how much can be saved from i-banking salary

Graduate School Business School - MBA
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<p>First of all, to assume that your salary is going to be $110,000 your first year is a little optimistic. Sure, some first year analysts get $50,000 bonuses, but on average, the end-of-year bonus ranges between $10,000 and 20,000. Add to it the typical base salary of $60,000 and in some cases a $10,000 signing bonus, most first year analysts make roughly $80,000-$90,000 their first year. </p>

<p>Bonuses are taxed at 50%, so the $20,000-$30,000 bonuses one gets are going to be worth $10,000-$15,000 once uncle Sam gets its cut. The $60,000 salary is taxed at 37% (when you include federal, state, city and SS deductions), which leaves you with $38,000. </p>

<p>So, the average first year analyst earns roughly $48,000-$53,000 after taxes. </p>

<p>Rent in NYC easily averages $18,000-$23,000. So, after rent, you are down to $25,000-$35,000. Food and utilities (phone bills, internet connections, television cable etc...) easily come up to $10,000/year and transportation and entertainment easily cost $5,000/year. So, you are already down to $15,000-$25,000. Saving more than $25,000 your first year in NYC is highly unlikely.</p>

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<p>Need clarification... what exactly is bonus? An amount of money in addition to the base salary?</p>

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<p>for a 1st year ibanking analyst does it require a mba or are you good with a finance degree (bachelors)</p>

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<p>bachelors for an analyst position; mba grads usually start out as associates.</p>

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<p>Bonuses are paid at the end of the company's fiscal year -- some pay them in December, but most pay in January or February. The amount that you receive is typically based on a combination of your performance, the performance of your group at the investment bank (i.e. fig, health care, telecomm, etc.), and the performance of the company as a whole.</p>

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<p>"bachelors for an analyst position; mba grads usually start out as associates."</p>

<p>How long does it take to transform from an analyst to an associate???</p>

<p>Also is your salary always going to be higher if you have your mba or will it eventually be the same???</p>

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<p>Almost all analysts go back for an MBA. You'll see a couple of stars who don't want to leave a hot M & A market, but they're unusual. They return as associates (if they get to return). The analyst years are your chance to prove yourself. By no means are most people safe to become associates and so on by getting an MBA. Last summer I watched a number get canned after a year as an analyst. All top grads of very top schools. It's a unique skill set, not just being smart or having a Harvard Mba.</p>

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<p>"Almost all analysts go back for an MBA."
That's not necessarily true. The very best of the analysts, after two years, are retained to be third year analysts or even a fourth year. Their salaries already exceed those of newly minted MBA's and they are unlikely to go back for MBA since their exit options from then on are very lucrative to say the least. One friend is leaving for a private equity firm after two years at IB. He is very unlikely going back for his MBA.</p>

<p>One doesn't necessarily has to major in finance to be in investment banking. Many recruits can be engineering majors, English majors, math majors. Their common path is that they are the cream of the crop in their top ranked schools.
Once they are recruited, the banks will train you.</p>

<p>That said, many who do go on with their MBAs likely want to hone their skill sets in an area that they did not get in their undergraduate studies. For example, a minority of Wharton graduates will go back for MBA because most have acquired all the fundamentals they need to go on in any financial related fields, and of course, they also have a built-in networking credentials.</p>

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<p>On the topic of MBA, it isn't the only way to a lucrative career in finance-related field.</p>

<p>One crediential is the CFA-Certified Financial Analyst. This 3 part exams can be taken anytime after an undergraduate degree, without taking the time off to go to grad school. </p>

<p>Many analysts( those interviewed on TV, whether a stock is a buy or sell) have this certification.</p>

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<p>More info on CFA</p>

<p><a href="http://www.cfainstitute.org/pressroom/05releases/20050506_01.html%5B/url%5D"&gt;http://www.cfainstitute.org/pressroom/05releases/20050506_01.html&lt;/a&gt;&lt;/p>

<p><a href="http://www.analystforum.com/phorums/index.php?0%5B/url%5D"&gt;http://www.analystforum.com/phorums/index.php?0&lt;/a&gt;&lt;/p>

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<p>You could live in the Bronx. Riverdale is part of the Bronx, and me myself prefer to live in Riverdale than anywhere else in NYC.It is 10 times nicer than downtown. There is so much peace and quiet looking over the river. It's isolated from the city, but at the same time right there. They even have the best schools in the country such as Riverdale Country School and Horace Mann School, and the tuiton there is 29,000 a year. Even Spitzer went to Horace Mann School.Oh nooooo he went to school in the Bronx, how could he ever live. Did he get shot there. People really need to stop making assumptions on the Bronx.</p>

