Are You a HENRY?

The investing information provided on this page is for educational purposes only NerdWallet Inc does not offer advisory or brokerage services nor does it recommend or advise investors to buy or sell particular stocks securities or other investments No we re not asking your name And we promise we re not trying to offend you HENRY isn t an insult it s a nickname given to a certain demographic in the personal finance world If you earn a decent income but feel like you aren t building enough wealth you might be a HENRY What is a HENRY HENRY is an acronym that stands for High Earner Not Rich Yet But what does it mean to be high earning The definition varies depending on who you ask We sifted through Reddit forums to get a pulse check on what users say about HENRYs People post anonymously so we cannot confirm their individual experiences or circumstances Over on Reddit in the r HENRYfinance subreddit HENRYs are defined as people who earn high incomes usually between to but have not saved or invested enough to be considered rich Net worth is another key number to consider Trevor Ausen a certified financial planner in Minneapolis Minnesota says that HENRYs often have somewhere between negative net worth thanks to candidate loans or early career costs to around million in assets Having an income or net worth above these figures tips the scales toward rich Who is the typical HENRY HENRYs are often business professionals doctors lawyers or tech employees with equity compensation Ausen says Multiple live in places like New York or the Bay Area he adds where it can be hard to accumulate wealth even with a high salary due to the high cost of living They re usually in their s s or s In specific cases HENRYs are also the first in their families to earn a higher income That can come with added pressure to provide financial encouragement for relatives and create generational wealth How do you know if you re a HENRY Now that you know what a HENRY is let s see if you fit the bill If you re earning well but still feel like you re just getting by financially you might be a HENRY Flavio Landivar a CFP in Miami Florida explained in an email interview You might be a HENRY if you Earn an above-average income typically in the low to mid six-figure range Live in a high-cost area Spend the bulk of your income on costs such as housing pupil loans child care and discretionary expenses Don t feel financially secure But not all HENRYs are the same While various have trouble building wealth because pupil loans or living expenses eat up their income others are saving aggressively Ausen says They ve only been high earning for a short amount of time and just have not had the time to really build up those assets and save enough where they can be considered rich he says Ausen says his HENRY clients generally have too much cash After maxing out their k s or other retirement accounts they aren t putting their extra money to work in an assets account If you re parking a lot of cash in a general savings or checking account that s a sign you might be a HENRY While there certainly is an argument for how much emergency fund essentially someone should have after a certain point it starts to become not as efficient as it could be Ausen says What do HENRYs care about Like greater part people HENRYs want more money and greater financial freedom Online discussions in r HENRYfinance and other forums often focus on lifestyle creep career upsurge capital options and strategies for minimizing tax burdens HENRYs are also looking for quick guidance and reassurance that they re on the right track These young professionals may be settling into their careers gaining responsibilities and have less leisure time than they used to Yesenia Realejo a CFP with Tobias Financial Advisors in Plantation Florida declared in an email interview They may be starting families buying homes saving for their children s college With so much on their plates they may find that they re saving but have no planned financial direction Is being a HENRY good or bad If you re a HENRY you may feel stuck It might seem like you aren t making enough progress toward your financial goals But it s central to emphasize the Y in HENRY You re not rich yet that doesn t mean you ll never be rich With smart planning managing expenses and focusing on long-term goals HENRYs have a great opportunity to build real wealth down the road Landivar announced Without that focus though it s easy to stay stuck living paycheck to paycheck despite a high income Start by making or revisiting your financial plan If you re not sure where to begin consider getting help from a financial advisor Getting rich may happen sooner than you think The post Are You a HENRY appeared first on Rough Draft Atlanta