If you are looking for a job on Wall Street when you graduate next spring, you’ve already applied and are waiting to interview. If things go well, you may soon find yourself making more money than any of your friends.
After raising salaries for analysts by 20%, most banks in New York are paying fresh graduates anywhere from $80k to $85k. Meanwhile, entry-level jobs in marketing or sales will pay a base salary of roughly half that, sometimes less. So, from a financial standpoint, life will be good. But be forewarned: New York City is absurdly expensive. If you spend like you’re a somebody, you’ll be financially insolvent in no time.
First, let’s talk actual take-home pay. Federal, state and particularly city taxes make New York City one of the most expensive places to live. Using a standard tax filing with no exceptions, an $80,000 salary equates to $53,073.15, according to the city’s payroll tax calculator.
On a monthly basis, that leaves you just over $4,400, and that’s before taking out premiums for health insurance and contributions to your 401k. Conservatively, that will leave you around $4,000 per month for rent, utilities, food and everything else you’ll need to survive.
Meanwhile, the average rent in Manhattan increased to $3,824 in November, up nearly 2% from the previous month. “And those numbers are only going to go up come spring with all the students moving in,” said Danielle Hamburger, a licensed real estate salesperson for Douglass Elliman Real Estate in New York. Renting in London is no cheaper: the cost of renting an apartment in the City’s financial district has risen 27% to over $5,000 over the past 12 months.
Looking across the river to Brooklyn, the rental market is even more unfriendly, at least when compared to what it was years ago when deals could be had. Brooklyn was just named the least affordable place in America when comparing income to home cost.
The median monthly rent there increased an astounding 13% from 2013 to 2014. The difference in median monthly rent between Brooklyn and Manhattan was $1,100 in 2008. That difference fell to just $300 this year. And by the way, Manhattan didn’t finish too far behind. It was ranked the third least affordable city in the US.
In Manhattan, the least expensive average rent for a studio apartment in a doorman building is in the East Village. The average rent for a studio there was $2,563 in November. So if you follow the rule that you shouldn’t spend more than one-third of your gross income on rent, you can barely, by the skin of your teeth, afford a studio apartment in the cheapest area of Manhattan.
Tack on the fact that you will need to purchase at least two nice suits, two good pairs of shoes and spend money networking with other analysts and associates, and your disposable income is pretty much dried up.
So heed this warning: just because you make double what your friend does who’s living back at home, don’t act like it. Find a place in Hoboken, or share a three- or four-bedroom apartment with friends to save costs. Take the subway and don’t eat out every night, lest you find yourself needing your bonus just to pay off your credit card bill. “Analysts” and “debt” often find themselves in the same sentence in cities like New York and London.