that excites you that you can do for free or for very little, bonus points if it's good for you. This will help with the stress of not liking your job and save you money.

It really sounds like the problem is your lifestyle choice, you are definitely living above your means eating out, travelling and I assume buying expensive things. I've found to be a lot happier with less things and more savings as there is less to worry about.

Regarding getting a girlfriend: the outcome for your wallet will really depend on how you/she/the relationship is. Yes, you'll be able to save on things like rent and she might give you a reason to save, but will you be going out more often? Taking more weekend trips?

Just start living below your means, it won't get easier when you start making more money as it's a lot easier to adapt to a higher salary than a lower one.

 
Jun 21, 2017 - 12:26pm

BBs have all that. But sometimes there are STILL cheaper alternatives. My BB gym is $80/month, the gym I go to is $29/month. My gym is an awesome gym too unless you like to do lots of cardio, its more for hardcore lifting.

My BB has like an employee center thing with deals for shopping, dining etc. online that you can use to get tons of deals. I always forget to use it though.

I never bring my own lunch, to much of a hassle plus the BB cafe food is pretty dope. And Chipotle is godly. Eating dinners at home, not going out on weekends will save a ton of money. $50/week on groceries is much cheaper than eating out/ordering out everynight. From my perspective though, going out is what makes the difference. Last Saturday I spent $180 in one night on beer and cocktails, doing that frequently is what makes the difference.

Frank Sinatra - "Alcohol may be man's worst enemy, but the bible says love your enemy."
 
Jun 21, 2017 - 12:30pm

yeahright:
BBs have all that. But sometimes there are STILL cheaper alternatives. My BB gym is $80/month, the gym I go to is $29/month. My gym is an awesome gym too unless you like to do lots of cardio, its more for hardcore lifting.

My BB has like an employee center thing with deals for shopping, dining etc. online that you can use to get tons of deals. I always forget to use it though.

I never bring my own lunch, to much of a hassle plus the BB cafe food is pretty dope. And Chipotle is godly. Eating dinners at home, not going out on weekends will save a ton of money. $50/week on groceries is much cheaper than eating out/ordering out everynight. From my perspective though, going out is what makes the difference. Last Saturday I spent $180 in one night on beer and cocktails, doing that frequently is what makes the difference.

$30 a month in Manhattan?

 
Jun 21, 2017 - 12:27pm

I found the hard way that eating out every lunch is a) expensive and b) fattening. I gained 20-25 pounds in my first year out of school. Bringing food to the office is way better, lets me snack all day so I never get really hungry, and I have a better idea of how much I really eat.

That said, I also keep milk and cereal at the office, so I eat breakfast and lunch at my desk most days, with the occasional dinner thrown in as well.

 
Jun 21, 2017 - 12:29pm

1. live at home if possible or have couple of roommates
2. pack ur lunch - learn 15min fast cooking
3. budget ur monthly spending and check ur bank/credit card account daily
4. looking for deals for staples/essentials such as organic grain beverage, cable bills, insurance, restaurant card and whatnot
5. maximize ur credit card benefit and mostly shop online

 
Jun 21, 2017 - 12:32pm

Saving Money (Originally Posted: 06/17/2006)

Hi all,

I am about to start as a first year analyst, and would like to not blow too much of any hard earned money. Does anyone -- especially those who are currently or have recently been junior bankers -- have a savings strategy that has worked well? Specifically for someone that may want to fund business school or law school in the future? Thanks in advance for any advice.

 
Nov 1, 2016 - 6:52am

Figure out how much you want to save per year, and work backwards (accounting for rent, necessities) to get an idea of how much you need to save / set aside per week or per month + additional buffer. Like the others said, track your spending with excel, Mint, online banking tools, etc.

Do you set aside money to invest for the future? Some of the money you set aside should also be set aside to invest. If you don't have time to manage your portfolio, you can use some of the more popular PFM tools that help you determine the asset allocation and will set your money into ETFs and bonds.

