With banking bonuses likely to fall (possibly very dramatically), some people in financial services are reconsidering their spending habits.
Our recent survey on compensation expectations and the outlook for 2023 revealed that many of the 1,500 respondents are being impacted by inflation and adapting their lifestyles to their lower incomes as a result. We fully appreciate, though, that widespread sympathy for people trying to save money on six figure pay packages is likely to be minimal.
Earning $300k and cutting back on groceries
A New York-based VP at an asset manager said he’s cutting back on groceries and spending less on leisure. That’s not all. “My monthly savings are lower… Inflation is really eating into the amount I can save for a down payment.”
The same respondent said he earns around $300k, which sounds perfectly adequate for groceries and leisure, but one MD estimated that $1m a year will “only just going to cover your bleed costs.”
“$175k in NYC feels middle class,” an M&A associate told us, although despite saving less, there was “no impact to lifestyle.” He’s leaving his firm for “opportunity in crypto” though, so make of his personal finance knowledge what you will.
Another VP, with Credit Suisse in Singapore, noted similarly that while inflation hasn’t impacted lifestyle yet, it had definitely impacted his financial planning, and that he was saving less.
Turn off the heating
A London-based director (in risk, mind you) noted that he was “penny-pinching, not going out, not putting the heating on,” and cancelling holidays. A Paris-based JPMorgan VP agreed, despite being on $300k-$400k. He added that he was choosing cheaper hotels.
A South African credit trading associate said that he had replaced his car with an entry-level model.
Saving on lunch seemed to be another big tip, with a London director earning between $450k to $550k now “budgeting for everything.”
The same director added: “Days in the office are meaningfully more expensive than days at home. Now bringing lunch to work.” We found similar goings-on in private equity.
Returning to the family home
One analyst at an ESG-focused firm said that “London on £65k is not possible,” and that he had moved back in with his parents, as did an associate in asset management who was also in London, although she was on twice the salary. eFinancialCareers does not currently operate a dating app (sorry, guys).
Another London-based banker, a VP at Barclays, said that he had to sell rental properties and withdraw children from their fee-paying school.
Delaying property purchases was common, with one Credit Suisse VP saying that she chooses to overpay by 30% on her mortgage in anticipation of rising rates come 2024, when her fixed rate arrangement ends.
Ditching the extracurriculars
Various bankers also provided the following responses when we asked about their efforts to economize:
“Less drink, drugs, women, gambling,” – one London-based MD.
“Have cut back on clubbing” – an analyst expecting his bonus to fall by 70%.
“We broke now” – a Hong Kong analyst (JPMorgan).
“Trying to shop at discount stores like Aldi” – a Jefferies Director on $450k-$550k total comp
“We use candles rather than turning on lights” – a BNP director in London
“Let my mistress go” – a London-based VP
“Less shopping at Waitrose” – an asset-manager director
“I think the majority of people in finance are fortunate enough that inflation is not going to fundamentally impact their quality of life. If you are earning hundreds of thousands and it is, then you have a problem with what you view to be “necessary” spending. Imagine how tough it must be for even the median person in the UK on £30k a year (let alone the ones below).” – a sane person, who did not state where they work.
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