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<p>Whoever said taxes are 50%...that's wrong. This is the US, not Europe. The heighest federal tax bracket (for over 200K a year) is like 29%. I am no tax expert, but I would estimate 30-40% as far more reasonable.</p>

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<p>maboyle, when you include state and city taxes, as well as SS, it comes up to over 40% in the highest income brackets. Furthermore, bonuses, regardless of size, are tacked at 50%.</p>

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<p>I've always been curious about this too. I'm a very frugal person, and can live without a lot of luxuries. I'm wondering if anyone who is/knows well an i-banker can create a "survival budget", for example:</p>

<p>salary $100,000
taxes $ 40,000
net $60,000</p>

<p>rent @ $800/month (in a super cheap place) $9,600</p>

<p>net $ 50,400</p>

<p>no new clothes
eat on the job
no paid entertainment</p>

<p>$ 10,000 of miscellaneous (transportation, haircuts, etc.)</p>

<p>$40,400</p>

<p>Is this at all reasonable? Or am I nuts?</p>

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<p>$800 for rent is very unrealistic, even in a very cheap place in an outer borough (unless perhaps you are living fairly far out from Manhattan with a couple of roommates). Take a look at the rental ads in the NY Times or the Village Voice for some ideas (though you usually get what you pay for -- cheaper = roaches and mice and fifth floor walkup). I wouldn't bother with craigslist as most everyone who lives here in NYC realizes that the vast majority of those rental listings are bait and switch heaven -- the places somehow never actually exist when you get someone on the other line (but they would be happy to show you a place for double what was stated in the ad). I think that it's a lot more likely that you would pay a minimum of about $1000-1200/month outside of Manhattan and within reasonable commuting distance, with a roommate or two.</p>

<p>Don't forget to add in the following deductions from your paycheck to your cost example:
Health Insurance Contribution (pre-tax dollars, but at least $200/month)
401k Contribution (silly not to take advantage)</p>

<p>The following are additional costs that your $10,000 miscellaneous allowance would certainly not entirely cover:
Phone
Cable
Internet
Electricity/Gas (ConEd has some of the highest rates in the U.S.)
Groceries for home (even if only Ramen and bottled water)
Renters' Insurance
Cleaning Supplies/Cleaning Service (since you'll won't be home much)
Dry Cleaning/Laundry (this really adds up)
Breakfast, Lunch, Starbucks (cost is on you -- dinner will usually be covered by work since you'll be there late every night)
Hair Cuts
WSJ/FT subscriptions
Gym Membership (optional, but most have one)
Commuting/Taxis (you won't want to get on the subway at 2 a.m. after you met friends out a midnight when you got out of work -- a fairly early night)
If you make it out, an occasional $8 beer at a Manhattan bar
Vacations (you will get at least a week or two off each year)
Tips for your doormen and super (if you have them) at Christmas
I could continue, but I'm sure you get the idea ...</p>

<p>Yes, you can be frugal and probably save a bit. Unfortunately, your savings won't be nearly the $40,000 you estimated in your post. Additionally, many people, when they are working crazy banking/lawyer/consultant hours end up feeling entitled when it comes time to actually wander into Barney's or whatever kind of store it is that floats your boat. I know tons of bankers who have the latest $1000 B&O phone or whatever other expensive gadget because you feel that you "deserve" it when the time comes to actually do some buying. Almost everyone falls into it at some point. Of course, my estimates above assume that you never go out on a date, never go to see a movie, never go out to dinner, never go out to a bar or club (except for said occasional $8 beer above) and basically travel directly between work and home each day without stopping unless absolutely necessary to run an errand.</p>

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<p>You will need high end clothes to look the part. For men, suits minimum $1K on sale times 5-7 plus a tux. For women it's crazy money, can't wear the same things often. My girlfriend spends easily $20K/yr to look professional.</p>

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<p>What's your experience bobby?</p>

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<p>brooks brothers non-iron shirts, 3 for 150 bucks.</p>

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<p>Just go with brooks brothers, J.Press, Turnbull & Asser, and etc. those clothes last for a long time.</p>

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<p>One suit for 1K are you insane? Unless you shop at Saks Fifth.I could get 3 or more really nice suits in Macys with 1K. It just depends on how much of a spender you are. I know people with a lot of money,but usually spend very littile buying clothes. if you go to the right places you can find expensive things for really cheap i.e. I bought a Kenneth Cole suit for $100 on 37th street in NYC, the orginal price was 450 and I swear. The suit was missing all of it's buttons, I went down the block bought buttons for 10 dollars and the problem was solved I got a suit for $110. If you know the right places like me, evrything is cheap. All the money I get goes straight to the bank for when I really want something.</p>