 
Nov 1, 2016 - 8:45am

Most of this advice is spot on, but what you need to do the most is (as aspiringcoolperson said) is pay yourself first.

Bump your 401k to 10% (minimum) if it isn't there already, and from now on take 25% of your net pay each paycheck and send it straight to savings. Boom, you are instantly doing much better. It should be close to open enrollment for your health insurance - figure out what you spent on healthcare (glasses, contacts, dentist, doctor, etc.) this year and throw that money into a FSA or HSA for 2017. Congrats, all your health expenses next year will be pre-tax.

75% of that third year bonus (net) should be going straight into savings as well, so don't plan some big blowout in Ibiza. No crazy nice dinner for your first date with that chick from Bumble. And so on.

You make a shit ton of money. New York is expensive but you can do a lot better. There's a lot of easy little wins you can take advantage of.

MM IB -> TMT Corporate Development -> New Ventures
 
Nov 1, 2016 - 11:03am

What would your take on traditional vs. Roth 401k be? Friends have told me to do traditional to experience thet savings on tax now, but I find it hard to believe that my tax rate won't be higher than it is now when I pull money out during retirement...

The fool thinks himself to be a wise man, while the wise man thinks himself to be a fool.
 
Nov 1, 2016 - 2:56pm

Mark Hanna:

What would your take on traditional vs. Roth 401k be? Friends have told me to do traditional to experience thet savings on tax now, but I find it hard to believe that my tax rate won't be higher than it is now when I pull money out during retirement...

This is a tough question for most monkeys, as most of us believe we'll be or desire to be in the 0.1% in retirement so all the traditional wisdom about higher/lower tax brackets in retirement is not as applicable.

That being said, there is a >0% chance that tax brackets will change in our lifetimes, probably for the higher. When I worked at a company that offered a Roth 401k, I split my contributions 50%/50% between pre-tax and Roth to diversify some risk. A few things to keep in mind:

  1. Most (if not all) company matches/contributions will be pre-tax, even if you are making all your contributions to a Roth 401k.
  2. If you're at a point where your total 401k contributions (ex-company match) are hitting that $18K limit, and you've maxed out IRA options, start dumping more into your Roth 401k because $10,000 Roth and $8,000 pre-tax is net more money than $9,000 Roth and $9,000 pre-tax.
MM IB -> TMT Corporate Development -> New Ventures
 
Nov 1, 2016 - 9:57am

I'm gonna throw out a service here called: You Need A Budget. You can download it to your PC but there's also an app for it. It's a bit painful to set up but once you do, you're golden.

You set up all your monthly expenses, monthly allowances for fun, entertainment, food, etc and you set up buckets for your longer term goals (vacation, down payment for car/home, retirement, etc).
Once you do that, you set up how much you want allocated to these buckets per paycheck. You can copy over these allocations for every month. Then via your app or PC, you just log your purchases. Could take you 15 secs to log one in when you're starting out but nowadays it takes me 5 secs.

I will admit that it takes some discipline to do this but the benefits are worth it, at least for me. I know exactly how much I have allocated for vacations, entertainment, restaurants, etc all with only having 1 savings account & 1 checking account. I can see in which category I overspent and figure out if I need to increase the allocation or cut down on the expenses. The system can create models & projections for your personal wealth & expenses over time. It is not a free service though, but that shouldn't be a problem.

 
Nov 1, 2016 - 10:07am

no bad advice so far, but your problem is not logistics, it's emotional/behavioral. you need to change your lifestyle in order to be able to save money. no amount of iphone apps, free checking accts, etc., are going to change what the actual problem is.

