Are You A HENRY?
Most of us know a few people who spend more money than they earn – and even when you make a solid six-figure income each year, that doesn’t make you rich. In fact, it’s easy to find yourself in financial turmoil when you’re constantly eating out, taking vacations, and leasing luxury cars – all without putting a penny aside in your savings. It’s this behavior that makes somebody a HENRY – a finance term standing for “High Earner Not Rich Yet”…
What Is A HENRY?
First coined by Shawn Tully in Fortune magazine in 2003, HENRY is a term that is commonly used to describe high-earning, generally young professionals. Yes, the “millennials.” These are the type of people that you see on Instagram taking impromptu weekend European vacations and getting expensive facials.
Even when you’re lucky enough to have a high-profile job that pays $200,000 a year, avocado toast and fancy coffee for breakfast every single day still adds up. This group has likely never had as much financial freedom – or income – as they do right now, and it’s easy for anybody to get caught up in buying things that you don’t need when you finally have the cash to do so.
The Illusion Of Wealth
While HENRYs don’t consider themselves wealthy, they tend to spend more on luxuries and give the illusion of wealth, while paying only essentials like rent, car payments, and student loans. Most of them don’t even consider saving for retirement, buying a home, or investing at this stage of their life, feeling like they don’t have enough cash left over at the end of the month, and generally assuming that the future will take care of itself – which is where the true issue lies.
As you can imagine, choosing not to save means that a HENRY won’t be able to stop working for a good while. And in a less than stable economy (or a time of a global pandemic) where many are getting laid off from their jobs, this can be a harsh awakening for many.
A high income doesn’t make you rich, and it doesn’t hurt to speak with a financial planner, or at the very least begin working towards building a savings cushion, to stay financially afloat in the difficult times.