Work/Life MONEY Meet the HENRYs ‘High earners, not yet rich’ need to get their priorities straight, say financial experts
By Jason Walsh
Do you take home a decent paycheck, but still struggle to make ends meet? You might be a HENRY. While the average household’s net worth rose a whopping 37% between 2019 and 2022, according to the Federal Reserve, the rising cost of living coupled with a lessening ability to save has left many earners feeling like so-called HENRYs, or “high earners, not rich yet.” More than half of Americans earning more than $100,000 a year say they live paycheck to paycheck, according to CNBC. “To bridge the gap, more people rely on credit cards to cover day-to-day expenses. [Since 2022], credit card debt spiked to an all-time high,
expenses, 30% for discretionary spending and 20% toward long- term savings. Yet the top 2% to 10% of earners save roughly 12%, according to a study by economists Emmanuel Saez and Gabriel Zucman. While money certainly doesn’t stretch as far as it used to, some financial watchdogs aren’t chalking the HENRYs situation up to unavoidable student loans or high mortgage rates. Rather, high- income earners can often succumb to the financial pitfalls of a “high-consumption” lifestyle. Aaron Cirksena, founder and CEO of MDRN Capital, calls it a case of “misplaced priorities.” “Their spending typically follows the pattern of addressing immediate needs followed by immediate wants followed by future wants, with anything left over going to future needs,” Cirksena says, writing for insurancenews.net . “To increase net worth, future needs must be given a higher priority.” Adds Cirksena: ”When a pay increase is used to finance a more expensive vehicle or a bonus is used to fund a spontaneous getaway, increasing net worth is clearly not a priority.” Luxury brands target HENRYs The acronym HENRY—high earner, not yet rich—was first used in 2003 by writer Shawn Tully in Fortune magazine and over the years has been folded into marketing strategies for several luxury brands. The typical HENRY’s eye is toward consumer status and brand identity—making them particularly ripe for attaching themselves to higher-end labels, such as watchmaker Tag Heuer and retailer Louis Vuitton, both of which developed campaigns specific to HENRYs. “Marketers believe that HENRYs are more likely to be aspirational buyers, meaning that they are starting to purchase the trappings of the lifestyle they one day hope to be able to fully afford,” is how Investopedia explains it. One abstract from a study by Bournemouth University Business School as to the marketing prospects for the demographic is quite blunt in its assessment: “Most HENRYs are narcissists.” —JW
while the personal savings rate fell,” CNBC reported last year. Meanwhile, lofty earners often climbed to those fat paychecks on the higher education ladder—and are now paying the student- loan-debt piper. Additionally, the rising costs of housing and high- interest mortgage rates are tightening purse strings further, if not keeping people out of the housing market altogether. Financial advisors often recommend the 50/30/20 rule of household money management—with 50% going toward living
20 NorthBaybiz
November 2024
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