Asatar is right, first you need to move. living in an expensive area is your first mistake, you need to lower this by lowering your standards AND getting roommates. you do NOT need to live in squalor to save money, but paying nearly $2k/mo in rent is absurd.

once you move, change your routines. what kinda gym do you go to? if equinox, is it really worth it? try to cut that expense in half. also, take a good hard look at your monthly spending, see what's the highest discretionary expense. you can do all kinds of tips and tricks to lower your fixed expenses (cutting cable cord, switching cell phone plans all the time, etc.), but discretionary is likely what's killing you.

once you determine what it is, come back here and we'll have some better tips for you. my guess is it's one of a few things: clothes, food, bar, hobbies (golf/tennis for example), drugs, or dating. I'd rather not write a dissertation on each of those, so if you could help us out by narrowing down where you need tips, I'm happy to help.

in short, you need to change your lifestyle, but you need help in finding a happy middle between a penny pinching pariah who never leaves the house and someone who is a conspicuous consumer.

 
Nov 1, 2016 - 10:14am

A budget sheet to track spending helps. Mint is useful to link all of your accounts. You can then use its built in tools or it will export all of your transactions in a standardized format to a csv file so you can build your own sheet.

Another option is to deposit a good chunk of your money in a savings/investment account, and then only use a debit card for expenses so you are forced to stick to budget.

 
Nov 1, 2016 - 10:42am

I person ly try to save around 40%, cut back on eating out and buy cheap food, my food cost me each week around £10 eating in, I obviously at out but when I do il go for the rump stake rather than fillet and ask for tap water and maybe once a week I will eat out.

This might sound wrong but buy expensive clothes, why? Bevauae 1, they last longer. 2, they wash better. 3, they are more liquid, meaning you can sell easily..

I only have set items, 3 jeans, 4 t shirts, 5 non work shirts, 3 sports jackets/baller.. all high end quality clothing, if I want a new item I have to sell an old one, that is the rule.. saves on washing also.

The little things really do add up, check you bank statement and do a spreadsheet of expenses and you will be shacked at the waste.

I live in a city in the UK but not London so my salary is not as much as most, I'm a researcher so just over 28k £

 
Nov 1, 2016 - 10:51am

Not sure where everyone lives...who can actually spend less than 2k in NYC and get a decent place?

Array
 
Nov 1, 2016 - 10:56am

can you get a great place in midtown for 2k? hell no, but it wouldn't shock me if you could get a nice place in stuytown, chelsea, etc., for 2k with roommates.

change your definition of "decent," and plenty of options will open up...

 
Nov 1, 2016 - 12:52pm

Again, do any of you actually live in NYC? And are current with rent prices? Chelsea is expensive AF and much more than midtown...Who wants to live in Stuytown as a 3rd year? With roomates?

I live in Midtown West, unless you want to live in a crappy apartment youre at a minimum 2k and above (and every analyst here pays at a minimum 2k)

2K untax effected @ 40% is 40k, which is less than half of your bonus as a 3rd year.

How about you analyze what your annual spending habit is this year (credit card has a tool usu) and tell us the breakdown. To save $10k a year on $150k a year is an indication of a problem.

Array
 
Nov 1, 2016 - 11:50am

Something I used when I was in my 20s and cash was tight - withdraw the total spending money at the beginning of each month and place it in envelopes for each week. Each week, put that week's cash in your wallet and restrict yourself to paying cash for everything.

The physicality of seeing the cash and knowing you only have that to get through the week helps apply some brakes to your spending.

Those who can, do. Those who can't, post threads about how to do it on WSO.
 
Nov 1, 2016 - 2:20pm

Also carry a gun for security, I am joking. This does work, it is really easy to swipe your debit card or credit card when you know you have the funds to cover it. Then you see your balance online and realize you spent twice as much as you had expected. Try paying cash and you will naturally be more selective as that stack of bills dwindle in your hands.

 
Nov 1, 2016 - 6:42pm

Cooking can save some money but he can easily save money by changing his spending on the big items (rent, vacations, frequency of expensive dinners) first. Also, if you're working 70-90+ hours, do you really want to devote the little free time you have to making your breakfast and lunch everyday? Hell, I rather watch tv, catch up on personal life / emails, or sleep.

 
Nov 1, 2016 - 12:00pm

As a third year analyst at an EB you should absolutely be able to save money. To give you context, I'm in a similar position to you, work in SF, make in the 100s pre tax. As some have mentioned I have a little excel model which I use to get a high level sense of where my money goes and how much I have to spend.

