Monday, June 02, 2008

MBA finances

I am graduating in 4 weeks, and am quite impressed by the cash flows I projected before starting the MBA. Though there were lots of deviations along the way, I had estimated that I should end the MBA with a balance of approximately 0, and this is what happened. I am disclosing my "profit and loss statement" for the 21 months of my MBA at London Business School. It is obviously rounded and approximated to the nearest 1000, and I have omitted holidays, clothes shopping etc.

Overall, you can see that I have managed to end the MBA without any debt. Actually the balance is higher than what I show because in reality my husband found a good job here after a while and we split the rent and other living expenses. So if you are coming to London Business School and want to make estimates, here's my recommendation for adapting the numbers to your situation:

- obviously, most of you won't be lucky enough to be paid by McKinsey without obligation to return ;-)
- if you have a partner, expect him/her to find a job after 3-6 months and enjoy :-)
- most banks and consultancies pay the sign on bonus tax free, somehow my bank refused to, so it was taxed which makes a big difference unfortunately
- Rent is one very big factor which will change the outcome. Even though I came here with my husband, we started off sharing, since he didn't have a job yet and we also didn't find studios that were cheap enough (we were willing to pay up to 230 pounds per week). I only knew one other couple that did that for the first year, and I think we were the only ones who did that for the two years. It's not easy of course, but that way we paid a rent of 837 pounds per month instead of 1200-1500 that we would have had to pay for a studio/1bedroom in this area. There were a lot of couples who had no income (and no McKinsey sponsorship and no scholarship) but opted for a 350 per week 1 bedroom. Of course it is more comfortable, but then I would have had about 15,000 pounds debt upon graduation, and now I am debt free, which feels great

So you see what to focus on: on the income side, internship salary, scholarships and bonuses are very important (I did two internships and obviously earned more than others), on the cost side, rent in London is the major factor (given that tuition fees are beyond your control).

I hope this helps. All numbers are given in GBP.

Net Income
McKinsey living expenses 15,000
Scholarship for tuition 20,000
Internship salary (20 weeks) 22,000
Internship bonus (so far) 15,000
Second year project 2,500
Total income 74,500
(excludes around 7,000 GBP in outstanding summer bonus and relocation allowance)

Cost
Tuition fees 41,000
Rent 17,640
Living expenses 18,900
Bills, phone etc. 1,050
Transport 1,050
Sum 79,640

7 comments:

forrest gump said...

thanks for your comment. your income statement looks phenomenal, and i am surprised to see how much money you earned out of the internship (probably because of your two internships).

Matthew said...

Hey Angie,
Great blog - I look forward to your posts as I have just started an MBA at Tanaka.
One question from today - the £2,500 for your final year project...this means you sold it? Could you say what is was about and briefly how you went about getting income from it please?
Thanks,

Matthew

George said...

Hello Angie,

my name is George and I have also applied to LBS for the MBA programme starting this September. I have been reading your blog over the previous year and i would like to thank you for posting very useful information!

I was looking at your income statement and i was impressed by the amount you earned via the internship. Do you think that the turmoil in the economy has reduced the opportunities for achieving similar income currently? Do you think that it would be much more difficult to achieve similar income if you started your MBA a year later?

Thanks

George(garmenis@gmail.com)

Rohit said...

Hi Angie,

I chanced upon your blog through Google and I must admit it is quite great! So, I just wanted to wish you all the best with your new job and keep up the good work with the blog. I hope you keep posting after you have graduated from LBS.

P.S I harbour similar aspirations as yours in terms of getting into LBS (I am still quite a few years away from that though!) and the info you have posted is very useful.

Regards,
Rohit.

Sharat said...

Hi Angie,

Have been reading your blog for more than a year.. thanks for sharing all these useful information with us. Wish u good luck for the future.

Sharat

Relocation Texas said...

Hey angie,
its ever so generous of you to share this information with people i know this would have helped me!

Wonderful blog! youre brilliant!

Cheers,
Erica

Rijo Stephen Cletus said...

Hi Angie,

I am also doing my MBA in Finance and have gone through your story. After going through it I realize this is on similar lines that I am doing, the financial planning etc. So I think I also should create a P&L at the end of my MBA.

Thanks
Rijo Stephen Cletus