Tips for HENRYs (High Earner Not Rich Yet) to Build More Wealth

How High-Income Earners Can Avoid Wasting Their Financial Potential

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Coined by Fortune Magazine, the term HENRY stands for “high earner not rich yet” and it typically refers to individuals and families who earn between $250,000 and $500,0000 but haven’t been able to amass any real worth yet. It may be difficult to understand how someone making this much money could feel like they’re not rich, but with high costs of living, the reality is that high-income earners often feel that they’re far from rich. Research on the subject shows that 25% of families making $150,000 or more are living paycheck-to-paycheck.

When you think about a cost of living that seems to be consistently rising, the student loan crisis, healthcare costs that are skyrocketing, and increasing levels of credit card debt, it’s easy to feel like you’ll never be able to amass the kind of wealth you dream about. But while you may not be able to control the cost of healthcare, education, or day-to-day living, you’re still fully in control of how you manage your money. Even if you’re late to the game, what you do today matters. If you’re someone who could be considered a HENRY and you’re worried about how you can build your wealth to be long-lasting, here are some tips to help get you started.

Create a Budget and Commit to It

Budgeting is a crucial step of wealth management no matter how much money you’re making, but it’s especially important if your focus is to build wealth. Start by tracking your spending. Not only is it simple, but it’s a great way to determine how much you may be wasting on unnecessary purchases. Whether you do this by reviewing recent bank statements or using an online financial tool, find a way to list out your purchases so that you can see exactly where your money is going each month.

Once you have more clarity on where your dollars are going, you may see a few “problem areas” where you can cut your spending and begin to save some money. Perhaps you only dine out once a week. start making coffee at home instead of buying Starbucks each morning, or reduce the number of streaming subscriptions you are paying for each month. Whatever the case may be, cutting out even small purchases can add up and make a difference over time.

SEE ALSO: 6 Ways to Stop Overspending and Save More Money

After you have a strong understanding of how you’re spending your money and where you can save more, you’ll have the framework to create a budget. Determine what your ideal monthly spending limits are and write them down. As the month progresses, be sure to track your spending so that you can ensure you’re staying on track. If you’re struggling with building a budget, there are a plethora of budgeting apps that make tracking your expenses easy and accessible. Find one that works for you and do your best to stick to your limits. After all, a budget only works if you follow it.

Maximize Your Retirement Account Contributions

Retirement accounts are a relatively easy way to grow your worth. Not only do retirement account contributions help to build your nest egg, but since most retirement savings are tax-advantaged, these contributions also help lower your tax bill, saving you more money in the long run. If your retirement savings account is through your employer, find out if they offer to match your contributions. Then, make a commitment to contribute enough to qualify for the match so you aren’t leaving free money on the table.

SEE ALSO:  Recipe for Success: 10 Ingredients for Financial Well-Being

Seek Professional Help

Currently, 4 in 7 Americans are considered financially illiterate with only 24% of millennials understanding basic financial topics. So, if you’re struggling to get a grasp on your finances, know that you’re not alone. Finding a professional that you trust to help guide you on your wealth management journey can do wonders for helping you get ahead with your finances. Not only will a financial advisor be able to help with the basics such as budgeting and saving, but they’ll be able to help you craft an investment and tax strategy that brings you closer to your goal of leaving your HENRY status behind as you build true wealth.

Breaking the HENRY Cycle

When it comes to building wealth, it’s crucial that you stay committed to seeing the big picture and thinking long-term. It’s not about simply getting through the month or the year, it’s about building financial security for your future self. Think about who you want to be when you’re older, and what you want to achieve, and act in the ways that best match your vision.

At Flourish Wealth Management, we’re committed to helping our clients understand their money history, grow comfortable with their money values, gain confidence in having conversations around money, and create the financial freedom needed to live the life of their dreams. If you’d like to start a conversation with one of our professionals about how you can make the most of your high income and build your wealth as a HENRY, please contact us today!

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