The way it roughly looks is

Pre Tax Income - Max out 401k(18k) = Taxable Income

Taxable Income * Tax Rate = Money I have for living/additional saving

With that money I divide by 12 and get an idea of how much I have to play around with each month.

I usually allocate money towards the big bucket expenses which include

Cable
Internet
Phone(work pays for it)
Food(Meals Out, groceries, and daily breakfast/lunches etc)
Transportation(Ubers/Public Transit)
Misc Expenses(Dropbox, Spotify, Audible, etc)
Gym(Equinox, but at a discounted rate)
Rent(~$2k)

And even with all of that I max out 401k, put more money into a trading account, and still feel like I live a luxurious life for a mid 20s professional.

Looking at your description I think the biggest expenditure that I you spend on that I don't is travel. Going to Europe/Skiing in Colorado are thousands of dollars each time. Honestly, 2-3 of those trips a year would probably run me like 10k or so. Add in a trip to vegas and some other misc expenses and that pretty much wipes out my 401 contribution.

If you really want to travel, I'd start working on credit card churning and use points to go nice places. I've been working on that and its pretty easy to amass a pretty big balance of points that can be used for vacations. It especially helps if you're a big spender.

 
Nov 1, 2016 - 12:25pm

Hi mate,
Just my 2 cents:
I believe you should NOT feel bad about spending money on traveling and vacations. I myself am still in university and am envious of my friends which have enough money to travel all the time. So this is what I study for - getting a good job, earn a lot of money and then go and see the world. If you really want to save money, try to cut back expenses for food/clubbing and similar activities (eat at cheaper restaurants, get drunk before going out instead of buying bottles at the place and so on). This will not impact your happiness and lifestyle as much as cutting down vacations.
Obviously everyone has their own priorities - I just personally think that going on vacation and seeing new things is a great privilege which you have worked hard for and should enjoy.

 
Nov 1, 2016 - 12:45pm

Go to Fairway and buy your food. Try cooking in bulk on Sunday's so you have dinners for the week. Also try eating less and snacking more- you can save half of the meal you bought and have it later by just having some nuts or a fruit between meals.

The suggestions on hear have been good, but you have to be disciplined about entering the line items into your budget. Get in the habit of entering the amount you spent into your budget every time you spend money. You'll subconsciously start to realize how much you're spending and you'll always see your total. If you have estimates of your monthly bills in there then you'll have an even better idea of your monthly total.

Finally- stop traveling so much. You can travel a little bit, but you don't need to take luxurious European vacations at 24

 
Nov 1, 2016 - 3:38pm

Not sure how much you are making, but you don't seem to be in a horrible position. 20k in savings gives you living expenses for 6+ months in case of emergency and am assuming you've maxed out your 401k so 40-50K+ there. You've enjoyed your life so far, taking trips and enjoying NYC, while still saving more than most people your age.

If you do want to save more its very simple, cut back. It doesn't have to be a huge amount, take 1 or 2 less trips a year, go out to eat one less time a week...it will all add up. I'd also say to live off your base and save your bonus.

 
Nov 1, 2016 - 4:38pm

Remember the idea in working for money is to figure out how to make your money work for you. Automate. Pay yourself first. Set up auto payments into your 401k (matching min %) and a savings account not at your regular bank (10% min). Save 6mths cash + 6mths invest acct. 1 date night out on the town with the lady friends and if they are worth it go low budget the next night. You don't want a girl who wants to spend your money. Vacations are awesome and should be enjoyed but you don't have to go 1st class all the time. Keep it to 1 a year and stay state side to lower cost. Sounds like more creative trips and dating could solve a lot of your expenses without reducing your enjoyment. Remember the idea in working for money is to figure out how to make your money work for you.

