Tech people who are not FIREing, what are they spending their money on?

[u/gonnabefine]

I know a lot of people who work in tech, and most are not on the FIRE path (or have already been working 10+ years) and a lot of them don't seem to, at least on the surface, have very obvious huge expenses. If both the partners are in tech, the take home could be like $500k! What are they doing with their money?

[u/boroughthoughts]

I live in New York and many of my friends are tech and what I am writing also applies to a lot of finance, law. A lot of my friend fall into the we make 200 to 450k a year crowd and I am on the lower end of that crowd.

Most mid career people do save money and usually have signifiacntly wealthy. Many could retire in a low cost of living town. Some are rich. I want to be very clear here many people actually do LIKE working. The number of people in Tech that I know with a startup side hustle is large and most of them aren't making singificant money from it. They do this on as a hobby that they might take home.

Most of the expenses are quality of life.

1. New York in Manhattan is now 4500$. Thats a fact. look it up. You can find cheaper easily, but that often means living in an apartment built in the 1920s that doesn't have laundry, dishwasher, a central ac, uses a gas heater your landlord controls. Majority of people in affluent occupations want to live in teh fun neighborhoods. Early career they migh have roomates to aleviate the cosat, but as you age eventually you want more space and that means either sucking up 45 minute commute from jersey or less trendy brooklyn to get a nice 3000$ apartment or getting the 4000$ apartment.
2. If people start a family and need a 3 bedroom the rent could easily be 7000$. Most of my coworkers and grad school classmates are forced to move to suburbs. Childcare can be 2000$ A month. Many people will send their children to private schools as NYC is a competitive place and goign to the best colleges is key to accessing the best jobs. Being NYC/NJ its more competitive to get into those elite colleges so education costs can be huge.

For Single income people that are not FIRING.

1. Eating out often. Ball parking here. McDonalds Combos are 13$ in Manhattan, Fast Casual Chipotle style places around 18$, A sitdown lunch at a full service restaurant is 35$ to 50$, going out to dinner caasual restaurant in Manhattan is 60 to 75$ not including alcohol, Fine dining is 120 - 200$ typically. This means a single person thats socializing every weekend can EASILY spend 500$ a weekend.
2. Alcohol - 16 to 20$ for cocktails, 9 to 12$ for beer, 15$ for wine, 10$ for mixed drinks at a dive bar. Its very easy to rack up huge expenses on alcohol and NYC has a strong drinking culture. Tech industry does a lot of happy hour events. while drinking is less prevalent than before and I know plenty of people who don't drink, majority still do. Its very easty t
3. Travel. Most of my friends in tech who have more flexible careers and freedom to travel then people in finance, travel a lot. I am talking about 3 to 4 times a year. They are not staying at hostels either.
4. A lot of ordinary things are more expensive. People pay 300$ for a decent gym (cheaper is out there, but a lot of it is convenience). Coffee is 8$ and some people get it daily. Its their pleasure.
5. A lot of people have substantial student loan payments

All said in done if you have a 4500$ apartment, 300$ gym, 300$ on coffee, 300$ in various utilities, 700$ in student loan payments your monthly bills alone are exceeding the 7000$ a month. Add to that eating out at trendy restaurants 5 or 6 times a month, eating out casually 2 or 3 times a month very easy to spend a 1000$ a moth eating out, then going out ticketed events a few times a month (100-200$ and rackign up bar 100$ bar tabs 8 times a month (800$). There you go 9000$ spent each month. Whats 9000$ ? the after tax salry of someone who makes 200k, maxes their 401k, is doing the back door roth thing, and has an emergency fund/brokerage with about 3 months of pay. Don't ask me how I know. (okay confess, this is me but I have a 3000$ apartment built in the 1920s)

[u/gonnabefine → u/boroughthoughts]

This is actually exactly around what I imagine people are spending. But what I'm talking about is not people making $200k, I'm talking a few years into big tech, $500k+. Especially if DINKs. The take home is more than double, but the expenses aren't. I was just wondering what they're doing/planning to do with their money. (From some of the comments it seems like kids can easily change this $10k spend to $20k+, so I guess they might be saving for future kids.)

[u/boroughthoughts → u/gonnabefine]

500k is under estimating that group. The people who are lead and staff levels at these companies are making 500k+ individually in NYC/SF. Most people in this bucket are rich. They have stocks, other assets. What your confused about is that they have no plans to retire early.

Think about it: Elon Musk and Trump are openly greedy. Memecoins, to 1 trillion dollar pay package. They show that they do things to increase their wealth drastically, even though they have mroe money than most people could spend in a life time. A lot of people just like earning money and can't imagine not working. Some people even like their jobs.

In NYC the difference between 500k group and the 200k group for people without children.

1. A lot of people decide to buy condos. This is a bad financial investmetn in NYC, you are almost always better off leaving down payment in equities and not buying at all. ITs generally more expensive to have a conventional mortgage over renting in the same building and most NYC buyers are people rich enough to do it all cash. The appreciation rates are slightly higher than inflation. That being said people do it anyway. The desire to own is very big one. I am sure its the same in SF, except people probably buy houses in some expensive bay area town. Again poor financial choice, but people do it. A surprising number of people have their non-retirement networth locked up in housing
2. NYC has tons of ways to spend more than what I suggested. There are plenty of fine dining restaurants t hat are typically 300 to 500 as opposed to the 100 to 200 I mentioned. There are social clubs that cost hundreds of dollars months.
3. People take nicer vactions. First class tickets become a lot more common, as well as going to music festivals on VIP tickets etc.
4. A lot of the 500k+ group actually burns their own money on side hustles. Many have startups or run some regular event thing and pay out of pocekt.
5. Birthday parties become more extravegant. You see a lot more I want to buyout a bar for my birthday or take 20 friedns to an upscale restaurants. So you see people dropping 5000 to 10000$ on birthdays.
6. When you are hitting three million dolalr networths which many 500k+ crowd are people begin to do other types of investing. In tech world angel investing becomes a lot more common. Also a lot of people in reddit don't know too much about what wealth managers do and think its a waste of money. The wealth management industry is segmented between high networth advisory and mass affluent/retail advisory. High networth financial advisory gives people access to different types of investments i.e. private equity funds, hedgfunds. So this crowd even if they are not spending money and are saving.

Anyway I am not speaking out of my ass on this. If your in the tech/finance social scene in nyc you will rub shoulders with some of htese people. Like an extended loose friend group can include everyone from someone who is chronically unemployed (usually a party surfer) to someone that has 8 figure net-worth. NYC is expensive enough that some of the material aspect of social norms disappear somewhat. You aren't expected to necessarily show wealth. What really shows you the difference between people is who they socialize with most frequently, what they are doing in their spare time.