New IIM Graduate Says MBA Made Him Broke | Can’t Afford 1BHK?

Summary

This video script addresses the reality of post-MBA life for graduates of new IIMs, particularly those in the top 10% placements. Despite receiving attractive salary packages on paper, many graduates struggle financially in major cities due to high EMIs, rent, and living costs. The script explains how salaries increase over time, offering a brighter outlook in the long term. It emphasizes that luxury living is not immediate and that the first few years require patience, hard work, and financial discipline. Overall, it provides a realistic perspective on the challenges and rewards of an MBA career.

Takeaways

• 😀 Initial MBA salaries from new IIMs (Rs. 80,000 - 90,000) may seem high, but they are still not enough to live a luxurious lifestyle in expensive cities like Mumbai and Gurgaon.
• 😀 Graduates should not expect luxury in the first 3-5 years after completing an MBA; initial years will be difficult with modest living conditions and a focus on repaying loans.
• 😀 Over time, MBA salaries grow at an annual rate of 10-15%, meaning that after 5 years, a salary of Rs. 1-1.5 lakh is possible, and after 10 years, salaries can be 4x the initial amount.
• 😀 The cost of living in metropolitan cities, especially Mumbai and Gurgaon, is high, and it may take up a significant portion of the salary, including expenses for rent, utilities, and transportation.
• 😀 Even with a high starting package (Rs. 32 lakhs), the salary in-hand may be only Rs. 75,000 - 85,000, and after EMI payments, it will be difficult to save or afford a 1BHK apartment.
• 😀 Graduates should plan their finances carefully during the first few years, as salaries will grow slowly, but by working for 5-10 years in a good company, a comfortable life will be achievable.
• 😀 While business ownership may seem appealing, it often doesn't provide immediate financial returns, unlike a stable corporate job where salary increases steadily.
• 😀 The first few years are critical for career development, so it’s important to choose a role that offers good learning opportunities and growth potential to avoid burnout.
• 😀 Graduates can ease the financial burden in expensive cities by considering remote work opportunities, living with family, or sharing accommodation with peers.
• 😀 Luxury is not a realistic expectation for MBA graduates in the first few years; frugality, hard work, and patience are key to financial success over time.

Q & A

What does the new IIM graduate claim about his placement despite being in the top 10%?

The new IIM graduate claims that despite being in the top 10% of placements, he still cannot afford a 1BHK apartment, citing high living costs and financial obligations like EMIs and delayed compensation structures.

Why does the new IIM graduate say MBA can make adults 'broke'?

The graduate argues that the financial strain after an MBA, particularly with high EMIs and relatively low take-home salaries initially, leads to a paycheck-to-paycheck lifestyle. He suggests that even with a high salary, one cannot afford a comfortable lifestyle immediately after graduation.

What are some specific salary examples mentioned in the script?

The script mentions salaries such as Rs. 32 lakhs from Amazon (with only Rs. 75,000 in-hand), Rs. 19 lakhs from BCG (with Rs. 85,000 in-hand), and Rs. 20 lakhs from Aditya Birla Capital (with Rs. 80,000 in-hand), all of which face high deductions and financial obligations.

How does the script address the affordability of a 1BHK apartment for MBA graduates?

The script explains that even with a salary in the top 10% of placements, the high cost of living, especially in cities like Mumbai and Gurgaon, makes it difficult to afford a 1BHK apartment. Graduates often have to share housing, pay high rent, and manage multiple financial responsibilities.

What is the expected salary growth for MBA graduates after 5 to 10 years?

The script mentions that MBA graduates can expect their salary to grow at a 10-15% compound annual growth rate (CAGR). This means that salaries should double in about 5 years and increase fourfold in 10 years, leading to better financial stability over time.

What advice does the speaker give regarding the first 5 years after completing an MBA?

The speaker advises that the first 5 years after graduation will involve a lot of hard work and struggle. During this period, graduates should not expect luxury but focus on building a strong career foundation, as salaries improve significantly after this initial phase.

What is the significance of compound salary growth mentioned in the script?

The significance of compound salary growth is that it allows graduates to experience substantial salary increases over time. For example, a graduate earning Rs. 10 lakhs initially could see their salary reach Rs. 50-60 lakhs in 10 years, providing a more comfortable financial life.

How does the cost of living in different cities affect an MBA graduate's lifestyle?

The cost of living in cities like Mumbai and Gurgaon is high, and the script highlights that for a luxurious life, a family in these cities would need Rs. 3-4 lakhs per month. In contrast, smaller cities like Kolkata or Indore require much lower living costs, which affects how MBA graduates can manage their finances.

What does the speaker say about the misconception of instant luxury after an MBA?

The speaker emphasizes that graduates should not expect instant luxury after completing an MBA. Although salary figures may seem high, the reality is that it takes several years of hard work and gradual salary increases to live comfortably and afford luxuries.

What does the script say about the role of remote work in managing expenses?

The script suggests that remote work can be a solution for managing expenses, especially for graduates in high-cost cities. By working remotely, graduates can save on rent and other living costs, potentially allowing them to live in less expensive areas or even work from their hometowns.