NEW YORK (CNN/Money) -
Maybe it's a little hard to turn on the waterworks for those Wall Street folk losing their jobs these days -- especially given that some of them had the chance to make more in a few years than many people will make in a lifetime.
But like a lot of Americans, many investment bankers have adjusted their lifestyles to reflect what they make -- and more.
A typical junior person at an investment bank who is two or three years out of business school is likely to make up to $200,000 a year -- with $80,000 coming from a base salary and the rest in bonus money. A managing director with 12 years on the job is likely to make $1 million to $1.2 million, with a $200,000 base salary, according to Alan Johnson of Johnson & Associates, a compensation specialist in the industry.
It's a lot of money, no question about it. But with the New York investment-banking lifestyle, it doesn't go quite as far as you think.
First consider that $1 million salary. Your biggest expense: $440,000 in taxes, leaving the banker about $560,000 in take-home pay, according to an estimate by Brooklyn-based certified public accountant Barry Picker.
And assuming the banker lives in New York City, and is married with two kids (two girls, ages 7 and 5), you're potentially looking at a great deal of outlay just to get through the day.
- Taxes. Roughly $440,000, based on $1 million in earnings.
- The Apartment. Let's assume he owns a three-bedroom, three-and-a-half bath apartment on the Upper East Side that he bought for $2.1 million in 1995. That carries with it mortgage payments ($7,300) and monthly maintenance and property tax payments ($3,500). Total monthly bite: $10,800, or nearly $130,000 a year.
- The Kids. Then there's the children's education. The girls have to go to private school, of course -- figure about $20,000 a year per child for a kindergartner and third grader to attend a high-caliber school like Spence. Then add in the "suggested" contribution of at least $10,000 per year per child. Total: $60,000 a year. They'll also be going to summer camp: Indian Head Camp in Honesdale, Pa., costs $7,350 per child.
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- The Help. Though the kids are getting older, you need a nanny/housekeeper, someone who can pick up the kids from school and do the laundry. Elite Nannies in New York says prices range from $550 to $1,000 a week. Assume $800, for a total of $41,600 a year.
- The Car. For weekend jaunts, there's the BMW 7-series. The monthly lease (at BMW of Manhattan) is roughly $1,000 and costs to park it in a garage is at least $600 a month (at Park Avenue Garage). That's $1,600 a month or $19,000 a year, not including insurance.
- The Hamptons House. Staying in the city from Memorial Day to Labor Day is a big no-no. Renting a house in South Hampton for the summer can run as high as $250,000 for beach-front property. But our million-dollar investment banker can only afford a home with a pool -- total cost is $60,000.
- The Vacations. There's a week at Christmas and a week for when the kids are on spring break in March. A week of skiing at Beaver Creek in Colorado for a family of four -- plus the nanny -- will run about $20,000. Count on a little less for a warm-weather vacation at Ritz-Carlton Jamaica. Total: $36,000.
- The Club. Golf can be a relaxing game -- if you can get over your rotten short game and the sticker shock. A high-end club comes with an initiation fee of at least $50,000. Annual dues are $5,000 to $10,000. Plus count on food, guest fees, tennis lessons, golf lessons, pro shop purchases, etc... Figure $25,000 per year.
- The Extras. Dry cleaning bills can easily be several hundred dollars a month, or a cool $3,000 a year. Figure $15 a day on taxis, or more than $3,300 a year. Then you've got dinners out, theater tickets, birthday parties, and Christmas presents (tipping the building staff alone will cost $1,000).
All that adds up to roughly $830,000 -- and the banker hasn't even yet fed his family or clothed them. Still, there should be plenty leftover for savings, including the kids' college fund and the banker's retirement fund. Who said $1 million isn't a lot of money anymore?
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