What Happens When After Graduations Your Friends Earn More Than You?

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Brian is 23-years-old and earns an amount of money that, he says with a self-deprecating laugh, “the average 23-year-old doesn’t and shouldn’t have.”

He graduated from an Ivy League school in 2007 and works in management consulting in San Francisco, taking home between $80,000 and $90,000 ayear, including bonuses. Does that sound like a lot?  Some of his friends are making as much as $120,000.

Post-college, Brian has seen his social circle split in two along the fault line of the paycheck stub. For example, the wealthier friends dine in restaurants, while the ones who don’t earn as much cook at home. “My friends from school who don’t make very much money don’t really hang out with my friends from finance.” 

What about treating his less well off friends to a night out?  “I don’t think I’ve ever picked up the tab,” he says.  “I think that might be seen as condescending.”

“People are tending to have socialization within income,” says Julia Issacs, an economics fellow at the Brookings Institution, who studies income and socialization, especially as it pertains to marriage. (According to findings that people in the top quintile of income tend to marry other people from the top quintile of income, suggest that these disparities exist even after your first post-school job.)

Earning different salaries after graduation can introduce new elements, like pride or envy, into relationships. “You’ve got an interesting social wrinkle that comes up,” says Ramit Sethi, founder of iwillteachyoutoberich.com and author of the forthcoming book, I Will Teach You to be Rich. 

Sethi suggests consciously keeping a budget so you know you’ve got 20% of your paycheck to spend on going out. Whether that is $200 or $2,000 shouldn’t matter, because at least you know you’ve given yourself a certain percentage of your own money to spend. Or you could depend on the kindness of others, like Nick.

Nick is one of Brian’s friends, a 2006 Yale grad who is now working as a research assistant at his alma mater.  He earns $40,000 a year and says his salary the middle or lower end of the spectrum of salaries amongst his friends.  

However, post-collegiate income disparity isn’t always putting a damper on their social lives–he just asks his friends to pay for him.  “I’m not shy about telling them they’re paying for me [if we go out] and they’re not shy about doing it,” Nick says.  “I don’t have any scruples about taking free drinks” from friends.  In addition to “$8 beers,” he also lets them pay for cab rides.

Two years out of school, Nick says he feels more “awkward” about his wealthier friends paying for him than he did immediately after graduation.  But he’s also headed to law school in the fall, so Nick expects he’ll get them back for those $8 beers.  And, then there's this: “Half of my friends lost their jobs because of the economic downturn, anyway.”


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