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H.E.N.R.Y. - Financial Facts Holding Them Back

HENRY - High Earner Not Rich Yet. This clever term has been around for several years now. Lately, it has mostly referred to younger people who earn over $100k per year as individuals. Millennials get the HENRY label most often and their salary can be over $250k annually.



If you are in this club, congrats. You should find the following statistics about your cohorts interesting and helpful. These facts and figures will give you insights that hopefully erase the “not rich yet” portion of the HENRY acronym.


Paycheck to Paycheck

The biggest surprise for younger high-earners may be their inability to save money. Take-home pay and what is left after expenses are the true measure of how much money you have. Money you had and got spent doesn’t do any good long term.



And a recent survey found that millennials earning over $100k yearly still feel like they are living paycheck to paycheck. Hopefully, that isn’t the case with you. But it is so easy to fall into this trap. The more we earn, the more humans tend to spend. This fact goes along with Parkinson’s Law.


This theory typically relates to letting our tasks expand to the amount of free time we have to complete the task. But the theory can also relate to how expenses expand to reach the same level as your income. Natural tendencies like this rob us of time and money.


Breaking Cycles Before They Begin

Living week to week without putting any savings away for a rainy day may not sound scary for a HENRY starting out. Beware bad habits that turn into patterns then eventually inescapable cycles.



It is easier to stay out of a hole than to get out of one. Not saving money for the future is a problem. But it gets worse. Because with no savings or emergency fund, you will turn to credit cards when things go wrong. For example:


Car repair or major maintenance costs

Loss or reduced income

Medical issues


Where HENRYs’ Money Goes

The best way to find out where your money is going after you get paid is to have a budget. With so many apps and programs to track spending, this is easier than ever. Debt.com found that about 85 percent of those surveyed use a budget. Encouraging, but still, roughly 50 percent also said they lived paycheck to paycheck.



Looking at a budget isn’t enough. Putting it into action consistently is what directs your money where to go before it is spent.


A good place to begin looking for where your paycheck is going is to look at luxury items. Young people with large incomes are big targets for luxury brands. Affluent younger generations of consumers are predicted to account for 70% of the luxury market by 2025.


*Gen-Xers have the highest post-tax incomes and spend more than other age group according to a 2018 Urban Institute report.


The Worst Part of Luxury

While preventing you from saving money to build wealth is the biggest cost of luxury purchases, it gets worse. When people get into financial trouble, they find out how little value their expensive brands have. A Gucci outfit won’t fetch much secondhand. Neither will an outlandishly priced sofa.



Also, many young people are shocked to find out how some brands keep their prices so high. They create artificial scarcity by burning excess stock at the end of the year. Not exactly Earth-friendly. Also shows how much the brands value their own products if they are willing to toss a Hermès bag into a fire, for example.


Luxury isn’t the only costly budget item though…


Can’t Forget Student Debt

One of the reasons younger generations are earning $100k and up? They did what their parents and society suggested. Go to college. For many, that education turned into high-paying careers. We can’t forget the cost to do so though.



The average college student who is earning above $100,000 annually owes a whopping $80,000 in student loans. This debt is crushing to those who don’t earn top dollar. For those who do command top-dollar, student debt is a stressful burden that also takes a chunk of their income every month.


Big Salaries are not Enough

It is great to see many young people have found careers that pay so well. That is just one side of the equation though. Expenses eat up paychecks and rob so many Americans of wealth that could be theirs.


The best ways to remove the “not rich yet” from the HENRY acronym is with a budget, self-discipline, and goal setting. Anyone can do that and it doesn’t take four more years of school to learn how.



Time-tested ways to save more, cut expenses, and reach financial goals are simple. They are just not necessarily easy to make part of your routine. I would encourage anyone with an impressive salary to not waste that opportunity. It is a fortunate position to be in and you can become wealthy which puts you in a position to do more good in the world. Not to mention enjoy a comfy retirement sooner than most generations have historically.


Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.

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