 
Nov 1, 2016 - 6:32pm

After five years in Big 4 Transaction Services, I have managed to save up approximate USD 100k :-)

My advice:
- Open a separate account and transfer x amount each month automatic
- Save up 100 % of your bonus
- Share an apartment or rent a small / crappy / shitty apartment. You work all the time so apartment cost should be limited
- Use the options to let work pay for your food if you work overtime
- No car

My biggest mistake is that I have not been able to invest my money.

So all of the USD 100k is in cash.... however, I hope there will be a downturn in the market so I can buy som cheap shares :-)

 
Nov 1, 2016 - 8:08pm

So two parts to this. The first is practical. The second is philosophical.

The prop traders I used to know in Chicago always said that learning to break even and then make money as a trader was about figuring out how you lose money, figuring out what were your losing trades, figuring out why you made them, how to avoid them going forward.

I suggest you do four things to get the big picture snapshot:

1.) Calculate how much money you bring home every 4 week or 1 month pay cycle. This should be pretty easy. Get your pay stubs. Also take a look at your annual bonuses, but this should be considered separately from your salary.
2.) Calculate how much you spend on your credit cards. Again, this should be easy. Review 2-3 months of statements.
3.) Add to all of this what you spend on rent - $1900, apparently.
4.) Figure out how much you spend outside of your credit cards. I try to put everything on my 2% cashback credit card, so this is only a couple hundred a month, plus a disability policy and my electric bill.

Give us a breakdown of what you've spent on in the past three months besides rent.

Your rent looks in-line. I was spending $1900/month for a JR 1 bedroom in Midtown West. I think you may be able to save a bit with a roommate, though. Something to consider if you're not already doing it.

Now you have a rough estimate. We'll need to go down the credit card bill and make some adjustments to it-- ideally we'd take a 1-year average of your spending and then start doing some adjustments to the capex.

But I think, deep down, you're a finance guy, and you know what you have to do and what needs to be done to fix this. You're unmotivated to do it. So we need to get a bit more philosophical to fix this.

I could tell you that historically, equities have returned about 6.5% per year after inflation. If this trend continues, and if you can build a portfolio that sustains a 4% withdrawal rate at retirement, every dollar you save today is 50 cents per year at retirement. If you save $50K next year, that's $2000/month in retirement. Or if you buy the right dividend stocks, that's $200/month in dividends, taxed at a mere 15%. One of my behavioral tricks was to stick my money into dividend-paying equities. Today, I think the stock market is a little bit overvalued so I stick extra money into my mortgage, although as rates rise that is going to shift towards CDs.

I could tell you that having money in the bank makes it a whole lot easier to sleep at night when you screw something up at work or your firm announces layoffs. That there's a hidden interest payment on cash or even cash equities.

The secret to saving more money isn't to hate spending money-- it's to enjoy saving money more than you enjoy spending it. Skipping a trip to the Keys might save you $3000, but the real fun in that is that if you stick the savings into Exelon or Brookfield Infrastructure or Prosper (online lending), the dividend next year will give you enough money to eat out ~3-4 times at a really nice restaurant (I define really nice as $40-$50 per plate)- and you'll still have your investment at the end of the year and can use it to pay for the Keys then.

I also enjoy measuring my runway. If I liquidated all of my assets and never worked again, how long could I make it? Right now, that figure is 5.5 years strictly in terms of liquid net worth. If you count the equity in my condo (which I measure net of expected transaction costs), that increases to 7 years. Now, 18 months of that figure is emergency savings which isn't earning any returns, but the balance-- 5.5 years (including the equity), is probably earning a 6% return after inflation on average. So every year I work, if I save nothing, my runway increases 3-4 months on average. My assets are now pulling roughly 1/4-1/3 of the weight of my lifestyle. That's a really good feeling to have.

But I got here by measuring my runway in terms of being broke, then having a few months of expenses, then several months of expenses, then a year and some months. By the time I got to a year (and it wasn't long), my assets were compounding at a material rate-- enough to sustain 3 weeks of living expenses every year. It was incremental, and every time I got tired of saving, I thought about where I had started ($0), where I had gotten to, and how much better I felt for having that money saved. And it kept me going.

