Sales of private label brands have exploded in the past half-decade as consumers have done the best they can to get through the economic recession. According to market researcher Packaged Facts, store brands accounted for almost one-third of new food and beverage items introduced in the United States in 2011.
While monetary savings are usually the primary impetus for choosing private label products over national brands, purchasers have discovered that there is little tangible difference between the two categories of products in taste, use, or quality of ingredients. The lack of differentiation and the clear cost advantage of private brands are imposing fundamental changes on the retail industry today, affecting pricing, advertising, merchandising, and product selection.
This article originally appeared on the WallStreetOasis.com website on June 13, 2013.
Congratulations, through hard work, intelligence, and attending the right schools, you’ve won a ticket to the greatest game of risk and reward in modern civilization. Your starting salary will be higher than your fellow graduates with the possibility of annual bonuses that equal two, three, or more times your base pay. That’s the good news.
The other side of the coin is long, long hours of tedious data analysis, endless reports, and tension-filled competition with your co-workers. You’ll live on the edge of physical exhaustion and adrenaline-fueled moments of intense activity, working 60- to 80-hour weeks, constantly on call the few moments you break free from your duties. Few of your fellow employees will be with the firm a half-decade hence, ground up and spit out by the ongoing, never-ending demands of high finance and escalating profit expectations.
While you may be one of the few that continues to build a career with your employer, the likelihood is that you’ll change jobs, even careers, a number of times during your work life. As a consequence, it’s prudent to build a financial base by developing spending and saving habits now that can serve you a lifetime. Regardless of your level of income, financial independence is possible only if you can distinguish between “wants” and “needs.”
As you begin your new tenancy on Wall Street, consider the following tips:
1. Choose an Affordable Living Space
Manhattan is one of the most expensive places to live in the world with the other four boroughs of New York City close behind. Fortunately, you are unlikely to have much time reveling in your apartment. A small one-bedroom apartment in Greenwich Village, Little Italy, or the Upper West Side can easily cost $3,000 a month or more, while a studio in the Financial District averages the same. Consider living with a roommate and sharing rent and utilities so that your housing costs average 30% or less of your net salary.
2. Find a Tailor
Appearance is critical in making first impressions, so how you dress – the clothes you wear and their fit – is important. Wall Street fashion has always been conservative, allowing to you to buy quality wear that rarely goes out of style. An initial, well-chosen wardrobe can serve you for years.
To start, you need two or three suits in basic colors like gray, charcoal, and navy blue. Avoid “flashy” trends and unusual colors. The fit is the most important element – a well-tailored $500 suit looks better than a $1,000 ill-fitting one. Basic dress shirts in blue and white can serve you well. Indulge your creative sense in ties, socks, and braces if necessary. Once you’ve purchased the basics, limit your clothing expense to less than 5% of your salary or $300 per month.
3. Learn to Cook
You won’t have much leisure time in your new career, so beware of falling into the habit of grabbing fast food whenever you’re not enjoying that rare evening out at an overpriced restaurant. Preparing fresh food and trying new cuisines is not only cheaper and better for you, but it can satisfy your creative urges and be the focus of a rare social evening with friends for much less than the cost of a typical evening out. The money you save by preparing a meal at home, even with good ingredients and a nice bottle of wine, is enough to pay the average monthly cost of a fitness club – a justifiable luxury which can help you work off the tensions of a busy day and keep the debilitating effects of a sedentary lifestyle at bay.
4. Maximize Your Allowable Taxable Deductions
As a Wall Street employee, you are in the top 5% of earners in the country, which means you’ll pay a high percentage of your income in taxes. It behooves you to take advantage of every legitimate credit or deduction available to you, including those employee benefit plans – group health, disability, and life insurance, as well as retirement plans and savings plans. Your share of the costs or contributions is usually deducted directly from your paycheck so you never have a sense of being deprived.
If you’re single with no responsibilities, you don’t need significant amounts of life insurance. However, you do need as much disability insurance as your employer provides, since disability is more probable than death. If possible, establish a Health Savings Account (HSA) with a high deductible-health plan, funding the maximum deductible each year. And if you’re not covered by an employer plan, maximize your annual IRA and Roth IRA contributions ($5,500 for 2013).
At bonus time, set aside an amount for investment at least as great as the percentage of taxes you’ll pay on that bonus, increasing your living standard no more than the remainder of the bonus. For example, if your bonus is $100,000 with $40,000 deducted for taxes, invest $40,000 and add the $20,000 to your budget for living expenses.
5. Set Up Automatic Payments for Recurring Bills
Paying expenses like rent, utilities, credit cards, and other regularly occurring expenses automatically frees you from missing a payment deadline due to your work schedule, and it allows you to take advantage of early pay discounts as well. Most banking software lets you – not the vendor – control the timing of your payments and the amounts you pay. It’s a good practice to never let any vendor or third-party have direct access to your private accounts.
For large purchases, use credit cards, especially for those expenses likely to be deductible as this creates an independent record and provides an intermediary in the event of a vendor dispute. Paying for large-ticket items with cash is rarely wise. Just be sure to pay off balances completely each month.
Final Thoughts
As a Wall Street financier, friends and acquaintances often overestimate how much money you actually make. As a consequence, you may feel pressured to meet their expectations of a lavish lifestyle, picking up dinner and drinks checks you can’t afford, or purchasing items to fit the image of a successful deal maker, trader, stockbroker, or analyst. Trying to fulfill others’ expectations is a sure and often-traveled path to a life in which you constantly chase a higher and higher income to cover past expenses. While it may be important to meet the lifestyle and appearance expectations of your employer and clients, you would be wise to resist the pressures of acquaintances, hangers-on, and others who have no “skin in the game” of your life.
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Sales of private label brands have exploded in the past half-decade as consumers have done the best they can to get through the economic recession. According to market researcher Packaged Facts, store brands accounted for almost one-third of new food and beverage items introduced in the United States in 2011.
