I'm moving to the Bay Area [preferably San Francisco], and am going to be making about $100k. If I am 21 years old and at the start of my career, how much rent can I afford? What is my ideal budget after taxes? Where in San Francisco should I live (or not, since I will be commuting to one of the big tech companies)?
You'll probably take home somewhere around $5k a month after taxes. Rent will eat half of that, but living on $2.5k a month is easily manageable and you should be able to put some savings away as well.
I prefer to live in the city proper, but many people who prefer a more quiet lifestyle are perfectly content to stay in south SF or across the bay.
Commuting is easy, if a bit slow. Between BART, Muni and Caltrain getting to and from anywhere in the Bay Area is possible. I sold my car before moving here and haven't looked back. If I need to pick something up or leave the city for the day I just use getaround.
You can afford any apartment in the city, but spending a ton on rent isn't the requirement everyone makes it out to be. I live in a new building 2 blocks from the Caltrain and pay $1200 a month. Just be diligent about it (as others have mentioned: roommates, location-specific, etc.). Leverage your network if possible. My friend in finance who makes close to 7 figures just got a room in a rent-controlled apartment and pays 800/month in the heart of the Marina.
Have fun in the city, but be mindful about saving as well.
If your friend really does make 7 figures a year he is not helping the current housing crisis in SF by taking a rent-controlled apartment that someone with a lower income might have depended on.
I mentioned it mostly to emphasize the fact that your rent doesn't need to scale with salary, but it's definitely going to be tough finding a rent-controlled place. Not impossible though. His friend moved out (got married), so my friend took that spot.
Live with a bunch of people and split the rent so that you're paying as little as possible. Don't live outside your means, and SAVE SAVE SAVE.
Also, work hard, and LEARN LEARN LEARN. Your salary, if you are good and work very hard, will rise faster than you can imagine and if you live a frugal lifestyle, you will have a lot of money in 10 years.
Don't rule out living in Oakland, especially around the Lake Merritt area. It's a nice downtown area (getting nicer), rent will be cheaper, and you can often get to downtown SF faster than from other parts of SF (like from the Richmond district).
Agreed, with one caveat: Lake Merritt is sleeeeeepy. If you're around 30 or have kids, it'd probably be your scene, but there are definitely better parts of Oakland for younger folks.
If you want to live in the City, now is a great time in your life to do this.
You can get your own studio and it will cost you between 2K and 2.5K. A better idea would be to find some roomates. You can get a bigger place, pay less rent, and live with with interesting people.
whatever you do keep your costs as low as possible (roommates, live in a motor home, minimize commute, etc.). Strive to save 80% of your take home pay and live off only 20%. If you do this and invest your savings in low cost index funds, then working will be optional for you in less than 6 years. Meaning you can work on what you want. Don't fall into the debt/slave trap. Most fun/happy times happen because of experiences and the people you hang with, not because you spend a lot of money. Being so young and just starting out, your life will revolve around work anyways (time spent, friends).
Sounds like good advice, but here's another take on it: I'm in my 20s and didn't save any of the money I made. I immediately spent (on startups, travel or invested in myself) all of it. I have a bit of debt but not too much. I don't regret a single bit of it. I've lived in 5 different countries for longer periods of time, met amazing people from all over the world, and had a blast. I wouldn't trade these experiences for anything. And because I invested most of the money in myself I found that I obtained a lot of skills, experiences and relationships that allow me to make a lot more money in the future than I would have if I had followed a regular career path for a couple of years.
Too many people undervalue time and health and overvalue money. You can always make money. But you're only young once. IMO the best thing you can do is invest time and money in yourself, not in any kind of fund. The lifetime ROI is higher.
i'm om with such a choice as long as you don't go into debt to do it.
"a bit of debt but not too much"...this is relative, thousands is probably ok, tens of thousands or more not ok.
the whole reason to save most of your income is so you can have free time to do with what you please (work more, travel, start up, nothing). the investment part is only so you can earn a respectable interest (8% to 10% vs 1% to 2% in a savings account) for you to live off of.
I agree with the debt. Let's put it like this, I would be out of debt if I worked for a 4-5 months and saved 50%.
What I'm advocating against is the notion of working hard for 5-10 years and sacrificing your youth while saving a lot of money and postponing things you want to do with your life. Whatever you want to do in the future at some point it'll be too late. Once you hit your 30s priorities start to shift. You start thinking about having a family. This means you'll need stable lifestyle not just in terms of money, but also in terms of work hours (= no startups). Excessive travel is no longer possible. Perhaps you need to take care of your parents. Or you may simply become complacent with your current lifestyle (this happens unconsciously more than consciously). Suddenly the startups, travel and fun that the money was supposed seem a lot more risky and unrealistic than they seemed when you were in the beginning of your 20s.
I'm all for saving. But don't sacrifice things you want to do in return for money.
i'm not sure of the options in your own place of residence, but in the US and Canada index funds are mutual funds that just copy some large established index (e.g. S&P 500). So you get the return of the total market and their fees are very low since the fund is not really managed other than balancing. Most actively managed funds that have a strategy rarely beat the market and they have much higher fees. Vanguard low cost index funds are the classic example in the US and Canada.
ha. you can have a more lavish (wasteful) lifestyle and still only live off 20% of your income, you just have to increase your net income...then 20% represents a bigger slush fund.
Unfortunately salaries in the bay area seem to be inversely proportional to age ;) That's only half kidding. Many companies are willing to pay premiums for what I'd call "future potential" of new hires. With 30 and supposedly 5-10 years of work experience you'd be expected to already have "proven" your potential. Your degree will matter a lot less than what you've actually done in the past. If you don't have much to show for your experience it may well be that you'd actually be offered less than a promising candidate right out of college. However, $100k seems about average. There are people who are offered 150k (+ 100-300k stock grants) out of college at some of the "hottest" startups.
I prefer to live in the city proper, but many people who prefer a more quiet lifestyle are perfectly content to stay in south SF or across the bay.
Commuting is easy, if a bit slow. Between BART, Muni and Caltrain getting to and from anywhere in the Bay Area is possible. I sold my car before moving here and haven't looked back. If I need to pick something up or leave the city for the day I just use getaround.
Hope that helps :)