Financial Planning, Millennials

HENRY’s: How to Make the Most of This Opportunity

What is a HENRY? 

Alright, I know what you are thinking just from the title. “What in the world is a ‘HENRY’? Well, HENRY stands for “High Earner But Not Rich Yet”. It refers to people in their first half of their working careers that are making substantial incomes, somewhere between $100,000-$500,000 spending on where they live, but have minimal amounts of savings. They love to travel, eat at nice restaurants, stay at elegant hotels, etc. but feel like they are living paycheck to paycheck due to the combination of debt, living costs, and the lifestyle they chose to live. 

The Truth

We all have a lifestyle we want to live. We want nice clothes, fun trips, and to be able to go to the trendy new restaurant that opened downtown. But, we can’t do everything. We simply can’t afford it. This is a hard reality for many HENRY’s to face. Especially because this is the way we grew up. This is the lifestyle our parents created for us. It is not easy to just take a step back from that. However, if you asked your parents what their lifestyle was like in their 20’s and parts of their 30’s, they would tell you they did not have everything they wanted right away. It took time to increase their income, save, pay down their debt, ect. before they reached that stage of financial freedom where they could afford almost all the things they love to do.

Sometimes we all need a reminder to reign in our spending. The goal is not to look back in 20 years with just a bunch of “stuff” to show for our hard work. The goal is to build wealth and find balance so you can do the things you want today while also saving for the future. 

How to Build Wealth As A Henry

  1. Track your spending – One of the best ways to see if you are overspending on your lifestyle is to track your expenses. Oftentimes, HENRY’s avoid this step because it is not fun, but it can be so eye opening. It is easy to lose sight of how much money you are spending on various things. Do this exercise and be honest with yourself. 
  2. Find room to save – If you have very high expenses like rent, healthcare, debt, ect. It can be hard to find room to save. One good way to save money is by cutting down to one nice dinner a weekend vs. two. Or maybe take a domestic trip instead of an international one (once COVID allows it). There is always room to find ways to save. Figure out the lifestyle things you truly value and then cut spending on the areas you don’t. 
  3. Maximize tax-advantaged retirement accounts – Maximizing your retirement accounts not only helps you save and invest for retirement, it can also reduce your tax bill today. You can contribute up to $19,500 a year to your 401(k) and $6,000 a year to your ROTH IRA. Just start doing this as early as you can. Your future self with thank you for it. The early you can get invested in the stock market the better. 
  4. Hire a financial advisor – Let’s face it, your 20’s and 30’s are hard. Life changes quickly. You go from first job, to second job, to marriage, to buying a home, to having kids, to paying for their college, ect. You are a HENRY because you work hard and work a lot. Hire a financial advisor who understands you and what you want in life. A good financial advisor ultimately can take a load off your plate and help you plan and invest for your future. You do not need to go through this alone. If you would like to learn more about how RLS can help you navigate your financial life and achieve your goals, schedule some time with us! We would love to be a part of your story.
  5. Become an Owner – If it interests you, either start a business or work somewhere where you can buy in or earn ownership. Having ownership can be huge for you in the future if the company continues to grow. You may make less money at first at firms you are earning ownership in, but remember it’s all about The Long Game. Pay me in equity as my colleague Dasarte Yarnway would say! 

How To Not Become Another Henry With A Bunch Of Stuff

I know this is cliche, but let’s fast forward 30 years and look at ourselves (I hope you look better than me 😂)

Are our spending and savings habits in line with what we would want to provide for our 70 year old self? If your answer is yes, then you are doing well. But if your answer is no, let’s make a change. I know it may be hard to find ways to make room in your budget and save, but it is possible. We need to understand that our incomes right now do not necessarily support the lifestyle we see others live on Instagram and that is okay. It gives us something to work hard towards.

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Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page.