How much money do you really need if you want to achieve a reasonable standard of living? As we reported a few months ago, some bankers claim to be struggling to get by on seven figures. Today, a new report from the Joseph Rowntree Foundation sets the bar far lower. A single person living in a generic UK location needs no more than £273 ($415) a week in net income to achieve a minimally acceptable standard of living, says the Foundation. A family of four needs a minimum of £715.
The Rowntree Foundation breaks out the allocation of this spending in the chart below (click to enlarge). For a single person, for example, £50 per week is allocated to food, £5 is allocated to alcohol, £23 is allocated to travel.
Surprisingly, and despite the stereotype of the high-spending finance professional, the bankers and ex-bankers we spoke to said Rowntree's estimates looked reasonable - and that in terms of food at least, they could live - and in some cases were already living - within those spending limits.
"I would say that you could survive on £50 a week for food," said Brian Winterflood, life president and founder of Winterflood Securities, the London broking firm. "Whether it would be a nice existence would be another question."
Winterflood was less enamoured of the £5 a week alcohol allowance. "It's hardly worth the bother," he said.
Louise Cooper, a former Goldman Sachs salesperson and analyst at Cooper City, said she already adheres to the £103 food spending budget for a family of four. "I spend £120 a week on food for five people. Now that I'm not working full time any more, I just shop in Asda," she said.
Supermarket shopping may be fine for the self-employed, but one French financier said junior bankers are compelled to visit places like Pret for reasons of prestige. "Only interns and health fanatics bring in packed lunches. Once you start going out for food, your gross dollar spend is going to be far higher," he reflected.
Another private equity professional who previously worked in M&A said bankers can be surprisingly parsimonious when it comes to day-to-day living expenses. He added that most big banks provide a canteen allowance of around £10 a day. "People make sure they use it. They'll take a chocolate brownie home with them if it hasn't all been spent."
While bankers might be able to spend £50 a week on food, where London finance professionals really depart from Rowntree's minimums is in terms of housing costs. The report allocates just £73 a week to rent for a single person. "People in financial services will pay a premium for their accommodation," said the private equity professional. "But they'll be careful with everything else."
Away from accommodation, only the head of a prop trading firm told us the Rowntree figures were completely off. "To be honest - if you want a decent quality of life, with your kids at private schools, I don't understand how anyone can live on less than £200k a year," he said. "If you amortized my spending on food and drink over the week - including going out at the weekends, it would probably come to £50 a day."