So that's why I enjoy saving money. Maybe you can enjoy it, too.

 
Nov 2, 2016 - 9:39pm

Well living in NYC isn't helping I can tell you that...

The best advice I can offer is to look at your bank statement and figure out what you're spending money on and then figure out what you don't need. Most banks offer some kind of analyzer for your spending on top of that.

I mean you can easily just cut out eating lunch and you'd probably save a ton. I know what its like working in NY.

I'm not a real banker though...
 
Nov 3, 2016 - 2:10pm

OppositesAttract:

is 20K in non-401K savings after two years really that bad? Assuming you've maxed out your 401K (36K after two years), I would imagine that the additional 20K in post-tax savings on top of the pre-tax 36K in your retirement account is more than what most analysts in NY have saved in your position.

Before I got my MFE, I always lumped all of my (vested) savings together, aside from my emergency fund analysis. I always planned on grad school and I knew those funds could be accessed to pay for tuition without penalty.

IMO, the goal of every first year analyst should be to save 20% of your salary and 80% of your bonus on either a pre or post-tax (marginal) basis.

For a first year earning $80K + $70K bonus, that works out to $18K pre-tax 401k, with $38K + $16K pretax left over from the bonus, or $54K pretax. There's a bit of a fudge factor in figuring out the tax rate here because your tax rate isn't constant-- above $118K you stop paying social security and above ~$100K your federal tax rate jumps from 25 to 28%, but let's just assume an average tax rate between $75K and $130K of 26.5% federal and 4% social security (you can do the exact calculation if you'd like). NY state tax is an additional 6.85%; medicare is 1.45%. The city tax is roughly 3.5%. You'll get some federal tax deductions in there for the local taxes- call that -2%. So your net tax rate is about 40% from $76-130K, give or take a couple percentage points. So a good first year analyst could hit $32K/year + $18K in his 401K if he's earning street ($80K) and gets a good IBD-type bonus. (IE $70K).

Very rough benchmark, but a serious saver working in NYC finance for a reasonable firm can save 20% of his salary and 80% of his bonus on either a post or pre-tax basis. (I am not expecting you to save $16K post-tax on a $80K pre-tax salary-- just to put 20% of your salary into a pre-tax 401K or save 20% of your take-home salary if you do not make 401K contributions).

This is a good benchmark, not something you MUST do. This is how I lived my first year in the city. (And before you ask, I lived in a $720/month bedroom in a mediocre apartment run by a crazy landlord in Jersey City on the last safe station on the PATH train. But back then, street was $60K... they decided to up it to $70K the next year)

This is not something you have to do forever, and your lifestyle can expand with your income. But it's an awesome feeling to sock away $50,000 your first year out of undergrad. That's $750K at retirement for a post-inflation return of 6.5%.

 
Nov 3, 2016 - 2:55pm

Bro, 20k saved up + 401k (depending how much you've got in there) is great for a 3rd year employee. I'm assuming you're throwing 4% into your 401k and receiving a 100% match. Not accounting for capital gains (or the typical 6 months before the firm starts matching your 401k), year 1 at 85k base you tucked away 6,800. I'll exclude bonuses and go with only 10k raises for your next two years. Year 2 you tucked away 7,600 in your 401k. Year 3 you tucked away 8400. That's 22,800 in your 401k.

Depending on how your investments are performing in the market and what % you tuck away is very solid and realistically you're making quite a bit more than the 105k I've accounted for in year 3. Add on the $20k you've saved that's not in your 401k and you've got $42,800 at 24/25 saved up. Not sure about your student loan situation, but you're in solid shape.

People on these forums need a reality check. I'm in a similar situation (second year) and I'm very proud of the fact I've saved up >$23.5k so far. Probably will be in a similar situation as you come year 3. I'm doing 8% pre-tax into a 401k, $100 a week into a Roth IRA and $200 a week into my Ally bank account (trying to get to a $12k cash cushion).

 
Nov 4, 2016 - 2:19pm
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