HENRY - is that you?

Are you a HENRY? A HENRY makes good money but has yet to attain the goal of being rich.  

H - High 

E - Earner 

N - Not  

R - Rich 

Y - Yet

HENRY income

According to Investopedia writer Will Kenton, "High Earners, Not Rich Yet (HENRYs) is a term to describe people who earn high incomes, usually between $250,000 to $500,000, but have not saved or invested enough to be considered rich"(Kenton, 2022).

A HENRY maybe someone who recently earned a professional degree or credential with limitless earning power like a doctor or lawyer. They may work in the technology field, be self-employed entrepreneurs, or fall into another category with high-earning potential. 

HENRYs have opportunities and big decisions to make

A key opportunity of a HENRY is to optimize their financial life for success today and in the future. HENRYs should work on addressing debt elimination, budgeting, emergency savings, investing, education for children, estate planning, tax considerations, and risk mitigation. Whew, that's a long to-do list! Let's break it down into bite-size pieces.  

Debt elimination

Do you have debt? Break up with that debt relationship!   

Other than an appropriate mortgage or car payment, debt brings down an individual's credit score, puts a harmful strain on monthly cash flow, can cause marriage/relationship problems, and it's a mental drain on our already overwhelming lives. You must kick debt to the curb. 

Benefits of budgeting 

Budgeting can help a person pay down debt. Once you know how much you spend monthly, you can better determine where to cut expenses. Cutting out unnecessary expenses frees up cash that can then be applied toward the reduction of debt. Once debt is eliminated, additional cash will be freed up and can be applied to saving and investing for your future, kids' education, and other goals. 

Guiding young adults toward financial independence

Raising money-wise children takes a lot of education, time, and conversations. Educate your kids and continue as they approach adulthood. Prepare them for a successful financial future. Their education starts with their actions. Embrace being a good example as your behavior motivator!  

Estate planning 

Protect your family and your assets. Essential estate planning documents ensure your wishes will be carried out if you pass away or are deemed to be incapacitated.  

Documents most often utilized are Wills, a trust, Power of Attorney for Healthcare (aka Healthcare directive), and Power of Attorney for Finance.  

Once estate documents are in place, assets must be titled appropriately and beneficiary designations assigned so the documents have authority. This is called funding a trust.

Tax considerations - don't overpay Uncle Sam

HENRYs making big bucks can expect a large tax obligation. However, overpaying Uncle Sam is not required. There are tax-savvy solutions for reducing your tax bill.  

W-2 employees can take advantage of tax-deductible contributions to their employer benefit plans and IRA. Self-employed individuals and couples have even more options.  

Talk to your financial advisor to explore tax reduction solutions and confirm with your tax professional to make sure the tax reduction opportunities are within appropriate guidelines for you to use. 

Risk Mitigation 

In many situations; such as healthcare and automobile liability, insurance is a requirement. However, HENRYs can benefit from additional insurance provisions like umbrella policies, professional coverages, disability, life and long-term care policies, and more.  

What is Success?

We all have different goals, so success means different things to different people. Some dream of owning a big house or a fancy car. Others place more weight on free time to be spent with family and friends. Maybe personal success could be defined as the feeling we have when we achieve the whole package or completeness. But, do we ever really get there? Doesn't it seem the more we have the more we want? I'll bet you just thought to yourself, yep, that's me!

Richie Rich

As pointed out, success is ambiguous. It's a feeling of having attained one or many goals. Measures of success can vary daily. I feel successful when my husband tells me how much he enjoyed a special meal I have prepared. I also feel successful over time when one of my projects comes to fruition.   

Rich may be more easily defined. Being rich is more tangible than having personal success. If someone is considered rich, they have wealth, extensive assets, or a life of abundance.  

Now for a big question, which is more important, being successful or being rich? We have all heard the line, you can't buy happiness.  

What can a HENRY do to stay on track?

Most HENRYs have a lot going on in both their personal and professional lives. They need to be diligent in learning how to do what is best with their situation to ensure a lifetime of benefit. At retirement, when the paychecks stop coming in, they need to be prepared. Working closely with their financial advisor is the first step.  

In addition to being a HENRYs investment manager, a Certified Financial Planner™ will work as a HENRYs financial quarterback. A CFP® works with their clients CPA/tax professionals, Estate attorneys, Insurance agents, and others in your financial circle. The Certified Financial Planner™ keeps all key players aligned as a team, so together they can make winning scores for team HENRY.  

Conclusion

HENRYs have all sorts of financial potential. However, as they work toward milestones, they aren't always sure they are making the right decisions to advance themselves and their family most efficiently. Too many adulting choices can feel scary. 

HENRYs make really good money, but for many, they don't feel as if they have totally 'made it' yet. To get appropriate guidance, seek a Certified Financial Planner™.

About the Author

Marianne Martini Nolte, CFP®  provides tax-savvy wealth management for women.

Contact Imagine Financial Services to learn about the services provided and associated costs. 

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References

Kenton, W. (2022, December 28). High earners, not rich yet (henrys) definition. Investopedia. https://www.investopedia.com/terms/h/high-earners-not-yet-rich-henrys.asp#:~:text=High%20Earners%2C%20Not%20Rich%20Yet%20(HENRYs)%20is%20a%20term,%2C%20educational%20costs%2C%20and%20housing.