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"The break-even lifestyle is around £300k ($400k) net"

If you work in the financial services industry in a major financial centre like London, New York, or Hong Kong, you almost certainly earn more than the average person. You might be in the top 1%, which implies that you earn over £300k in London and anything from $100k to $490k (depending upon your age) in the U.S. This doesn't mean you feel financially secure. 

When you have a big job in finance, that job is probably in one of the world's big financial services cities, and those cities are expensive places in which to to live and work.

"The problem with London is that you always feel poor," says one buy-side employee earning $150k. "- You pay tons of taxes, your apartment costs a fortune and people around you are always super-rich. For sure, when you compare to the normal world, you feel lucky. But London makes you feel poor..."

A 25 year-old Morgan Stanley investment banker earning an equivalent amount says he has nothing left by the end of the month. "Taxes, living in London and not sharing accommodation, occasionally going out with a modest restaurant check. This wipes all my earnings out and it's not a luxury lifestyle by far."

Another banking junior in London said he spends 60% of his pay on rent: "I need a flat in a relatively central location...No further than zone three - and my pay needs to be higher to reflect this." Buying a house is out the question: "The mean property price in my area is over 10 times my salary as a sole buyer."  A London credit trader who described himself as, "budget conscious", said he's sharing a flat for the sake of affordability.

If it's not rent, it's childcare and school fees. A J.P. Morgan technologist who describes himself as earning between $250k says he needs a 30% pay rise: "This is by no means a luxury lifestyle. Paying a mortgage and nursery fees for two kids is way above my level of compensation."  An HSBC rates salesman says his school fees are "very expensive," and a Deutsche Bank quant says a combination of school fees and medical bills are wiping him out.

With a large proportion of finance pay deferred, high earners also complain of cash-flow issues - especially if they work in areas like private equity, where carried interest is often paid over years. One Mayfair private equity employee earning around $600k said he needs his salary to double simply to cover his cost of living because, "the deferral is far too long." Lower earners struggle more: a junior earning less than $100k at an asset management firm said he's in debt to the tune of 22% of his salary: "My bonus will clear it, hopefully. Maybe next year I'll be above water."

While most people consider banking professionals to be grossly paid, people in the industry have a different perception. "The pay doesn't really cover the amount of time, effort and stress that's required to ensure you can outperform the market," says a trader.  "I'm paid above the street for my seniority," said one banker. "But then I do four jobs simultaneously."

"Working 12 hours a day with all the stress that entails, kids at school and being able to afford a flat somewhere in a place that a banker could afford 10 years ago? Let's be honest, the break-even lifestyle is around £300k ($400k) net," said one J.P. Morgan commodities trader.

Not everyone is sympathetic, though. "Anyone who lives in London and earns £130k or more and thinks they are underpaid needs a reality check," says one banker. "It might be nice, but no one needs to earn more than that."

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AUTHORSarah Butcher Global Editor
  • An
    20 October 2022

    Why on earth are medical bills wiping that fella out? Healthcare is free in the UK, some people do go private for the occasional illness but for long term conditions the large NHS uni hospitals have the best specialists in the country anyway.

  • Ro
    9 September 2022

    Rubbish - I earn slightly less than that here and I live very comfortably in Essex . Have a lovely home , Range Rover, McLaren and sports bike . It’s over 15 a month in your pocket and gives you the chance for a decent living

  • ro
    26 October 2021

    The author is right. These days a decent, 2-3 bed apartment in a clean, safe area of London is around 1 million pounds. That's not exactly aspirational for a high achieving individual but they might be happy to own it by their 30s. So somewhere one has to find 100k a year, plus interest, to acquire that. Add in some big city living costs then gross things up to cover 50% lost to current rates of tax and NI. 250-300k is breakeven. There are of course people who will say this is excessive but, sadly, so much of the population don't realise just how low living standards have fallen for them. Bankers should not be criticised for having the financial smarts to see that.

  • As
    22 October 2021

    A few thoughts:

    1. As many have pointed out, it's comical for anyone earning six figures to plead poverty. Even in major metropolises like NYC or London, the median/average income is shockingly low. Finance folks are not going to generate much sympathy, when they cry about not being able to make ends meet on a $400K salary.

    2. The cause of this relative poverty is obviously lifestyle creep. Here, the front-office culture is obviously to blame, and shows why banks are so eager to have their staff back in the office. They need their employees stuck in a cult-like environment, spending most of their waking hours with their colleagues, one-upping each other with conspicuous consumption. It's a financial arms' race, designed to trap people in the industry.

    3. There were some junior bankers interviewed in this piece, and I sympathize entirely. And it also shows why junior bankers are no longer eager to brave 100-hour weeks. $100,000 salary right out of school was serious money back in the 90s, and investment banking really put you on a path towards wealth. Today, both promises have paled considerably in the face of greater competition, rising living costs, and higher asset prices. You simply cannot entice people to destroy their health, for a paycheque that was exciting in the 90s.

  • Ph
    22 October 2021

    And bankers wonder why the rest of society hates them? The idea that you can't live very comfortably on the sums of money being thrown around here is obscene. Maybe stop going to restaurants run by Turkish Tik-tok stars for a start.

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