BRAINZ MAGAZINE | Are You A HENRY, High Earner, Not Rich Yet?

Who is a HENRY

Lifestyle

HENRYS typically live a high-end lifestyle that drains their paycheck. They drive an expensive car but do not have any savings. They are guilty of lifestyle creep, where their lifestyle and expenses increase as they make more money, so they cannot accumulate wealth.

What to do:

1. Look at your expenses and see if you are maxing out your lifestyle.

2. Pay attention to your monthly recurring costs and see if there are areas you can cut down.

3. Ditch the luxury apartment for a more affordable option.

4. Replace the high car payment with a more moderate option. Car expenses included garages or additional costs to maintain your vehicle.

If you max out your lifestyle today instead of putting money towards retirement, you will work longer. Those are just the facts.

Spending

HENRYS have become the target for luxury brands because they will spend money on luxury bags, belts, clothing, shoes, and accessories. Luxury marketers believe HENRY'S desire for a luxury lifestyle will make them long-term buyers.

Debt

What to do:

1. Paying off debt should be a priority.

2. Pay more than the monthly minimum payments.

3. Any extra income or bonuses should go towards paying down debt.

4. If you have credit card debt, look at your spending behavior and consider lifestyle shifts to avoid continuing to accumulate debt. Also, do not incur new debt until you have paid your outstanding liabilities.

Saving & investing

HENRYS have low to zero savings and investable assets. All their money is spent, with none left to save or invest in their future. The liabilities side of their balance sheet outweighs the assets, or they are breaking even. It is a cycle of money in, money out. 

What to do: Take an in-depth look at your expenses. When you thoroughly review your expenses, you will see where there is room to reallocate money from expenses to savings and investing.

5 tips to avoid becoming a HENRY

1. Track your spending: No matter how much money you make, you need to track your spending. Even people who make six or seven figures can overspend. You always need to know where your money is going.

2. Automate your finances: The more you automate, the easier it will be to manage your finances and stay on track. You can automate money into your savings or investment accounts each month or from each paycheck.

3. Create financial goals: Goals give your money direction and provide you with something to work towards.

4. Stop living paycheck to paycheck: This means looking at your costs and lifestyle. Look at your expenses and see what areas you can shift from spending to saving.

5. Get support: Examining your spending habits and lifestyle can be difficult and overwhelming. Making changes and knowing which changes to make can be even more difficult. Having someone to guide and support you can make a huge difference.