If You Make a 6-Figure Salary and Still Don’t Feel Rich, You Could Be a ‘HENRY’
Written by
Kristopher Kane
Edited by
Zuri Anderson
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You might wonder how someone earning a quarter of a million dollars annually wouldn’t be considered wealthy, but there’s a relatively new socioeconomic category known as the “HENRY.” And if you’re someone with a lucrative career who, for whatever reason, isn’t yet affluent, you could be one.
Keep reading for a closer look at HENRYs, what the term means and the unique opportunities and challenges this group might face.
Understanding HENRYs
HENRY is an acronym for “High Earners, Not Rich Yet.” The term was introduced in a 2003 “Fortune Magazine” article by Shawn Tully, and it’s meant to describe people who earn high incomes but still struggle to build wealth due to high expenses.
It’s a paradoxical financial dynamic for people who are perceived to be affluent but don’t experience the benefits that are commonly associated with the accumulation of wealth.
HENRYs typically earn significant salaries but aren’t able to hang on to much of their money. Despite their impressive earning potential, a substantial portion of their income is eaten up by things like taxes, student loan debt, housing expenses and other essentials. HENRYs have little to no savings and are asset-poor, a position that leaves little room for wealth-building investments.
Who Qualifies as a HENRY?
There’s no official checklist for being considered a HENRY, but the term is usually applied to anyone who has an income between $250,000 and $500,000 but minimal savings and investments.
Even if they have begun to invest, they haven’t had the time or opportunity to amass substantial amounts of personal wealth.
Marketing to the HENRY Demographic
Lifestyle does, of course, play a part in the HENRY designation. You can live beyond your means no matter your budget, and HENRYs are no different.
Many luxury brands have recognized HENRYs as a promising market segment and are aggressively pursuing their marks. High-end luxury goods like designer handbags, jewelry and exclusively priced wristwatches are being increasingly marketed toward HENRYs. Though they may not be technically wealthy, their discretionary income can support premium purchases, even if they may not be the wisest investments.
HENRYs have been called the “working rich,” and their perceived wealth primarily comes from a steady income rather than from stock investments, real estate or other accumulated assets.
It’s this dependency on earned income that poses a significant threat for many HENRYs: If they were to stop working for any reason, their changed financial status would likely not align with their lifestyle or expenses.
Why Are HENRYs So Broke?
High-paying professions like those held by doctors, lawyers and engineers are full of HENRYs. These jobs typically have high earning potential, but that potential depends on their ability to maintain their employment.
And HENRYs have to go where the money is. A significant challenge for many people in this group is the high cost of living in certain areas, typically those with a high demand for the typical HENRY careers.
This can have a prolonged and dramatic impact on their financial standing. For instance, an income of $250,000 would go a long way in many parts of the country, but it might land squarely in the middle class in places like New York City.
It’s this disparity in the geographic cost of living that complicates the understanding of what it means to be rich in different parts of the country.
How HENRYs Can Actually Get Wealthy
Despite the challenges HENRYs face, there are ways out of living from large paycheck to large paycheck.
As with anyone looking to build wealth, reducing debt levels, maximizing tax-benefited contributions to retirement funds and optimizing long-term investments are a clear path toward unqualified affluence for HENRYs.
For those already living the HENRY lifestyle, it’s wise to be mindful of unneeded expenditures, especially luxury purchases. Instead of that Tag Heuer watch or Louis Vuitton handbag, HENRYs should put their money into savings and investments that will pay off over time.
In Defense of HENRYs
It’s worth noting that the challenges HENRYs face may not be easily overcome by simple advice to lay off the designer handbags.
Despite earning $250,000 a year or more, the accumulation of real wealth often eludes this group due to debt incurred by the high cost of the education required to attain the high-paying careers that HENRYs hold, the high cost of living in the urban areas with a high demand for such roles and other unavoidable expenses.
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